- The Washington Times - Wednesday, July 25, 2001

Everybody knows that proposing changes to Social Security is the political equivalent of grabbing a high-voltage power line. Touch it and you may die. But unless we touch it soon, millions of Americans will inherit more than $22 trillion in debt over the next 75 years. If we are going to avoid this mess and truly secure America's future, we need some straight talk on Social Security soon.

Recently, the President's Commission to Strengthen Social Security started meeting. Led by former Sen. Daniel Patrick Moynihan, a Democrat from New York, and AOL Time Warner executive Richard Parsons, the bipartisan commission used its first gathering to discuss the problems facing America's most popular federal program.

Unfortunately, while this impressive group of experts kicked around terms like solvency, cash-flow deficits and baselines inside the ballroom of the Willard Hotel, most Americans went on with their lives with little or no clue as to how the future of Social Security will impact their retirement. Even worse, many Americans don't even understand how the program works. Millions of Americans think there is a Social Security account with their name on it, and the cash they've paid in is being saved for them at the Treasury, drawing interest.

To address this lack of understanding, the Social Security Administration recently began mailing personal benefit statements to all non-retired Americans over age 25. The statement includes an accounting of Social Security taxes the individual has paid to date, the worker's eligibility status for benefits and an estimate of the various types of benefits the worker could receive under different circumstances.

Unfortunately, this four-page newsletter, "Your Social Security Statement," is painfully misleading. It lists the individual's yearly earnings and then estimates the individual's future benefits without even mentioning that there is a problem. In fact, the opening letter on the front of the statement says, "of course" Social Security "will be there when you retire." All of this creates a false sense of security, which prevents the public from seeing the immediate need for reform and causes many to make poor decisions in planning for retirement.

People are going to disagree on how we should address the problems facing Social Security. But we should all agree that working Americans at least have a right to know that the program faces very serious problems. That is why I have introduced legislation called the Straight Talk on Social Security Act, which would inform people of the true financial status of Social Security and how it will affect them in retirement.

This legislation would improve the information provided in the personal benefit statement in three ways. First, it would clearly point out to working Americans that their benefit estimates are just promises, not guarantees. Workers have a right to know that taxes coming into the system will not be sufficient to pay all of their benefits. This shortfall is important because it could mean lower benefits, higher taxes or some combination of the two in the years ahead. In fact, according to the latest report of the Social Security trustees, payroll taxes would have to double or benefits would have to be cut by a third in order to put the system back into balance.

Second, this legislation would explain how the Social Security trust funds are not real economic assets that can be drawn down to pay future benefits. Often, people hear about the trust funds as if they are going to save the program. Americans have a right to know that these so-called funds are just IOUs that will have to be redeemed with extra revenues produced by higher taxes, lower spending or more debt. As a consequence, Social Security's problems will begin in 15 years, much sooner than expected.

Third, this legislation would illustrate the declining performance of Social Security as measured by rates of return on taxes paid. When Franklin Roosevelt proposed Social Security, he promised a program that would provide retirement benefits "at least as good as any American could buy from a private insurance company." Unfortunately, today's younger workers will have rates of return as low as 2 percent, and even lower if taxes are raised to make the program solvent. Social Security is a retirement system and working Americans have a right to know if they are getting a poor return on their investment.

When the commission issues its final recommendations in the fall, critics will attack its proposals without counting the cost of doing nothing. Without accurate, easy to understand information on the current system, many Americans will be fooled into supporting inaction, which is the worst thing that could happen. Disclosing the information I've suggested is simple and easy to accomplish. All of these facts are contained in official reports that are readily available. But unless we get the information beyond the Beltway soon, there is little hope for reform.


Rep. Jim DeMint is a Republican from South Carolina.

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