Wednesday, January 26, 2005

We Must Act Now to Save Social Security

The powerful, left-leaning AARP has suggested that the Social Security system would become solvent within the lifetimes of baby boomers if we simply discontinued Congress’ practice of using FICA revenues to fund current expenditures. This idea is absolutely preposterous, even using new math.

Our current Social Security debt is enormous. The fund trustees’ 2004 report shows that the present system deficit is $10.4 Trillion. Even if Congress immediately stopped using FICA revenues for current expenditures, we would have to dump $10.4 Trillion into the fund to make it solvent. That’s in today dollars, not down the road sometime.

No tax increase can accomplish this.

The suggestion that Social Security isn’t broken is valid only if you look at it through a limited 10-20-year window. When viewed over an unlimited timeframe, which considers the needs of our great grandchildren and beyond, the system is undeniably broken.

Each year that we delay fixing the system adds $600 Billion to its deficit. We must act now to stanch the flow of red ink. We made a choice many years ago to socialize retirement, but we have funded it like an enormous Ponzi pyramid scheme. We will soon be faced with scrapping the system entirely or making it work in reality. We do not have the luxury of doing nothing.

Privatization may not answer every problem, and it will certainly introduce some new ones, but it has the prospect of actually making the system solvent. Privatization is working on a smaller scale in several other countries. It creates private ownership of retirement funds rather than an IOU from the government. Our country must engage in healthy debate followed by decisive action to resolve our impending Social Security disaster now.

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