|Week of: |
October 1, 2000
|Social Security Has to be Reformed
by: F.R. Duplantier
"Americans have come to realize that Social Security faces serious financial problems that are only going to get worse," reports David John of the Heritage Foundation. "This public concern is well grounded," he affirms. "Studies and official reports confirm that Social Security is approaching a major financial crisis and, even if its revenue and expenditures were in long-term balance, the program is providing poorer and poorer retirement income security for the money Americans contribute. Younger workers," John notes, "are especially aware that Social Security will not be able to provide the benefits they have been promised when they retire."
In a chapter he contributed to Issues 2000, the Heritage Foundation's candidate briefing book, David John emphasizes that "the 10.6 percent of income most workers are taxed to pay for Social Security retirement benefits soaks up most of the money that they otherwise could save. Moreover," he adds, "less than half of American workers are covered by a private pension plan. Most lower and middle-income workers will have to rely on Social Security income."
According to John, "The real problem with Social Security is not the financial health of its trust fund, but the poor returns." He says many workers "will actually receive less in retirement benefits than they have paid in taxes. Fixing the trust fund by raising taxes or cutting benefits would be fairly simple," John asserts, "but both approaches would only make Social Security an even worse deal than it is now."
The solution, John concludes, is "to allow workers to invest a large part of their existing retirement taxes in a personal retirement account. Funding these accounts from any source of money other than a portion of the Social Security taxes that they now pay will not solve the problem. In fact, it could make it even worse," he argues. "Social Security personal retirement accounts are feasible and would raise retirement income," John contends. "Younger workers could earn over twice what they would receive from the existing system."
In a recent issue of Family Policy, a bimonthly publication of the Family Research Council, economist John Mueller points out that "today more than 3.4 workers support each Social Security beneficiary; when the boomers retire," he notes by contrast, "two workers or fewer are projected to support each beneficiary." Mueller argues that this "raw deal for their generation is largely self-inflicted. Today's relatively high worker-to-beneficiary ratio exists for one simple reason," he explains; "the average retired couple today had more than three children during their child-rearing days. In contrast, the boomer generation is the first to practice abortion. . . . As a result, they are now left with a relatively smaller progeny than their parents. Most of the decline in live births and future taxpaying workers since the late 1960s is due to legal abortions," Mueller asserts. "If not for legal abortions, the ratio of workers per beneficiary would be even higher today."
Behind The Headlines is syndicated to newspapers and radio stations, free of charge, by America's Future, a nonprofit educational organization founded in 1946 and dedicated to the preservation of our free-enterprise system and our constitutional form of government. For more information, or a free sample of our bimonthly newsletter, e-mail or write to: America's Future, 7800 Bonhomme, St. Louis, Missouri 63105.
Or call: 1-314-725-6003.