Are We Willing?

On August 18th, Michael Tanner of the Cato Institute wrote an outstanding article regarding the need for true reform in Social Security and the “cowardice” of some Republicans not to embrace some of the reforms detailed by Congressman Paul Ryan http://bit.ly/cCEdbH.

Republicans are missing out on an historic opportunity to gain a mandate for true and lasting reforms to Social Security. We must lead on this issue and be willing to engage in the arena of ideas. Reform must happen. There is broad agreement that the current Social Security system is unsustainable. The question is whose ideas will win out?

Ronald Reagan taught all conservatives that our ideas are more popular than liberalism and progressivism. The problem with conservatives, pre-Reagan, was an inability to effectively articulate the ideals of conservatism and draw the pure analogy between conservatism and the first principles of our country. Republican candidates should be willing to lead on this issue, stand in the arena, and join the fight.

Social Security is a promise made to generations of Americans and we are in danger of being unable to keep that promise. According to the Congressional Budget Office, in 2010 Social Security will begin paying out more in benefits than it brings in through payroll taxes. Furthermore, although the Social Security Trust Fund is supposed to keep Social Security solvent through 2041, the default fallback for Democrats, the sad truth is there is no actual money in the Social Security Trust Fund. Instead, Congress has spent the money and replaced it with IOU’s (http://bit.ly/192TT7). Finally, today’s worker has a promise of less than a 2 percent return on the money paid out to Social Security. That is less than core inflation and it has to change if we are seriously interested in retirement security for all Americans.

Real reform is needed in Social Security that:

1)  Keeps the promise of Social Security that was made to the current generation of Americans;
2)  Creates a system that will maintain the solvency of Social Security without tax hikes;
3)  Establishes an “inheritable” account that non-users can leave to heirs;
4)  Creates a system that is fair to minorities (particularly Black Americans) whose life expectancy is below the national average; and
5)  Gives workers ownership over their savings.

There has been great work done on the issue of Social Security Reform by Congressman Paul Ryan (http://bit.ly/c5AqWf), the Cato Institute (www.cato.org), the Heritage Foundation (www.heritage.org) and The Social Security Reform Center (www.socialsecurityreform.org), among others. I have incorporated many of their ideas into this plan.

The Plan

1) Allow younger workers to invest a portion of their Social Security taxes in guaranteed, inheritable, personal accounts;
2) Set aside a portion of earnings on private accounts for deposit in the Social Security Trust fund for the first 15 years of the private account;
3) Maintain the current system of Social Security for workers 55 and older and those near retirement;
4) Allow workers 59 ½ and over the choice to opt out of Social Security and take a lump sum payment;
5) Lift the 401K and/or IRA limits for those workers who chose to opt out of Social Security and eliminate required minimum distributions;
6)  Discontinue the use of wage indexing to determine the amount of benefits and replace it with progressive price indexing;
7) Establish legislation that puts the Social Security Trust Fund off limits for any purpose other than Social Security spending; and
8) Implement age indexing for Social Security benefits that correspond to current life expectancy tables.

We have a choice. We can continue to put off the problem of Social Security insolvency, or we can make hard choices. In order to meet future Social Security obligations under our current system, we will either have to raise taxes by 30% or cut benefits by 24%. Neither of those is a positive solution; we can do better.

The goal of this plan is to not only bring Social Security into the 21st Century and keep it solvent, but also to provide Americans with real choices in retirement. The current system will not keep up with the growing number of baby boomers who are reaching retirement. Something needs to be done.

These are not radical ideas by any stretch.  They speak to the yearning of all Americans to be free of the yoke of government control.  We need leaders who are not only able to develop creative and workable solutions, but who are also willing to implement good ideas. Doing nothing and hoping for the best is not an option.