Keep the security in Social Security By Tim Johnson Nearly one out of every five South Dakotans depends on Social Security to make ends meet in their golden years. These are our mothers and fathers, our aunts and uncles, our neighbors and dear friends.
Forty-seven million Americans count on this program, and for two-thirds of seniors, it is their primary source of income.
The central component of the program has always been that seniors would know exactly how much money they could expect every month. There would be no guessing game or fear of market crashes. Social Security was to remain a secure, guaranteed benefit.
So, of course, recent plans discussed by the White House to reform and privatize the program have caused concern because of the severe cuts expected to the benefits our seniors have been promised.
While the Social Security Trust Fund has a very long-term problem, it is not an immediate risk. According to the Congressional Budget Office, the Trust Fund remains solvent for nearly half a century until 2052 and even after that, all recipients would continue to receive roughly 80 percent of today�s Social Security buying power. This means we must work together on the best plan possible for future beneficiaries and not rubber-stamp the first plan floated.
From the limited information we�ve seen from the Administration, the Bush proposal privatizes a portion of Social Security by diverting payroll taxes to individual private accounts.
In addition, during an economic forum held by the president in December, the Administration sent signals that they will likely propose changing the formula that sets benefits to a troubling scheme that will reduce benefit levels by nearly a third in the coming years.
The scheme adjusts benefit levels based on consumer price indexing rather than wage indexing. This would leave beneficiaries with a smaller annual cost of living adjustment, or COLA, at a time when Medicare premiums are skyrocketing at nearly 17 percent per year.
These changes and the resulting benefit cuts would apply to everyone, even people who chose not to set up a private account. Such a plan essentially results in a steep �retirement tax� on all seniors. Such a plan is not �reform� and it will not �strengthen� Social Security.
Further, the privatization component of the plan doesn�t fix the basic solvency problem for the Social Security Trust Fund. Rather, private accounts would throw the Trust Fund up to $2 trillion deeper in the red.
Future generations would be tied down with this debt � a debt we would likely be forced to borrow from countries like China and Japan.
We must find a fiscally responsible solution to this problem without slashing the program and driving up the deficit.
If privatization were in place as Enron was collapsing and the market stumbled just a few years ago, seniors would have faced an unsteady future. While private accounts may be a concept we can examine as an additional component of Social Security, much like an IRA or pension plan, it should not carve away from the guaranteed benefit our seniors have come to rely on.
Congress has yet to see the details of the president�s proposal, and until that point comes, it is difficult to determine exactly how we should proceed.
While we may need to examine several options to protect the Trust Fund, the first must be to bring our federal deficit back under control. South Dakota common sense tells us that when you find yourself in the hole, you need to stop digging.
I look forward to working with President Bush to strengthen and improve Social Security and boost private savings for families.� Change must be approached on a bipartisan basis, through consensus so the program continues to exist for current and future beneficiaries.
I believe that we must honor our promise to those who have worked hard and earned the right to a secure retirement that is safe and protected in their late years.