(HOST) Commentator Dick Mallary says that the Social Security debate isn’t about just one issue.
(MALLARY) President Bush seems to have everyone thinking and talking about our Social Security system these days. That’s probably a good idea, since it has been easy and safe for politicians to avoid any discussion of its ultimate soundness over the years. Unfortunately, the President is not contributing much to a true public understanding of the issue. Also unfortunately, many of those in the opposing camp are equally guilty of misunderstanding the issue or of seeking deliberately to confuse the public.
It is important to understand that, in the current debate, there are two distinct and separate issues. First, is the soundness of the existing Social Security system. Can it deliver the promised benefits to present and future retirees? Second, and quite independent, is whether today’s workers should increase their private savings to enhance their income at retirement.
With regard to the first issue, there is little dispute that the present Social Security system is underfunded. It is essentially a pay-as-you- go system within which today’s workers pay for the support of today’s retirees. There will be smaller numbers of workers in the future to pay for the benefits of larger numbers of future retirees. Reserves in the so-called Social Security Trust Fund will be exhausted by around 2042. To assure continued benefits, we will need to do some or all of the following: change the way future benefits are calculated, increase the retirement age or increase tax revenues to the fund. We are certainly not facing an immediate crisis, but the longer we wait to address the problem, the more difficult a solution will be.
The President is right to call attention to the problem and to call for change now. The President misleads and confuses, however, when he implies that private savings accounts, funded by some of the current revenues to the Social Security system, are a solution. In fact, such a reduction in the revenue to the Social Security Fund would further jeopardize guaranteed benefits to future retirees.
There is little question that the American public is spending too much and saving too little. The U. S. savings rate is now almost down to zero and many Americans have no savings or assets to supplement their Social Security retirement income. It would be highly beneficial to encourage today’s workers to save more, but not at the expense of maintaining the fundamental soundness of the minimal retirement income guaranteed by Social Security.
This is Dick Mallary in Brookfield.
Dick Mallary has served extensively in state government and is a former U. S. congressman from Vermont. He spoke from our studio in Norwich.