Saving Social Security

"This is a defining debate for today's leaders. Doing nothing is irresponsible and cowardly. It is in every American's interest to deal with this challenge."

SOCIAL SECURITY has been one of the most important and successful government programs in U.S. history. Almost every American family over the last 70 years has been touched by it. In signing the Social Security Act of 1935. Pres. Franklin Roosevelt declared. "None of the sums of money paid out to individuals in assistance or insurance will spell anything approaching abundance, but they will furnish that minimum necessity to keep a foothold and that is the kind of protection Americans want."

A fundamental point that Roosevelt made was that Social Security was not intended to replace the personal responsibility of individuals saving for and preparing for their own retirements. Social Security never was supposed to be a substitute for a retirement or savings plan. It is a safety net, an insurance contract that protects the most vulnerable in our society from falling into poverty. However, Social Security is actuarially unsustainable with its present commitments to future generations.

The baby boom generation has been the largest and most productive workforce in the history of man. The impending retirement of 77,000,000 boomers will impact every aspect of our economy, government, and society: Medicare and Medicaid; health care; the workforce; and the U.S.'s competitive position in a world filled with countries with workers much younger than ours.

The baby boom generation has a moral obligation to ensure that tomorrow's workers do not have to bear the increasingly heavy burden of providing the retirement resources for future generations. That is why Social Security must be reformed. It is a 1935 model trying to operate in a 21st century world. It soon will be incapable of delivering the promises and resources that it was built to provide.

Federal Reserve Board Chairman Alan Greenspan, speaking before the House Budget Committee, recently urged Congress to act on modernizing entitlement programs "sooner rather than later." He warned that, unless we act now, meeting the huge unfunded liabilities facing our entitlement programs will cause "severe" economic consequences for the nation. He is dead-on correct.

The U.S.'s largest entitlements--Social Security, Medicare, and Medicaid--are on a trajectory that cannot be sustained. For Fiscal Year 2006, the Congressional Budget Office maintains that 64% of the 2.5 trillion dollar budget will be obligated to mandatory spending, of which 42% is for these three programs. Those are tax dollars that are committed, money that cannot be used for anything else. Each year, the percentage of the budget obligated to funding entitlements grows larger and larger. The current unfunded liability for Social Security over the 75-year horizon the Social Security Administration uses to calculate benefits and expenditures is four trillion dollars. Medicare's unfunded liability is nearly 28 trillion dollars. This is in addition to America's current national debt of 7.5 trillion dollars.

Medicare costs are growing faster than any other government or entitlement program. As health care costs continue to rise. coupled with the growing number of retirees, it will put more and more pressure on the Federal budget and squeeze out money from important discretionary government programs like education, roads, parks, and housing. Last Congress. we passed an enormous expansion of Medicare. I voted against it. I thought it was bad policy and would add hundreds of billions of dollars to an already unsustainable program.

The Social Security system is not in crisis today, but there clearly is one on the horizon. In 2017, more money will be paid out of Social Security than comes in. In 2041. the Social Security Trust Fund will be insolvent. Beyond the next 75 years, there is a black hole of unfunded liability for future generations. The longer nothing is done, the more difficult it will be to protect Social Security and the promise our government made to future generations. This reality is daunting, but there is good news. The system can be fixed. It is within our power to preserve the social safety net of this nation. It has been done before. In 1983, Pres. Ronald Reagan worked with Congress to make tough choices and extend the life of Social Security.

Dealing with this problem now' means facing less dramatic and difficult choices down the road. The earlier we confront the reality of the coming crisis, the more options we will have to come up with a wise and sustainable course of action.

Reforming the system

Allow me now to lay out the main points of my Social Security Reform Bill. It would make changes to Social Security only for those Americans under the age of 45 by providing the option of voluntary personal accounts. This is good policy for the long-term viability of Social Security and for individuals. Government should be about empowering individuals and enhancing personal freedoms and their futures. Personal accounts help do this.