- The Washington Times - Tuesday, August 23, 2005

The August recess is now a little more than halfway over. One can only hope that members of Congress are getting in a little R&R.; After all, you deserve a little relaxation after the passage of CAFTA, the energy bill and the transportation bill, among other recent accomplishments. So, get plenty of time on the links, catch an 80-pound tuna, and even march in a parade or two. Enjoy it while it lasts, because when Congress reconvenes in September, there’s plenty of work to do.

The nomination of Judge John Roberts to the Supreme Court is going to require some energy from the Senate, of course, but with the exception of knocking down a few trumped-up criticisms, this shouldn’t take too long. Rather, what should be on the top of the agenda for both chambers is finally getting serious about Social Security reform.

We’re now eight months into the year. The president and countless members of his cabinet have traveled the country discussing the need for reform. Committees in both chambers have held numerous hearings on multiple aspects of reform. And third party groups on both sides of the reform debate have been hitting the airwaves with competing 30-second ads. Not to mention the research that think tanks like the NCPA have filled your book shelves with over the last 20 years examining the financial consequences of maintaining the status quo and offering a variety of reform ideas.

Take the rest of the month to study up on the issue and then come back ready to lay your cards on the table. Ignorance is no longer a good excuse for inaction. Here’s a little refresher on why reform is needed. There really are only four numbers you need to know — 77 million, 2017 and 11 trillion.

Seventy seven million baby boomers are about ready to go from the paying-in window to the pay-me-now window; 77 million going from pushing strollers to using walkers. That flood of newly-retired persons will nearly double the number of people collecting benefits, putting unbearable strains on the system.

By 2017, Social Security will be paying out more in benefits than it collects in payroll taxes to fund those benefits, according to the Social Security Trustees. That means there won’t be enough cash flow to pay benefits as promised and Congress will have to find some way to make good on the obligation bonds it has been stuffing into the system’s Trust Fund. The idea that the Treasury can actually pay benefits with these obligation bonds without some negative impact on the rest of the economy is a joke not worthy of serious debate by our elected representatives.

Twelve years from now Congress will have to start making difficult decisions about which taxes to raise and which programs to cut so money can be generated to redeem the obligation bonds in the Trust Fund. In 2017, Congress will have to find $6 billion (in 2005 present value dollars), just to pay benefits for that year. By 2040, this will have grown to $125 billion. Once again, that’s money needed just for that year’s benefit checks in addition to what is collected in payroll taxes. In all, between 2017 and 2041 Congress will have had to find $2.3 trillion in addition to what will be collected in payroll taxes under current law for the program. Unless reforms are made today, everyone under the age of 48 will likely experience higher taxes, lower benefits or both just to make up for the cash flow deficit.

The cash flow deficit just between 2017 and 2041 is expected to be $2.3 trillion. In 2042 the system will run out of obligation bonds and can only fund three-fourths of its promises. If we were to look at the life of the program, and attempted to fund the benefit promises being made solely with the current funding source at current rates, we’d come up $11 trillion short. If we wait until next year to deal with this problem, you can add another $600 billion.

The problem really is simple. Any program built on the concept of one generation’s benefits funded by the taxes of succeeding generations of workers cannot survive the twin threats of longer life expectancies and lower birth rates.

Obviously, understanding the nature of the problem should not be the hard part. Actually doing something about it is. After eight months, however, it is no longer acceptable to just criticize every proposal from the back bench. Its time for every senator and representative, Democrat and Republican, to stake their flag to a solution.

At last count, there were five bills proposed in the House and two in the Senate for members to choose from, not to mention the ideas proposed by members of Congress that have been discussed but not formally introduced. Don’t like any of those bills? Spend the next few weeks devising one of your own. As mentioned previously, there should be plenty of research in your office from every flavor of think tank and advocacy group to pull from. At $600 billion a year, we can no longer afford to continue the rhetorical games. With a month to contemplate it, every member of Congress should sign on or submit in September.

Sean R. Tuffnell is manager of Team NCPA, a special project of the National Center for Policy Analysis to educate the general public about the need for Social Security reform and the benefits of personal accounts. www.TeamNCPA.org

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