Wednesday, February 02, 2005

The truth about social security!

As a United Methodist and being part of an aging congregation and denomination, Social Security is a huge issue. I'm sick of all of the misinformation floating around. The debate makes me think of a scenario like this:

A person is building a house and their hammer breaks. A democrat shows up and tells them that their hammer isn't broken. George Bush shows up and offers them a screwdriver.

The Democrats (for the most part) want to ignore that any problem exists and the solution proposed by Republicans doesn't actually fix the problem - it just costs us a ton of money.

Here's the truth - in about 40-50 years, assuming NOTHING in the current social security law changes, Social Security will only be able to pay 70-80% of projected benefits. Clearly a problem, but Bush describes Social Security in that scenario as "bankrupt." Actually many economists argue that the problem can be alleviated through modest tax increases and benefit reductions.

The issue is not the lack of privatization. The problem is a result of demographics. Social Security functions as a "pay as you go" system. The Social Security taxes we pay today aren't put away in some account with our name on it - they go to pay current retirees, for the most part. Right now there are many more workers in the system than retirees. Over the next 50 years that is slowing going to shift and there will be fewer workers paying into the system while there are more retirees. Private accounts are not going to solve a problem that is resulting from a fundamental shift in the demographic makeup of our society.

Social Security was never intended as an investment mechanism for moderate to high-income Americans. It is a safety net. Private accounts aren't going to help the working poor - they'll primarily benefit the middle and upper economic classes. Meanwhile, the safety net will be broken.

Bush needs to be honest about what he's doing and tell the American people that his plan won't save Social Security. The Democrats need to acknowledge that there is a problem. Everyone needs to start discussing this in terms of social justice and realize the system isn't primarily for those of us that have employer-provided pensions and IRAs.