Social Security Straight Talk
Social Security Straight Talk
June 19, 2005
Washington, D.C. - The President's initiative to ensure Social Security remains for future generations has generated a lot of talk about what kinds of improvements need to be made to the system, or whether the system needs changes at all.
I'm somewhat amused at those who are debating whether or not the fact that Social Security will go bankrupt in the future can be defined as a crisis. Some say it's just a problem, but not a crisis, and still others believe it's not a crisis at all. This would be like delaying the Bedlam football game while the coaches argue over the opening coin toss. I'd prefer we get on to the real issues and try to get to a solution on this problem, instead of trying obscure the problem by bickering over semantics.
People have many different ideas about how we can fix the problems that the Social Security program is facing. My priorities are that Congress makes sure that these programs are there for all Americans - both current beneficiaries and future beneficiaries.
But that can't happen in the current system. There are some facts on which all sides can agree. In 1950, there were 16 workers paying taxes to support every single beneficiary. By 1960, the ratio of workers to retirees was 5 to 1. Today there are only 3 workers paying taxes for every retiree. Over the next 20 years, that number could get as low as 2 to 1.
That's because Social Security operates on a "pay-as-you-go" basis. The Social Security taxes paid by current workers are used to pay the benefits for current retirees. And starting in 2018, Social Security will pay out more money than it takes in. If a family household could see that their future expenses would soon grow larger than their family income, they'd do something about it, and we should too.
President Roosevelt and the creators of Social Security could never have envisioned the tremendous medical advancements that allow us to live longer than ever before. In 1935, life expectancy was about 60 years. Now life expectancy is up to 75 years for men and 80 years for women. That's wonderful news for older Americans and the people who love them. But it also means that there are more Americans receiving benefits than ever before. Add to that the even larger share of senior citizens as a result of the post-World War II baby boom, and you have a problem that Social Security's founders could never have prepared for when creating the system.
Congress has addressed this issue in the past, and each time it has decided to either increase the payroll tax or raise the retirement age. Neither of these fixes is a solution at all - it only punts the problem away for future generations to deal with. At the beginning of the Social Security program, the payroll tax was 2 percent on the first $3,000 of income, split between employee and employer. In the 55 years since 1950, social security taxes have been raised 20 times. Today the tax is 12.4 percent on the first $90,000 of income.
Clearly, the impetus for reform is there. Congress is currently debating ideas for Social Security reform that will put the program on a firm, stable footing for the next century.
One thing I will promise is that, whatever changes are made to Social Security, current beneficiaries will not see their benefits go down. Social Security is a promise that we made to our seniors, and I will fight to make sure that promise is kept.
http://www.house.gov/apps/list/speech/ok03_lucas/socsecfacts.html