Bush Presses the Case for Social Security Insecurity
Saturday, January 15, 2005
Facing increasing criticism over his Social Security plan, President Bush today said that "saving Social Security is an economic challenge. But it is also a profound moral obligation." The President went on to say that to delay fixing the problem now would only make the problem worse. However, many not only disapprove of the President’s plan; many insist that Social Security is not in peril at all.
Many insist that Social Security is not in peril at all.
The first problem lies with two conflicting forecasts by government agencies. The Social Security trustees, which includes Bush’s Treasury Secretary John Snow, claims that the fund will pay out more in benefits that it collects in taxes by 2018. In the trustee’s projection the fund will completely run out of cash in 2042. Meanwhile, the Congressional Budget office believes that the program could meet 100% of all commitments until 2052.
Bush’s plan will cost trillions of dollars in transition money
And of course, even if it were certain that the program was in as much trouble as President Bush claims it is, there is the question of how to fix it. Bush wants to privatize a portion of Social Security for young people and has also said that he will veto any plan that includes a tax increase. However, many say that Bush’s plan will cost trillions of dollars in transition money and believe a slight increase in either taxes or the retirement age could solve the problem.
While some find Bush’s plan difficult to understand, it can be easily explained with this analogy. Say your father put money into an account his entire life for his retirement, but your grandfather was drawing out a large portion of the money for his retirement. Then you started paying into the fund so that your father could retire. Then you borrowed the money in the account and started paying in interest and your portion into the account. Then the nursing home your father was living in asked for more money, and you calculate that the increase in money will either run through the money you owe the account or it will not. You decide you don’t want to start paying more into the account, but you’ve heard that there is money to be made in the stock market. Now you know the interest you’ve been making on the account is outpacing the market in general, but you believe you should be able to beat the average. So, you start investing some of the money you put into the account and investing in into the stock market. You then take out a large loan so that you can keep paying for your dad’s nursing home, and make the interest payments of that loan out of your own budget. Your own budget is already heavily in debt, but you figure a raise should be coming any day now. And if all else fails, your children can make up the difference. It just doesn’t get any simpler than that.
