Saving Social Security has been a slogan in Congress for years. But rarely did anyone call for true reform of the Social Security system. After all, pundits said that it was the "third rail" of American politics — touch it and you die.
All of that seems to be changing. President Clinton proposed putting budget surpluses toward the Social Security trust fund. Senator Daniel Patrick Moynihan has proposed a reduction in the payroll tax along with raising the retirement age. And many are calling for the privatization of the Social Security system. What are we to make of these proposals?
Social Security is a pay-as-you-go system. The payroll tax is already the most burdensome tax for most workers. And in order to provide sufficient benefits, the rate will have to increase. The General Accounting Office predicts that Social Security and Medicare alone would have to consume 100 percent of all federal revenue by 2040 if present trends continue. But don't expect Congress to reduce benefits to those already retired or about to retire.
Senator Moynihan wants to return Social Security back to a pay-as-you-go system. In other words, the payroll tax would be adjusted so that annual revenues from taxes would match annual outlays. Doing this would create a payroll tax cut and immediately reduce the payroll tax rate by as much as two percent. Workers would then be allowed to put this cut into voluntary personal savings accounts.
I think we can do better by moving away from the current pay-as-you-go system toward a more privatized system. Nevertheless Senator Moynihan deserves two cheers for his willingness to realistically deal with the problem of Social Security.
I'm Kerby Anderson of Probe Ministries, and that's my opinion.