ShareThisBy JAY AMBROSE
Friday, November 17, 2006
OK, congressional Democrats, here's your chance _ find a way to fix Social Security in bipartisan cooperation with President Bush and the Republicans, and then reap the blessings of voters because you helped improve what FDR started.
The last thing you want to do, now that you've captured the House and Senate, is to keep playing the demagogic, obstructionist game in which you bash every proposal anyone comes up with while refusing to commit yourself to any ideas whatsoever, or refusing to concede _ as some of you do _ that there's really much of a problem at all.
Believe me, there is a problem, summed up by the fact that the number of Americans over 65 will double over the next quarter of a century _ as some observers have put it, we are on our way to being a nation of Floridas. The entitlement bill will be enormous if nothing is done to restructure Social Security and Medicare, either requiring that workers pay incredibly high taxes, that we vastly reduce virtually every other program in the federal budget or that we borrow ourselves into economic obliteration.
Social Security is the lesser of these two big entitlement problems, but a hugely important program in American life, and a huge, multi-trillion-dollar problem on its own. The good news is that it can be fixed without enormous harm to anyone _ much more easily than Medicare _ if we quit kidding ourselves about an imaginary trust fund or supposed solutions that will only lead to further rescue attempts as the years pass.
The trust fund of all those surplus Social Security taxes paid over the decades is an accounting device. To get money out of it, you have to either tax more or borrow more or take the dollars from general revenue funds now going to other purposes. That's also how you get the supposed interest it is earning. When you understand that and some of the various other ways in which optimists underestimate the funding shortfall, you begin to see that raising retirement ages or getting rid of a $90,000 income limit on how much is paid in payroll taxes don't begin to be enough to get the job done.
Both these proposals were put forth in a recent USA Today editorial. It said you could make good on one-third of the shortfall by raising the age of full retirement benefits from 65 to 67 for everyone right this minute, gradually making the age 70. Nope, says a sophisticated source immersed in this issue; you would merely delay the year when payroll taxes are no longer sufficient to pay all benefits from 2017 to 2019 and lower long-term shortfalls by 28 percent.
Scotch the income ceiling, says the editorial, and you could solve everything once and for all. Hardly. The same source says you would only delay the Social Security deficit year to 2023 and reduce the long-term shortfalls by 24 percent.
Then USA Today mentioned a proposal that would work. If you increased benefits each year at no more than the cost of inflation, instead of inflation-plus-more as now, you would terminate the long-term problem. As the editorial noted, President Bush once proposed a version of this idea in which lower-income recipients would get increases on the same formula as now while higher income recipients would get just benefits plus an inflation adjustment each year. Some of the same Democrats who curse "tax cuts for the rich" seem to think unneeded benefit increases for the "rich" just fine.
But since some of these Democratic members of Congress have gone on the record about a willingness to negotiate on any way that might reasonably solve the problem _ presumably including the crudely misrepresented but solid Bush call for individual retirement accounts _ perhaps they will now do just that. Bush has made a similar pledge, as have a large number of Republican members of Congress. If everyone means it, the federal government can do an important favor for the American people and the two parties can do an important favor for themselves.
And after that?
Well, watch out Medicare.
(Jay Ambrose, formerly Washington director of editorial policy for Scripps Howard newspapers and the editor of dailies in El Paso, Texas, and Denver, is a columnist living in Colorado. He can be reached at SpeaktoJay(at)aol.com.)
Social Security
Well, Jay, are all those retirees going to have support or are they not?
If they are then no matter how you structure it those working will be supplying that support. If there's an issue there (there is) it's that real planning for that future needs to be done.
For the surplus, the real problem is Congress, which is merrily spending all the surplus FICA tax income. That is not a fault of Social Security. Yes, that money will have to be repaid - but that's no different from how all the money borrowed to cover the wild spending by Congress has to be repaid.
Your snarling manner seems to indicate that at heart you are opposed to American workers having any sort of retirement security, and that you take out your frustration that they do by attacking the Democrats. Fair enough: the Republicans are manifestly not the party that dsires such security for American workers.
It's an insurance program in structure. If it's to be kept self-supporting (on the books) the options are to increase revenue or decrease benefits. The Democrats surely will come up with a plan that combines the two. Will you then praise them, or will you continue to snarl, finding some other fault?
Time for seriousness on Social Security
As the party in power, the Democrats now have the responsbility to address Social Security's deficiencies. Hopefully, they'll do better than congressional Republicans.
The problems facing Social Security are substantial and I'm very pleased that incoming W&M Chairman Rangel may be trying to reach across the aisle by inviting Treasury Secretary Paulson to attend a retreat to discuss this and other pressing matters. Personally, I'm cautiously optimistic something could come from this.
Regardless, "Hewhoasks" needs to back off. Ambrose is merely outlining the program's realities and the political landscape. Last week's elections weren't about party as much as they were about a lack of leadership on critical issues. Will the Dems take up the challenge and lead? I certainly hope so.
HeWhoAsks--Snarly Response
To Mr. HeWhoAsks,
I appreciate your commenting, but it's YOUR comments that I found to be "snarly." I don't know Ambrose but his article was straightfoward and honest, in my opinion. Fact based, not personalizing. You are imposing your interpretation of his unstated motives and beliefs.
Of course the future retirees will have support--no one is suggesting otherwise. But if our kids will have to pay back the debt (that you acknowledge from spending excess SS taxes), why should they pay benefits to the wealthy who make millions--like football stars, Gates, and millions of others. Furthermore, the spouses of all of those wealthy retirees get an additional 50% of the worker's benefit, even if they didn't put a dime into the system! I don't think our kids and grandkids should have to carry that burden, just as they are trying to get their own careers (and often families) going.
YEs, this is an insurance program and the antipoverty insurance function is critical and probably should be strengthened. But as an insurance program, it's a rotten deal for many of our younger workers, not to mention the singles and poor people who die before retirement and get zero.
Let's look at the whole thing and be fair. It's time to set aside attacks and deal with honest facts and opinions.
Snarly
Ambrose says the trust fund is an "accounting device." The trust fund is invested in US Government Bonds. Saying the trust fund is an "accounting device" appears to be an attempt to deny that the US Government is obliged to pay back on those bonds, when the trust fund submits them for redemption. I see a snarl in that, maybe you don't. The debate surely is over what to do, not over words.
Ambrose is completely correct about how the money to pay off the bonds will have to be acquired, but that is not in any way a flaw in Social Security nor due to any flaw in Social Security. You borrow, you repay. If you spend so much that you have a huge amount you need to repay that's not the fault of the lender, is it? Why, for the Social Security trust fund only (not for bonds purchased by other countries, mutual funds, or investment houses) does Ambrose complain about the cost of repaying what was borrowed? Why, when the problem clearly is one of overspending, does Ambrose attack Social Security - and leave the overspending untouched, unmentioned?
The retirees will require food, clothing, lodging and health care. If they get those things then it doesn't matter how the money flows, the payer ultimately is those still working. It's a fraud to say that the workers can't afford it if the payment is through taxes but can if it's through corporate dividends. A worker provides $X/day to the retirees. How does the path the $X takes to the worker: it still comes from him (or her.)
There is a situation/problem here but it is not a solution to wave hands and claim that the workers can't afford retiree support if it's paid for through taxes but can if it's paid for through dividends. That's not in any way an honest examination of the problem, it's a deception, used to push something that is favored either because it will profit the advocate or because of flawed ideology.
The "wealthy" are taxed on their Social Security income, with the portion of the Social Security that is taxed going up as other income goes up. The tax doesn't begin to absorb all the Social Security benefits, even for extremely high incomes, but the tax law isn't unchangeable. Besides, that's a side issue. The real issue is one of retaining a system that works rather than replacing it with one for which the promise is never more than it "might" work. When it doesn't work the Republicans can smugly say "well, we never promised it would work, only that it might, so starve (and perhaps regret falling for the pitch)" but that's not a very sound approach to retirement security, is it?