Social Security provides a great social need
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Midland Daily
News, February 19, 2005
President Bush wants to reform
social security. Let's take a look into the issues involved.
The original idea of social
security was a safety net for older people. It was an "old age
pension".
According to the government
website, Social Security was established in 1935 during the days of the Great
Depression, although the first monthly check wasn't issued until January 1940.
Survivor benefits were added in 1939. In 1956 disability benefits were added.
Paul Starr, co-editor of The
American Prospect, says, "One of the signal achievements of Social Security, hardly noticed today,
is that poverty has fallen dramatically among Americans over age 65." He goes on to say that the reason for lower poverty among seniors is
that benefits are based on equity and adequacy. Equity means that the more a
person pays in, the more the benefits; adequacy means that adjustments are made
to allow for years that a person didn't work and for those with low wages.
Nearly two-thirds of those
receiving social security benefits (including survivor and disability) count on
it for more than half their income; a third rely on it for 90%", says Time
(1/24/05).
Social security is really a
government sponsored insurance program.
Life expectancy has increased
dramatically since 1940. The reason is the great reduction in infant mortality.
Age 65 life expectancy is less than three years longer
than it was in 1940, according to the Social Security website. If we compare
the life expectancy of 21 year olds in 1940 and today, 20% more of them live to
age 65. There are more than 35 million Americans over 65 compared to 9 million
in 1940.
The Social Security Trust Fund
became part of the general fund in the 1960's. This allowed Congress and the
President to spend this money without raising income taxes by merely putting an
IOU in the Trust Fund. Currently those
are $1.6 trillion. The Detroit News reported that by law social security
wouldn't go broke.
There are already numerous ways
that individuals can save for retirement on a tax favored basis: IRA's, 401k's, 403b's, and more.
This presumes, of course, people have the extra income to do so. Millions of
people do not have the kind of income to make any investments. They are living
from pay day to pay day.
Social security is not just a
retirement plan. It provides survivor benefits to widows and children as well
as disability benefits to the worker, spouse, and children.
It is not a plan just for
individuals. It is truly a social plan that benefits society by raising the
standard of living for millions of people, especially older people.
Social Security is one of the
most efficient government programs, spending less than 2% on administration.
The so-called bankrupt year of
2018 is false. That's the year that social security taxes are projected to be
less than the benefits paid out but, According to Mark Weisbrot
of AlterNet, the Social Security Trust Fund in 2018 will have "$3.6
trillion in assets, as well as $206 billion in interest income that year."
The extra amount needed to be paid out in benefits will be less than a tenth of
the interest earned that year! Benefits can continue in full under the current
plan until 2052, according to the non-partisan Congressional Budget Office.
There is a long-term problem,
however, of continuing benefits. The solution easily involves raising the
ceiling on wages subject to social security tax, raising the retirement age,
changing benefits, subsidy from general revenue, or any combination of these. These
actions must be taken before any consideration of personal accounts, according
to Sen. Lindsey Graham (R-OK).
"Private investment accounts
are a terrific idea, if you can afford them and they are carefully
regulated," says Joe Klein in Time (1/24), but the President's plan fails
the "social" and "security" aspects of our current system.
It is not a reform of the system, but a gutting of it.
These accounts will take money
away from the system - exactly the opposite of what the system needs. Private
accounts ignore the risk of poor investing, unless
they are closely regulated (then why have them?). They also take away the
safety net of minimum benefits. And of course they will not guarantee a
lifetime income, as social security currently does.
In an interview
by Chris Wallace on Sunday, Feb. 6, Vice President
Dick Cheney said, "We're
going to borrow $758 [b]illion over the next 10 years
to set up the personal retirement accounts.... Trillions more
after that."
If those billions were added to the Trust fund, they
would extend the period of payments way beyond mid-century.
Let's not be quick to trash a
program that has been one of the best government plans of the twentieth
century. Let's rather keep the "security" in social security.