Policy Analyst Says Math Backs Up Bush's Social Security Concerns
by Ed Thomas
February 9, 2005
(AgapePress) - Sources ranging from the Congressional Budget Office to Democratic pundits are saying that the U.S. Social Security system can pay retirement benefits until at least the year 2042. However, one policy analyst is pointing out one thing most of those sources fail to mention -- that this payout would be deficit spending.Whether the federal retirement security program pays full benefits to 2042 or not, the mathematics of the Social Security Administration's annual revenues back up Bush's recent dire predictions: "In 2027 the system will be 200 billion dollars short," the President says. "There's a lot of young folks who are saying 'I don't think I'm ever going to see a dime unless Congress acts.'"
According to Matt Moore of the National Center for Policy Analysis, the problem with the program is evident in the figures. The ratio of contributing workers to Social Security benefits recipients has dropped from 16:1 to approximately 3:1 since the program's inception.
What that means, Moore says, is that "in 2018 the program will start paying out more money in benefits than it collects in taxes." The solution for this, he continues, is for the federal government to borrow from the Social Security Trust Fund until it empties in 2042, which unfortunately leads to the next problem.
"There's no cash in that trust fund -- there are only government bonds," the policy analyst says. "So the question is, where are we going to come up with the two to three trillion dollars that's going to be required between 2018 and 2042 to redeem all those bonds?"
It is a good question, and Moore agrees that no matter which way the fingers in Washington are pointed, Social Security is going to cost money to fix -- money that even now is owed to workers as part of the National Debt.
The Privatization Plan
The Bush administration has made Social Security reform a top priority, and has put forth privatization as a possible fix. However, the president faces an uphill battle in getting skeptics among the American public and in Congress to line up behind the plan. As the Social Security system confronts the long-term challenge of not having enough contributors to pay younger workers in a few decades, many opponents continue to resist the proposed reforms.
One of the arguments opponents offer against changing the Social Security system by adding private investment accounts is that the $1.2 trillion start-up cost would be excessive. However, Moore says this amount is not actually new debt, but rather a way to begin paying at a lower cost a debt that would end up increasing later on. "Basically, what we're doing is paying off that ten trillion dollar debt today," the policy analyst says, "so we're not creating new debt, but we're paying bills that we're going to face down the road."
The accounts also establish another solid principle in which Bush strongly believes: that America is an ownership society. The president recently stated that, through the privatization plan, the administration hopes to "make the system a better deal for younger workers by allowing them to save some of their payroll taxes in voluntary personal retirement accounts, a nest egg they can call their own, which government can never take away."
Ed Thomasening, a regular contributor to AgapePress, is a reporter for American Family Radio News, which can be heard online.
