Many young Americans do not believe that Social Security will be there for them when they are ready to retire. Under the president's proposal to privatize Social Security, younger Americans' fears could come true.
Private accounts do nothing to maintain the solvency of Social Security. Instead, the president's proposal would cut guaranteed benefits by more than 40 percent for future retirees-those who are working and paying into the system now. For young Americans this would mean cutting their benefits by $152,000 over their lifetime. In order to fund private accounts, the government would need to borrow $5 trillion over the next 20 years. As a result, our nation's debt would rise for at least the next 60 years, and younger Americans would get stuck with the burden of paying back this debt.
As Congress considers changes to Social Security, it is important to understand the impact that the program has had on our country. Social Security has been a stable source of income for millions of senior citizens, as well as millions of disabled Americans and surviving spouses and children. In 1935, when Social Security became law, an overwhelming majority of senior citizens were living below the poverty line. Now, nearly three generations later, only five to 10 percent of seniors are living in poverty. While Social Security was never intended to be the sole income in retirement, even today Social Security is the only source of income for 20 percent of the nearly 50 million recipients who never could earn enough to set aside savings to supplement Social Security. And, for nearly two of every three recipients, Social Security provides more than half of their retirement income.
Social Security has never been a day late in providing benefits. But the president claims that it faces an immediate crisis, noting in his State of the Union speech that "in 2018, Social Security will be paying out more than it takes in." However, in 2019, the Social Security Trust Fund will still be growing and will have enough in its reserve to continue to pay promised benefits to all retirees up until at least 2052, according to the non-partisan Congressional Budget Office. That is 47 years away.
By contrast, the last time Social Security was reformed, in 1983, we had already experienced eight consecutive years when payments into the Social Security Trust Fund were less than the total of monthly benefit checks to retirees. In 1983, President Reagan and the Congress hammered out a series of bipartisan changes that will keep Social Security fully solvent and able to pay all promised benefits up to 2052, protecting the guaranteed income for retirees for close to 70 years.
Despite the president's claim that Social Security faces a crisis, Social Security's fiscal health is remarkably sound. Many options exist to strengthen Social Security that would not impose devastating benefit cuts on American workers who are paying into the system today. The president has manufactured a false crisis, but privatization would create a real crisis and younger workers would be forced to pay the price.
This quote by Peter Orszag from the Brooking Institute sums up the situation perfectly: "Social Security is like a car with a flat tire. We should fix the tire, not borrow money to buy a new car."
To learn more about how to preserve Social Security, please attend "Protecting the Promise," a campus forum at 8 p.m. on Tuesday in Johnson Chapel.
The Congressman can be reached at http://www.house.gov/writerep