Social Security Problem Perplexes Candidates
The Social Security Board of Trustee’s released its 2008 Annual Report on the finances of the Social Security Trust Funds on Tuesday. The report reiterated the rapidly deteriorating financial status of the Social Security accounts, stating that the time in which the benefits payouts will exceed the revenues of the system will be in 2017. In a perfectly timed speech, Hillary Clinton unveiled to the constituents of Pennsylvania her campaigns plans to reform Social Security for the future. Immediately questioning her own plan, she indicated to the Philadelphia Inquirer that “she was not altogether sure how her proposals would work in practice…but are worth pursuing.” Translated to non-rhetorical English, that means she not quite sure what she’s talking about, but she’s not alone.
The Report released Tuesday pointed out that when benefits payouts exceed revenue, Social Security will have to dig into its assets the fund has accumulated over the years to fund the over-extended benefits. The Report also noted that once Social Security goes upside down, it can only continue to fund the benefits until 2041. This is the equivalent of digging into your savings account just to maintain your current level of spending; it just can’t work that way. What’s even scarier is that all of the assets in the Social Security account have been borrowed against already by other departments of the ever-spending Government. That being the case, if the Government does not somehow begin to pay back the money it owes to the Social Security Funds, then current benefits will HAVE to be reduced by 2017 because there will be no assets for them to fall back on. With nearly 80 million baby boomers planning to begin drawing benefits in the coming years, there is no way possible to reduce benefit spending.
All candidates agree that a massive Social Security Reform is inevitable. The major difference is, the Democrats think the Government can fix it, while the Republicans feel it is better off partly privatized and less reliant on the Government. Where all the front-running candidates falter is the fact that they have all been in Senate for at least the last 2 years, with McCain and Hillary being in the Senate for a minimum of 6 years, and neither of them have yet to do anything about the Social Security problem.
In a quick voting record check thanks to Project Vote Smart, it is easy to see how the candidates have stood on the issue of Social Security in the past. Clinton and Obama have voted a resounding “yes” on every Social Security bill or amendment that came to their desk, all of which expanded benefits spending and entitlements, and none of which helped secure the financial future of the system. McCain voted “yes” on allowing the Secretary of Health and Human Services the ability to negotiate cheaper drug prices for Medicare/Medicaid beneficiaries, but other than that he voted “no” on all entitlement expansions and benefits increases. Ron Paul on the other hand voted on numerous occasions to protect the surpluses of the Social Security account against government borrowing, and also voted to slowly reduce entitlement spending. He has also proposed legislation to reduce Social Security waste by limiting the benefits to only legal citizens of the country.
So the obvious line is drawn: the Democrats don’t want to change anything except increasing Americans reliance on the government’s wallet, and the Republicans realize the system doesn’t need to be any more extended than it already is. McCain and Ron Paul have both suggested that partly privatizing the system is the answer.
The major problems the new Administration will face are: continuing to fund the current Social Security entitlements, depleting waste within the system, and providing solvency for future beneficiaries. Privatization is the only way to make sure that the system does not have to constantly increase its benefits payouts. The return on investment for the proposed entitlements for current workers (those not pulling benefits), depending on ones age, is around 1-2%. Younger workers are facing a 0% return on investment, and some are even facing a negative return on investment. Not a very good entitlement program. A savings account with a measly 3% interest rate would return more benefits than Social Security. The only way to solve this is to allow those not currently drawing off Social Security benefits to opt out of the system and create private accounts with a higher rate of return. However, this will deplete some of the revenue of the system, and it would need to be made up somewhere to maintain current entitlements the system is already committed to.
No doubt, the next President and Congress will have a large issue on their hands. Social Security reform has been the elephant in the room everyone is ignoring. Jim Nussle, director of the White House Office of Management and Budget, was quoted Tuesday by the Baltimore Sun saying, “It is disappointing that congressional Democrats have once again chosen to ignore entitlements in their budgets. Inaction is irresponsible.” At least Hillary, McCain and Paul agree that it a change needs to be made to the Social Security System. Obama, not surprisingly, didn’t address the issue today in a discussion on the issue. He instead stated that we needed to increase the reach and affordability of Medicare (which is also in dire straits) and provide universal health care to everyone, completely avoiding the topic of Social Security reform.
Comment by tim, minnesota on 26 March 2008:
Thanks for reporting on Ron Paul in your story. Good job of complete journalistic reporting.
Comment by Celeste on 26 March 2008:
Let the one person who understands it handle it.
Ron Paul 08.
Comment by Web Smith on 26 March 2008:
Just as with the illegal immigration problem, it’s a case of denial. These candidates, having been in government for decades, are the ones who intentionally failed to enforce immigration laws. Now they say they are broken while they attempt to run various end arounds and make the illegal immigrants disappear by granting them amnesty disguised as reform. They are also the same people who have spent Social Security trust funds, or just given them away, replacing them with government bonds that don’t even keep pace with inflation.
Being faced with the concept of having broken the law, robbed the bank, spent all the money and being called on to somehow make amends, is very perplexing. The money was/is not theirs to give but they continue to give it. Their denial was most recently and graphically demonstrated by giving the Egyptians $23,000,000 to build a border fence.
Comment by Cindy on 26 March 2008:
Once again, the only candidate truly addressing the timely issues, is Ron Paul. The media needs to lift the “ban” on Ron Paul. If America is ever to recover, it will take more than a pretty face or smooth talk. Come on America, this is your chance to support a candidate that is for the people.
Comment by spinnikerca on 26 March 2008:
Thanks for the article. It makes the situation very clear.
The ‘other’ answer is to elect Ron Paul for President, GOP or third party, and let him get to work fixing things, already.
Comment by Sarge on 27 March 2008:
You people are all nuts! Our government has total control over EVERYTHING in this country…FREE??? I think not. I am one of those people who have worked since the age of 16, contributing to the social security system with little or no opportunity to recoup any of it (the way things look now) If all that money had been put into savings accounts or cd’s I wouldnt have a thing to worry about..as it stands I may barely make ends meet when I retire (If that ever happens) and the possibility of that isnt very likely until the age of maybe 90…lets hope and pray I stay healthy enough to see that happen. In the meantime I scrape as much as possible into an IRA that may at least help a little…and that I have TOTAL control over.
Comment by American Patriot on 10 May 2008:
American CITIZENS need to WAKE UP! STOP voting for the Lesser of two evils, stop promoting MORE failed policies and FAILED/FLAWED candidates! Some voters are only interested in their political party winning the White House, NOT necessarily the BEST candidate!
The GOP is FLAWED from the top down, i.e. the Nevada GOP closing down the delegate nomination when they discovered that Ron Paul delegates would win the majority! WHAT CRAP! Our government is CORRUPT from the top on down to the state and local levels where the political parties are concerned!
WE WANT A REAL CHOICE, not the THREE STOOGES currently put forward by their parties; they are ALL backed and supported by Rockefeller’s One World Government think tank, Council on Foreign Relations!
America is in CRITICAL CONDITION! We NEED a DOCTOR, NOT ANOTHER CFR owned candidate!
Dr. RON PAUL is our ONLY REAL CHOICE for the FREEDOMS and LIBERTIES our armed forces are fighting and dying for right now! That is why they support him OVERWHELMINGLY over the 3 Stooges being shoved down our collective throats! Why is the GOP so afraid of one man?
Comment by Don on 11 May 2008:
I too have been “paying into the system” since age 16. Social security is an entitlement program. Go back to the 1937 Supreme Court decision and read it. There are *no* individual accounts, like the government wants you to believe. Collection of social security taxes is simply an exercise of the general taxation powers of Congress and the money can be spent for any constitutionally authorized purpose. Uncle Skunk wants you to believe that you have an individual social security “account”, like some demand-deposit account. This lie has been spread for over 60 years, but it just ain’t so. Read Helvering :vs: Davis.
http://www.law.cornell.edu/socsec/course/readings/301us619.htm
Monies collected under the socialist insecurity taxes are not earmarked *in any way*. (The court’s words, not mine.) Please educate yourselves about this massive and continuing theft. Social Security has no Trust Fund. It’s just a bunch of IOU’s that get rolled over into more IOU’s.
Comment by Mark Fishman on 20 July 2008:
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FOR IMMEDIATE RELEASE
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The additional revenue solves Social Security’s long term funding problem, creates and fully funds National Health and expands public education to include college, free of charge. It does all this and more while running a budget surplus.
Fishman’s Framework for Tax Reform is also the most comprehensive economic growth and stimulus plan ever proposed. The tax plan itself is only 17 pages long and comes with 40 pages of commentary, specific tax revenue estimates and five year budget projections. Additionally, there are seven appendices that prove that his tax reform plan lowers taxes and funds all government programs while running a budget surplus.
Fishman’s Framework for Tax Reform is now available to read free of charge at: http://www.serioustaxreform.com
Contact: Mark Fishman
mark@serioustaxreform.com