Retirement will be staring a current UB senior in the face in 2042, when President Bush predicts Social Security will run out of money. Unfortunately Bush's prognosis is skewed and his plan for fixing the program is destructive. We agree with the President that changes must be made to ensure Social Security's long-term viability. But the Bush plan kills Social Security instead of fixing it.
President Bush says he plans to save Social Security by privatizing parts of the savings accounts, a plan the Associated Press reports would lead to a 40 percent cut in guaranteed benefits - the guarantee being what Social Security is all about. Furthermore, U.S. Comptroller General David M. Walker said the creation of private accounts "would do nothing in itself to eliminate the long-term gap" between money coming into Social Security and money being paid out in the form of benefits.
Even this gap has been greatly exaggerated. The Social Security program, in taking in money from payroll taxes, will continue to take in more money than it pays out through 2018, according to President Bush himself. After then the system would begin to draw off the $3.5 trillion surplus it had accumulated, assuming the government has not borrowed from it to pay for other programs like, say, an ongoing war in Iraq. That surplus would keep Social Security afloat through either 2042 or 2052, depending on which predictions you take into account. Small changes made now, without creating private accounts, can keep the system going much longer.
The idea of forcing private citizens to invest money into private accounts of mutual funds and bonds defeats the original intent of Social Security, which was created in the wake of a major stock market crash to provide a stable minimum of support for retirees regardless of the fluctuations of the stock market.
The American Association of Retired Persons says Social Security can exist as is if certain modifications are made. In 1983 the government set a cap on income that can be taxed for Social Security at a level that covered 90 percent of all wages. Now, that level is at $90,000, a level that covers only 84 percent of wages. Raising that level to about $140,000 would cover about a third of the required funds needed for benefits for 75 years.
Groups that advocate for the interests of older Americans also say President Bush has compounded his own crisis, stating that if the 2001 and 2003 tax cuts are made permanent, the Social Security shortfall will multiply five times over the same 75-year period Bush says the current crisis will take us. In other words, the crisis Bush has advertised is partly of his own making. And the President has not been honest about the method behind his economic prognoses. Bush has used a different, and far more pessimistic, set of forecasts to predict big economic returns from his tax cuts. If Bush applies the numbers he used to justify his tax cuts to prognoses on the future of Social Security, they show the system remaining solvent forever.
Two years into the Iraq war, Bush has come up with yet another crisis to scare the bejeezus out of Americans, while wages drop, good jobs are lost, and the war on terror makes us less safe. If Bush gets his way on the Social Security issue, he will create a crisis where there was none - just like he did in Iraq.
