Patrice Hill’s Feb. 10 Page One article, “Bush Seeks $1 trillion debt boost,” misrepresents what happens when reform changes Social Security from an unfunded pay-as-you-go system to a fully funded system based on personal retirement accounts. In proposing such a change, President Bush is not boosting the debt one cent. He is simply explicitly recognizing money that is implicitly owed to future retirees. The annual deficit — the difference between what the government receives from taxes in a fiscal year and what it spends — may temporarily increase as the old system is phased out, but not the debt, the total amount owed by the government.
In fact, shifting to personal retirement accounts would result in the largest government debt reduction in the history of the world. The unfunded liability of Social Security is $10.5 trillion — the sum of the promises made to current and future retirees. This number will continue to grow and be an increasingly heavy burden on future generations unless we allow for personal retirement accounts. Under such reform, the government will pay off already made promises but will not add any more as workers opt to divert their payroll tax dollars into accounts they would own and control and use to fund their retirements.
In calling for personal retirement accounts, Mr. Bush is saying Social Security should no longer be based on wimpy economics: “I’ll gladly pay you Tuesday for a hamburger today.”
Citizens for a Sound Economy