It’s election time, so we can look forward to another round of political ads from candidates attacking their opponents for having dared to suggest reforming the Social Security system.
The ads will be full of attempts to frighten seniors, misleadingly suggesting that their Social Security checks will be taken away. The targets of these attacks will counter with ads explaining how much they love their mothers and promising never to even consider making any changes to the program.
Unfortunately, what will be missing will be any discussion of how to actually fix the soon-to-be-bankrupt program.
The facts are simple. Social Security will begin running a deficit in just 11 years. Of course, in theory, the Social Security Trust Fund will pay benefits until 2040. That’s not much comfort to today’s 33-year-olds who will face an automatic 26% cut in benefits unless the program is reformed before they retire.
But even that is misleading, because the Trust Fund contains no actual assets. The government bonds it holds are simply a form of IOU, a measure of how much money the government owes the system. It says nothing about where the government will get the money to pay back those IOUs.
Overall, the system’s unfunded liabilities — the amount it has promised more than it can actually pay — now totals $15.3 trillion. Yes, that’s trillion with a T. Setting aside some technical changes in how future obligations are calculated, that’s $550 billion worse than last year. In other words, because Congress failed to act last year, our children and grandchildren were handed a bill for another $550 billion.
Once Social Security reform was a bipartisan issue. Democrats like former Senators Bob Kerrey and Daniel Patrick Moynihan were outspoken in warning about the program’s looming insolvency and calling for innovative approaches to fixing it. The Democratic Leadership Council and its think tank arm, the Progressive Policy Institute explored ideas, including personal accounts. Congressmen like Charlie Stenholm reached across the aisle in search of compromise. Even President Clinton led a national debate to “Save Social Security First.”
But ever since President Bush called for reforming the nation’s troubled retirement program, congressional Democrats have had just one answer: No. No to personal accounts. No to changes in benefits. No to offering a reform plan of their own. No to any discussion or negotiation.
Not that Republicans have been profiles in courage. Having been beaten up for touching “the third rail of American politics,” they spend most of their time scurrying for cover, hiding from positions that they know are right. The result has been a choice between Democratic obstructionism and Republican cowardice.
The options available to fix Social Security are limited. In fact, it was President Clinton who pointed out the available options: raise taxes, cut benefits, or invest privately. If one opposes personal accounts, then there is an obligation to tell us exactly which benefits should be cut or which taxes should be raised.
Doing nothing is not an option. Social Security’s problems are not going to go away. The gap between its promises and what it can pay gets bigger with each passing year. The rate of return for younger workers continues to decline. And, even more important, workers still have no ownership of their money. Their retirement benefits remain at the mercy of 535 politicians in Washington.
Almost everyone agrees that Social Security reform is not going to happen this year. This is an election year after all. But an election year also means that the people can have their say. No candidate, whether Republican or Democrat, should be able to avoid telling us exactly where they stand on Social Security. Do they favor raising taxes? Do they want to cut benefits? Are they willing to give workers more choice, ownership and control over their retirement funds?
It’s time for voters to ask the questions. And it’s time for candidates to give a straight answer.