- The Washington Times - Wednesday, August 16, 2000

You can always count on politicians to invoke the "sacred compact" between the government and America's senior citizens whenever they talk about Social Security. Now, what they need to do is make that compact a reality.

Though most Americans are unaware of this, the Supreme Court ruled 40 years ago in Flemming vs. Nestor that Congress can reduce or end Social Security benefits whenever it pleases. Under the ruling, which takes on new significance as the program moves from an era of surplus to a future of shortage, seniors have no legal property right to their benefits, as they would an insurance company annuity or a U.S. savings bond.

Minnesota Republican Sen. Rod Grams has introduced legislation to correct this inequity: the Social Security Benefits Guarantee Act (S. 1102). Before they call it quits for the year, Congress should make this proposal one of its highest priorities.

To understand why the legislation is needed consider the facts. Most of us will pay Social Security taxes for 40 or 45 years (or more), expecting to receive a certain level of benefits upon retirement. This was a good bet for Social Security's first 65 years, and will remain a good bet for another decade or so. But all bets are off when the approximately 77 million baby boomers start to retire.

By the year 2015, Social Security tax revenues will start to fall short of promised benefits. By 2020, the shortfall will be nearly $200 billion a year. By the time today's youngest workers retire, Social Security revenues will only cover about 70 percent of promised benefits.

Some time along the way, the government will have to start liquidating Social Security trust fund bonds to continue paying what it has promised. To cash in the bonds, Washington will have to increase taxes, borrow from the public or reduce federal spending. Or it could simply tell future seniors: You're not going to get everything you've been promised.

This is not as far-fetched as it seems. Washington already has reduced benefits for baby boomers and future generations by increasing the age at which they can start drawing full Social Security benefits from 65 to 67. They could always boost the retirement age again or freeze or reduce future payouts.

The Grams legislation, and a companion bill known as the Personal Security and Wealth in Retirement Act, would provide each senior with a certificate, similar to a Treasury bond, guaranteeing his or her promised benefit as an official obligation of the United States government.

The certificates, backed by the "full faith and credit" of the U.S. government, would guarantee each Social Security recipient a certain monthly benefit as well as an accurate annual cost-of-living increase irregardless of Social Security tax revenues, trust fund balances or current political conditions. Retirees would receive their certificates when they first apply for benefits. While this would not prevent future increases in the retirement age, it would eliminate the temptation to tinker with benefits.

To make this reform work without imposing hardships on current and future workers, more fundamental restructuring of the program is necessary. That's where the second Grams proposal comes in.

The Personal Security and Wealth in Retirement Act (S. 1103) would permit younger workers to direct some of their required payroll taxes into personal investment accounts. The funds in the accounts would be invested in stocks and bonds and would grow with the economy, accruing dividends and interest. The money owned by the individual, not the government would be paid out to participating seniors upon retirement.

Mr. Grams understands that the best way to ensure the retirement security of America's seniors is to provide them with a legal guarantee that their Social Security benefits won't be tampered with. He also understands that the best way to ensure the prosperity of future retirees is to provide them with the opportunity to invest a portion of their payroll taxes.

The two modest reform proposals won't solve all the problems facing the Depression-era retirement program. But they would move us in the right direction.

If the Clinton administration and 106th Congress accomplish nothing else during their remaining months in office, they should make these proposals law.

Sandra Butler is president of United Seniors Association.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide