Solving Social Security Now
March 2, 2004
Speaking before the House Budget Committee last Wednesday, Federal Reserve Chairman Alan Greenspan suggested that future Social Security benefits could be cut to rein-in the long-term Social Security debt. He should be congratulated for initiating a discussion of the program's future and the need to address the problems sooner rather than later, says Matt Moore, a Social Security analyst with the National Center for Policy Analysis.
He didn't make these suggestions to cover up debts in other federal programs. He made these recommendations to reduce the debt within the Social Security program. After all, even if we get all other federal spending under control, the $27 trillion Social Security debt will still remain, says Moore.
The prospect of benefit changes for Social Security is not a popular option for anyone. But if decision-makers in Washington can't find another way, Greenspan's suggestions may well be unavoidable. But there are some caveats that must be included, says Moore:
- First, current and near retirees should be protected; benefit changes should apply to younger workers and future generations.
- Second, personal retirement accounts must be incorporated into the system; that way, younger workers can make up any losses in benefits with the savings in their accounts.
Research by the National Center for Policy Analysis, as well as figures from the Social Security Administration, show that personal accounts can provide benefits equal to what today's retirees receive, adjusted for inflation. In the meantime, personal retirement accounts can eliminate Social Security's $27 trillion long-term debt.
But we'll never find a solution if those who simply point out the problem are misinterpreted and attacked, says Moore.
Source: Matt Moore, "Missing the Point - and the Options," Washington Times, March 1, 2004.
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