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In 1996 Senator Richard Bryan, DÐNev. told the Incline Village Rotary Club that Social Security was broken and needed immediate fixing. Several years later Sen. John Breaux, D-La. co-chaired a bipartisan committee formed to study Social Security and concluded that the system was headed for insolvency.
A few years later Sen. Daniel Patrick Moynihan, DÐN.Y. chaired still another Social Security study committee which concluded that the system could not survive.
Despite all the studies and warnings, lawmakers just hoped the problem would go away because the conventional cures involve real pain ... raising payroll taxes, cutting benefits and/or increasing the retirement age. They ignored the issue, that is, until newly reelected President George Bush announced a plan built around the Moynihan recommendations to save Social Security. Then, in an abrupt about face, Sen. Harry Reid, D-Nev. claimed "There is no Social Security crisis." Reid must have been dropped on his head as a baby.
A present assessment of whether Social Security will become insolvent in 2018 or 2042 or some other year depends on what long term economic forecast is used so there really isn't an accurate answer. Spin-free truth on this subject appears to be available from Washington D.C.'s Concord Coalition. This group was founded by former Commerce Secretary Pete Peterson, former Sens. Warren Rudman. R-N.H. and Sam Nunn, D-Ga., former Federal Reserve Chairman Paul Volker and Clinton Administration Treasury Secretary Bob Rubin to be a "nonpartisan, grassroots organization advocating fiscal responsibility while ensuring Social Security, Medicare and Medicaid are secure for all generations."
The coalition has identified four key problems with Social Security: 1. increasing retirees and a decreasing work force make the current pay as you go benefit structure unsustainable; 2. workers will receive increasingly lower returns on their contributions; 3. Social Security discourages private savings when we should be encouraging it; and 4. public confidence in the system is declining. Concord Coalition proposes a couple of fixes. First, change the cost of living index. Since 1977 Social Security benefits have been indexed to wages while retirees are more affected by increases in prices. By indexing changes in benefits to prices Concord Coalition calculates a savings of 30 percent. Second, mandate personal retirement accounts for all active workers equal to an additional 2 percent to 3 percent of wages to be invested with qualified trustees in broad based index mutual funds.
Corporations have taken a more drastic approach. They recognized years ago they cannot continue to offer employees wage-indexed retirement plans because as life spans increase the costs will eventually overwhelm corporate revenues. Businesses have therefore been phasing out defined benefit plans and substituting pay-as-you-go retirement plans (401Ks and IRAs) where employees own their own accounts and direct their investments. Recently, Nevada Gov. Kenny Guinn and California Gov. Arnold Schwarzenegger both asked their legislatures to curtail defined retirement benefits for state employees.
George Bush's Social Security proposal splits the difference between the Concord Coalition's and that of corporate America (and an increasing number of states). He would not increase payroll taxes to establish private accounts but would allow younger workers to voluntarily split their payroll tax between the traditional system and a 401K type account, gradually converting Social Security to a pay-as-you-go, beneficiary-owned system instead of the present Robin Hood wealth redistribution process with its fatal mathematical defect.
As a "movement" conservative, Bush is dedicated to an ownership society. His supporters and opponents alike should recognize that the president is determined to turn the country away from collectivist schemes and back towards free market solutions to our nation's problems.
Jim Clark is president of the Incline Village/Crystal Bay Republican Advocates and a vice chair of the Washoe County Republican Party.
A few years later Sen. Daniel Patrick Moynihan, DÐN.Y. chaired still another Social Security study committee which concluded that the system could not survive.
Despite all the studies and warnings, lawmakers just hoped the problem would go away because the conventional cures involve real pain ... raising payroll taxes, cutting benefits and/or increasing the retirement age. They ignored the issue, that is, until newly reelected President George Bush announced a plan built around the Moynihan recommendations to save Social Security. Then, in an abrupt about face, Sen. Harry Reid, D-Nev. claimed "There is no Social Security crisis." Reid must have been dropped on his head as a baby.
A present assessment of whether Social Security will become insolvent in 2018 or 2042 or some other year depends on what long term economic forecast is used so there really isn't an accurate answer. Spin-free truth on this subject appears to be available from Washington D.C.'s Concord Coalition. This group was founded by former Commerce Secretary Pete Peterson, former Sens. Warren Rudman. R-N.H. and Sam Nunn, D-Ga., former Federal Reserve Chairman Paul Volker and Clinton Administration Treasury Secretary Bob Rubin to be a "nonpartisan, grassroots organization advocating fiscal responsibility while ensuring Social Security, Medicare and Medicaid are secure for all generations."
The coalition has identified four key problems with Social Security: 1. increasing retirees and a decreasing work force make the current pay as you go benefit structure unsustainable; 2. workers will receive increasingly lower returns on their contributions; 3. Social Security discourages private savings when we should be encouraging it; and 4. public confidence in the system is declining. Concord Coalition proposes a couple of fixes. First, change the cost of living index. Since 1977 Social Security benefits have been indexed to wages while retirees are more affected by increases in prices. By indexing changes in benefits to prices Concord Coalition calculates a savings of 30 percent. Second, mandate personal retirement accounts for all active workers equal to an additional 2 percent to 3 percent of wages to be invested with qualified trustees in broad based index mutual funds.
Corporations have taken a more drastic approach. They recognized years ago they cannot continue to offer employees wage-indexed retirement plans because as life spans increase the costs will eventually overwhelm corporate revenues. Businesses have therefore been phasing out defined benefit plans and substituting pay-as-you-go retirement plans (401Ks and IRAs) where employees own their own accounts and direct their investments. Recently, Nevada Gov. Kenny Guinn and California Gov. Arnold Schwarzenegger both asked their legislatures to curtail defined retirement benefits for state employees.
George Bush's Social Security proposal splits the difference between the Concord Coalition's and that of corporate America (and an increasing number of states). He would not increase payroll taxes to establish private accounts but would allow younger workers to voluntarily split their payroll tax between the traditional system and a 401K type account, gradually converting Social Security to a pay-as-you-go, beneficiary-owned system instead of the present Robin Hood wealth redistribution process with its fatal mathematical defect.
As a "movement" conservative, Bush is dedicated to an ownership society. His supporters and opponents alike should recognize that the president is determined to turn the country away from collectivist schemes and back towards free market solutions to our nation's problems.
Jim Clark is president of the Incline Village/Crystal Bay Republican Advocates and a vice chair of the Washoe County Republican Party.
