Few government programs have as much impact on Americans as Social Security. Millions of American seniors rely on Social Security for their retirement. Roughly half of American workers receive the majority of their retirement income from the program. For one in five seniors, it is all they receive. At the same time, the Social Security payroll tax is the largest single tax paid by most American families. In fact, nearly 80% of Americans pay more in Social Security taxes than they do in federal income taxes. Social Security is not only the largest program of the federal government (comprising 23% of the federal budget), it is the largest government program in the world.
Yet this important program is deeply troubled. In just 15 years, the program will begin to run a deficit, spending more on benefits than it takes in through taxes. Overall, Social Security has promised $25 trillion more in benefits than it can afford to pay. Consider this: An average American born in the 1970s will pay more than $200,000 (in today’s dollars) into the program over his or her lifetime, but by the time he or she retires the program will be insolvent.
At the same time, even if Social Security could pay every penny it has promised, the program offers poorer and poorer returns to succeeding generations of workers. A single worker paying the maximum Social Security tax and retiring in 2030 would have to live to be 110 just to get back what he or she paid into the program. Other aspects of the program create great inequities for low-wage workers, working women, and African Americans.
Given those problems and the importance of Social Security, American voters deserve a serious debate over the program’s future. Unfortunately they are not getting one. Instead, congressional candidates are busily engaging in dueling attack ads and a pointless debate over the meaning of the word “privatization.”
A couple of months ago, Democrats were caught in an errant congressional e‑mail discussing plans designed to “scare seniors” about proposals to allow workers to invest a portion of their payroll taxes through individual accounts. The e‑mail noted that the attacks were “not entirely factually accurate,” and “over the top,” but hoped they would go out anyway. Apparently, discovery of the plan did not have a deterrent effect, as Democratic candidates across the country have been attacking their Republican opponents for having “a secret plan to privatize Social Security and cut benefits.”
Of course, thoughtful criticism of individual accounts is entirely legitimate. But one might ask, What do Democrats propose instead? It was former President Bill Clinton who pointed out the limited range of options available to restore Social Security to solvency: a) raise taxes, b) cut benefits, or c) get a higher rate of return through investment in real capital assets. If Democrats are opposed to private investment, they have an obligation to tell us what taxes they would raise and what benefits they would cut.
And how have Republicans treated this debate? Scarcely better. Despite polls showing that two-thirds of American voters still support giving workers the choice of investing a part of their Social Security taxes, Republicans have for the most part responded by curling up in a fetal position and begging Democrats to stop saying nasty things about them.
If Republicans believe in the benefits of individual accounts, they should say so. Ducking, weaving, and playing word games is both bad politics and bad policy. You cannot reform a program as big as Social Security without talking to the American people about what you are going to do.
I believe that if the American voters are given a fair discussion of the issue, they will overwhelmingly choose to implement individual accounts. That is what the political process is for — to lay out the pros and cons of an issue and let the American people decide. It is time for candidates to treat voters like adults and give them the debate they deserve.
