Editorials
get?, How dotty can we
How dotty can we get? Social Security works. Most retired Americans possess significantly greater material resources than did their parents or grandparents. Social Security, private pensions,...
...Instead, in an era intent on unraveling the social safety net, Social Security has come under attack, though not as directly as welfare...
...Will there be enough working Americans to fund their benefits...
...That future crisis lies with the retirement of the "baby boom" generation...
...Only the aura of today's extended bull market has secured this scheme a serious hearing...
...Benefiting along with them would be the ideologues who believe that the invisible hand is morally superior to the generational reciprocity that allows us to support our parents and other seniors in their old age, and our children to support us and others in our old age...
...In fact, the Social Security Trust Fund is currently over-funded: the payroll taxes of today's working Americans fund the benefits of the retired, just as those now retired once paid the benefits of those who preceded them...
...and mandatory investment accounts in which a portion of an individual's payroll tax is allotted to the care of Wall Street...
...Or will they bankrupt the system...
...Direct investment puts the government in the business of investment banking and requires it to raise money elsewhere for its own bonds...
...Treasury Bonds...
...What we need is to be more generous and imaginative in insuring Social Security's solvency and security, and more vigorous in shoring up practices of social reciprocity between the generations and between rich and poor...
...Perhaps this conservative investment strategy, more than a future funding crisis, whets the appetites of those eager to change the current system...
...The anomaly of the baby-boomers does not require that we foolishly abandon a system that works...
...Mirroring our larger political stalemate, the committee failed to reach any consensus and instead offered a number of options focused on putting Social Security funds in the stock market...
...This is social justice and we should be proud of it...
...Among the proposals are: direct government investment of up to 40 percent of the trust fund...
...But pensioners are a more formidable lot than poor women and their children, and the Social Security "crisis" lies in the future...
...But each adjustment would rile some constituency, and President Bill Clinton and the Congress lack the courage to begin...
...Enter the report of the Advisory Council on Social Security...
...One or more of these adjustments would solve the baby-boomer shortfall, especially if made now...
...As the potential crisis has unfolded, some modest adjustments have been proposed to keep the system solvent: instead of tying the Social Security cost-of-living adjustment to the consumer price index, tie it to the actual rate of inflation (1 percent lower...
...Social Security, private pensions, savings, and their own growing numbers enable seniors to lead active lives of dignity and independence...
...gradually raise the normal retirement age...
...Today's workers pay more than retirees need and the surplus is invested in U.S...
...In 2010, the first boomers will turn sixty-five, and over the following two decades vast numbers will retire and claim Social Security...
...Retirees with individual accounts run the risk of needing their funds when the market is down...
...or raise the $65,000 cap on wages subject to Social Security taxes (see John Buell's analysis, page 8...
...The chief beneficiaries of this scheme would not be the retirees or Social Security but brokers and investment counselors who collect their percentage of the investments, no matter what the market does...
...By investing in stocks, which historically do better than bonds, the council argues, Social Security can be saved...
...increase the Social Security payroll tax (which would be hard on low-wage workers...
Vol. 124 • February 1997 • No. 3
