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A modest suggestion
By Robert S. Sargent Jr.
Two things related to Social Security happened last week: The Social Security Administration (SSA) released its annual "A Summary of the 2003 Annual Reports," and Daniel Moynihan died.
The report, which can be downloaded at their website: www.ssa.gov (Download the report in PDF format here), begins with this gloomy assessment: "The fundamentals of the financial status of Social Security and Medicare under the intermediate economic and demographic assumptions remain highly problematic. (Current surpluses) will give way to rapidly rising annual deficits soon after the baby-boom generation begins to retire in about 2010 In the long run, these deficits are projected to grow at unsustainable rates." Detailing future projections, the report shows clearly the problems the country is in for. It concludes, "Though highly challenging, the financial difficulties facing Social Security and Medicare are not insurmountable. But we must take action to address them in a timely manner. The sooner they are addressed the more varied and less disruptive can be their solutions." Enter Senator Moynihan.
On May 2, 2001, President Bush announced the formation of a Social Security Commission that was co-chaired by Senator Moynihan and Richard Parsons. The Commission was made up of an equal number of Democrats and Republicans. Later that year, they issued their report that offered three possible scenarios to reform the system, and they warned: "The Commission requests that any criticism of (reform) proposals be accompanied by constructive alternatives." Unfortunately, there was no national dialogue, and there were no "constructive alternatives." Regarding the Commission, here is a typical headline (from CNN): "Congressional Democrats criticize Social Security Commission." The date of this headline? May 2, 2001. The Commission hadn't even met yet!
Readers of ESR know the political problems in dealing with Social Security. It's assumed that seniors want to keep the status quo, and seniors vote more than any other age group, so politicians don't like to mess with the system for fear of upsetting the recipients. I pretty much agree that seniors want to keep the status quo, and that a great many seniors believe they are only getting back what they put in. I also believe that if they were taught the truth, they would change their agenda.
So much of the effort to educate the public about Social Security comes across as boring mumbo jumbo. Explanations of the inner workings of the Administration, statistics about the coming crisis, and so forth don't deal with the "fact that I'm just getting back what I put in." Which, of course, is a lie. According to Robert Samuelson, in 1995, a worker who lived to the age of 65 had a life expectancy of 15 to 19 years (today, it would be even longer): "The worker's payroll taxes, if invested with interest, would pay for about three years of benefits." That's 12 to 16 years of a free check, paid for by workers who are probably not as well off as the retiree (this doesn't even address the imbalance in Medicare benefits). I believe that those seniors who realize the truth of our entitlement programs are more willing to accept reforms, and I have a modest suggestion for helping to change our retiree's perception of these programs.
Every year, the SSA sends everybody a "Social Security Statement" that gives a history of your work, and the amount you contributed to FICA. From this, the statement projects how much your monthly payment will be when you retire. In this statement should also be a projection, based on averages, of how long you will live (I believe I would begin these projections for people nearing retirement). Also, based on this figure should be a projection of how much money you will receive over your lifetime. Under this total should be a figure that represents the amount of money you have contributed, plus interest, and under that should be a total. This final total would represent how much the average person your age and with your income will receive over and above what you contributed. It doesn't have to be a "SEE HOW SELFISH YOU ARE!" statement, but just a projection. I think once people got used to seeing these statements, it could be used as a valuable tool to help convince people of the necessity of reform. I think Senator Moynihan would approve.
Robert S. Sargent, Jr. can be reached at email@example.com.
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