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Social Security at a Crossroads
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16933 |
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Section : |
CURRENT ISSUES
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| Issue
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4 / 1990 |
2,635 Words |
| Author
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John Porter
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Sen. Daniel Patrick Moynihan (D-New York) has done the country a service by taking the future of Social Security out of the politically unmentionable category and putting it on the table for discussion and debate. He also deserves credit for forcefully putting before the American electorate a fact Congress and the administration would prefer keeping under the rug: We are spending the Social Security reserve currently to make our general revenue deficits look smaller than they really are: $54 billion last year, $65 billion this year, and more billions in the future will not be there when they are needed for the baby boomers' retirement in the next century.
The senator has joined in raising the alarm that this practice - thievery is not too strong a word - will destroy Social Security if allowed to continue and constitutes a breach of equity between generations of Americans. Young people in our country are already going to be paying through the nose to service the huge national debt we are leaving them. Now we are imperiling their Social Security retirement benefits as well.
We must take Social Security off-budget, force Congress and the administration to face the real budget deficit (which has hovered around $200 billion for the last six years), and have the courage to make the tough decisions needed to balance the budget without the Social Security buildup. Furthermore, we must reduce the reserve to "checking account" status - using only the money needed to pay benefits to current retirees - so Congress can't get its hands on the fund and spend it for things other than Social Security retirement. In short, we must take responsibility for truth in budgeting and stop treating a huge and growing unfounded liability as an interest-bearing asset.
Moynihan acknowledges that simply taking Social Security off-budget will not protect the reserve from congressional abuse. We can be absolutely sure of death, taxes, and one thing more: If future congresses see $3 trillion in a reserve - any reserve, on budget or off - they will find ways to spend it, as they are right now.
Beyond these principles, Moynihan is dead wrong. We should not, as he proposes, reduce the reserve by cutting the FICA tax rate. Though his diagnosis of the disease is right, his prescription is pure poison.
GENERATIONAL POLITICS
Unfortunately, the very structure of our nation's retirement plan has facilitated Moynihan's game of "generational politics" with Social Security. He has managed to promise something to everyone - everyone who can vote, that is. He has promised to preserve the benefits of 39 million current beneficiaries and to cut payroll taxes for 130 million workers.
Don't believe it. Sure, if the FICA tax rate is cut, American workers will get a tax refund. And what will happen? You and I would like to believe otherwise, but we will consume it, buying more German cars and Japanese VCRs and putting very little aside for savings. With the reserve needed to finance baby boom retirements in the next century gone, the future of Social Security will be placed in jeopardy, our base of domestic capital will not be enhanced, and we'll extend our consumption party financed by foreign capital for a little longer. This would be not only
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