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For Immediate Release:
February 3, 2005

The time is now

by Senator Larry Craig

In his State of the Union address, Americans heard President George W. Bush lay out a convincing case that Social Security reform is needed. The President spoke boldly and with clarity. That is exactly what we need to tackle this difficult issue. He set out some sound, general principles and invited all interested parties to come to the table and work together. I will do my best to help him carry this reform effort through the United States Senate.

The challenge we face is really not too complex. Since its creation, Social Security has always been a "pay-as-you-go" program. Through payroll taxes, today's workers provide the benefits for today's retirees. But shifts in demographics and the continued growth of benefits will soon leave the system trying to pay out much more in benefits than it collects in payroll taxes. In 1950, there were 16 workers contributing to the system for every one retiree drawing benefits. Today, that ratio stands at about 3-to-1, and will soon drop to 2-to-1.

The crisis is not yet upon us, but the longer we wait to deal with the problem, the more costly and more difficult it becomes. If we start now, we can make other, gradual changes and avoid radical cuts in benefits or massive tax increases. Experts have estimated that delaying Social Security reform one year ultimately would cost $600 billion. The price tag will only get bigger each year we delay.

At any rate, I want to make one thing clear above all - if you are currently retired or nearing retirement (55 and above), you will not have your retirement benefits in Social Security changed in any way. No one in a position of responsibility wants to cut your benefits.

Solving this problem is about what's fair for our children and our grandchildren. As workers, they will pay into the system. When the time comes for them to retire, it ought to be there for them, too. But Social Security cannot afford to pay promised benefits to future generations because it was designed for a 1935 world in which benefits were lower, life-spans were shorter, there were more workers supporting each retiree, and fewer retirees were drawing from the system.

One of the reforms suggested by the President's bipartisan Commission to Strengthen Social Security is the addition of personal accounts within Social Security. For the first time, this would allow an individual some measure of personal ownership and control within his or her own Social Security account.

The personal account would be totally voluntary. Young workers could designate just a portion of what they pay into the system to be invested, with significant safeguards, in safe bond funds (including government bonds), stock index funds that follow the broad economy, or other savings accounts. Younger workers who participate will receive a greater return than what Social Security can now promise. Wild, speculative investments or putting all your eggs in one basket are not going to be allowed, and neither are costly brokerage fees. The best model today is probably the successful Thrift Savings Plan that has been available for years to federal employees, including Members of Congress.

The good thing is that the future Social Security crisis is very avoidable. Like a driver at the wheel, we can choose to steer around this obstacle in good time, or we can deny reality and plow straight into it. Idahoans sent me to the United States Senate to deal with issues and help solve problems, not kick the can down the road and wait for the crisis to arrive. Let's take responsibility now, for our children's sake.

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