President Bush Confronts Reality

SOCIAL SECURITY
Bush confronts reality

True leadership is the willingness to face difficult challenges. In the business world, we called it confronting reality. President Bush is leading us to confront the reality of a Social Security system headed for insolvency unless we act to fix it.

I recently visited senior citizens at the Little Havana Activities and Nutrition Center. Social Security provides our seniors a critical foundation of income.

As a first principle, any reform plan must keep faith with the men and women who depend on Social Security for their retirement security. Benefits for today’s retirees and near retirees are secure, but our children and grandchildren face the dangerous instability of a retirement program with a budget shortfall as large as our entire present economy.

Fundamental reforms

The president believes that saddling our children with mounting debt, shrinking benefits and higher taxes is unacceptable. Social Security must be strengthened and saved, and salvation for Social Security requires fundamental reforms that modernize the program and give workers the option to build a retirement nest egg.

Some say nothing needs to be done, and that any solution is risky. What these critics fail to see is that the greatest risk of all would be to do nothing. The status quo is not sustainable; an unreformed Social Security system threatens our children’s retirement security. Some people think that Social Security taxes are saved in a special account. But the so-called trust fund is nothing more than IOUs from our parents and grandparents to our children and grandchildren. Each year, the Social Security taxes collected are being paid to current retirees or spent by the federal government on other government programs. As a result, the promises made to our children and grandchildren are empty ones.

Looking to the future, the numbers define our problem. In 1950, 16 workers supported every person drawing Social Security benefits. Today only 3.3 workers pay into the system for each beneficiary. By the time younger workers retire, only two workers will be paying into the system for every person who gets a Social Security check. Unless we act to fix the system now, that two-to-one ratio will mean higher taxes, lower benefits and an ever-growing Social Security deficit.

The graduating class of 2018 is already in kindergarten, but the funding crisis in Social Security will start the year they graduate. In 2018, Social Security begins paying out more money to retirees than it collects from workers paying into the system.

With every passing year, the Social Security liability grows larger. By 2042, the Social Security system will be insolvent. If we saw the same red ink on a family’s budget or a business’s balance sheet we would say that they were headed for bankruptcy. The current system has already promised workers $10.4 billion in benefits beyond its ability to currently pay.

If we wait to reform the system, our available options dwindle and grow ever more painful and unpleasant. The sooner we act, the easier it will be to fix Social Security with a permanent reform that makes the system sustainable. Every year we wait costs our children an additional $600 billion.

To fix Social Security, Republicans and Democrats alike will need to work together. The goal is to protect seniors, produce reforms that permanently fix Social Security and empower younger workers with a personal retirement nest egg.

Permanent solution

The president’s foundation for a permanent solution is clear:

• Stability for seniors: No changes in benefits for people at or near retirement.

• Pro-growth modernization: Reform measures that strengthen the system without raising payroll taxes.

• Ownership and inheritability: Voluntary personal accounts for younger workers allowing them to save a retirement nest egg they bequeath to their children.

The president is showing true leadership by confronting the realities within our present Social Security system. The Congress and the country should join together with the president to reform Social Security. To succeed, we will need candor, courage and cooperation.