This year, Social Security has been on the forefront of the presidential and Congressional agenda. President Bush has made it clear that reforming the Social Security system is one of his top priorities, and I am working with him and many committed Members of Congress on this issue to ensure positive change for America.
The program has also become a priority for the media and a number of special interest groups, making headlines in newspapers and television programs across the country. While helpful in many ways, this influx of information can often be confusing. Frequently, these stories produce conflicting views about the solvency of the Social Security system, making it difficult for the average citizen to learn the specifics of the problem. However, the facts are simple: Though stable today, Social Security faces a severe long-term funding crisis that, along with Medicare and Medicaid, will present extremely difficult fiscal challenges to our central government if no changes are made.
Viewed in isolation, the Social Security system is currently running at a surplus, with revenues collected from payroll taxes exceeding payments to beneficiaries. That surplus, created largely by legislative changes made in 1983, is credited on paper to the Social Security trust fund, but the cash is spent on a multitude of other government programs. Moreover, trustees of the Social Security Administration predict that by 2017, that surplus will turn to deficit, and payments to retirees will outstrip incoming payroll tax revenues. With an unprecedented number of retirees due to receive Social Security, by 2041, the Social Security system in its current form will be sufficient to pay only 74 percent of current expected benefits.
These facts speak for themselves. The need to ensure the solvency of a program that Americans have relied on to avoid poverty in retirement is among the greatest domestic challenges facing our nation. In addition, the accounting devices used to shift money from Social Security into other government spending programs are unsound and mask the true size of government borrowing. Each and every participant in the Social Security system, whether taxpaying worker, retiree, widow, orphan or disabled person, deserves better.
As chairman of the subcommittee on Social Security, my goal is to help ensure that Social Security progresses down a more secure and stable financial path. In addressing this challenge, Congress should have the benefit of the best experts, analysts and information available. My subcommittee held a series of hearings designed to accomplish that goal. We have examined the evolution of the Social Security safety net and its importance to vulnerable populations. We have studied the various causes and effects of Social Security’s fiscal woes. We have investigated the impact of longevity, demographics and economic trends on the system’s solvency, and we have learned about other countries’ experiences in reforming their safety nets. We have dissected a variety of options for improving the program, and, perhaps most importantly, we have listened to Americans whose reliance on the Social Security safety net has left them both grateful and determined that it should be there for others. In short, we’ve done our homework.
The next step is to act. Bush has indicated that he would prefer a broad solution that will restore the system’s solvency while continuing to benefit retirees, both now and in the future. For many reasons, I agree that a remedy for the current system is required — one that achieves fiscal strength, acknowledges budgetary realities, takes advantage of the time value of money, protects current and near retirees and improves the way the safety net operates to support beneficiaries with different needs. Unfortunately, such a comprehensive solution, though apparent, has not yet taken hold in the minds of many Americans and their elected representatives. Their reasons — among them fear, confusion or resistance to change — may vary, but the facts haven’t changed. Social Security is still in trouble, and still needs our help.
What a number of my colleagues and I have proposed is a reasonable first step towards addressing Social Security’s problems: GROW accounts. H.R. 3304, the Growing Real Ownership for Workers (GROW) Act of 2005, ensures that Social Security taxes will only be used to pay Social Security benefits — not, as under current law, to mask the true size of the deficit and fuel the growth of government spending. For as long as it lasts, the Social Security surplus would be protected. According to CBO, GROW accounts extend the solvency of Social Security by 11 years. They would enhance the transparency of Social Security’s finances, give workers a real asset they could leave to their heirs, and protect those aged 55 and older from any changes. That’s real progress.
We are currently at a crossroads. We can either ignore the fundamental inadequacies of the current system or work now, while there is still time, not only to fix the system, but to improve it to reflect Americans’ changing retirement needs. If we choose not to act, and ignore the looming shortfall, we will only pass the problem on to the next generation. I remain committed to reform.
Rep. Jim McCrery (R-La.) is chairman of the Ways and Means subcommittee on Social Security.
