If federal spending and revenue trends of the last three years continue, the United States will be able to pay off its entire national debt in 15 years, says Wisconsin Congressman Mark Neumann.
That's good news for everybody, but especially anyone who depends upon Social Security.
As many Americans realize, the government has borrowed from (read: "spent") the Social Security Trust Fund since LBJ was in the White House. Unless that money is repaid, or Social Security is reformed, Social Security checks will start bouncing the first day the amount being paid into Social Security is less than the amount being paid out. With baby boomers approaching retirement, that date will surely come by 2012, or as early as 2006.
Recent good news regarding the budget gives those still hoping to receive Social Security in decades to come reason for optimism. It is too soon, however, to rest easy.
One reason for pessimism is that President Clinton still advocates raiding the Social Security Trust Fund. In his 1998 budget he proposes "borrowing" another $95 billion, in part to fund new spending programs.
No new federal spending program is as important as restoring Social Security. The government can afford to stop borrowing from Social Security, and now it can even afford to start repaying money it borrowed in the past.
One way to put Social Security back on its feet would be to pass a Balanced Budget Amendment to force politicians to stop borrowing from Social Security.
Americans will recall that, in 1995, following probably the longest continuous debate in the U.S. Senate since the filibuster of the 1964 Civil Rights Act, a Balanced Budget Amendment failed by one vote. Backers were bitter, pointing to votes against the amendment by senators who ran for office promising to support it. Senators such as Harry Reid of Nevada, Byron Dorgan and Kent Conrad of North Dakota and Minority Leader Tom Daschle of South Dakota replied that the Amendment would have been approved if it had included provisions stopping federal borrowing from the Social Security Trust Fund.
Things have changed a lot. What was fiscally improbable in 1995 -- passage of a balanced budget that did not borrow from Social Security -- is now within easy reach. Passage of a Balanced Budget Amendment that mandates balancing the budget without borrowing from Social Security is now easily possible and a wise move. Doing so would put off Social Security's bankruptcy until 2029 or so and impose fiscal discipline to prevent massive government deficit spending in the future.
Passage of an Amendment would strengthen Social Security, and it needs the help. In 1955, there were 8.6 workers for every Social Security recipient. In 1995, there were 3.3. By 2040, there will be no more than two. A January 1998 study by The National Center for Policy Analysis found that when today's 20-year-olds reach retirement age, their government retirement benefits may consume as much as two out of every three dollars earned by those still working.
Equally sobering is a February 1998 poll by the National Center for Women and Retirement Research at Southampton College of Long Island University, which found 24% of baby boomers have not made plans to ensure their financial retirement security. A January-February 1997 survey of non-retired Americans by Public Agenda found that 46% of all Americans have less than $10,000 saved for retirement, including 30% of Americans aged 51-61 and 40% of those aged 33-50. 76% of the general public thought they should be putting aside more money for their retirement and 68% said they could save more if they tried.
Americans aren't saving as much as they should, even though a majority say they have little confidence in Social Security. A September 1996 Polling Company survey found only 21% of Democrats, 21% of Republicans and 17% of independents are either "extremely" or "very" confident that Social Security and Medicare will exist throughout their retirement. A famous 1994 poll by the Generation X group Third Millennium found that 28% of Generation Xers believe Social Security will exist when they retire -- while 46% of them believe in UFOs.
Clearly, many of the same Americans who say they have little faith in the reliability of Social Security are still planning to rely on it.
Policymakers have a lot of good ideas
for ensuring the future of Social Security, including a partial
privatization plan that would make Social Security permanently
secure, guarantee benefits for current retirees and actually raise
benefit levels for future generations. But the best way to get
started on comprehensive Social Security reform is with a Balanced
Budget Amendment to the Constitution. It will stop the federal
government from raiding the Social Security Trust Fund, and force
the federal government to stop deficit spending once and for all.
-Amy Moritz Ridenour is president of The National Center for Public Policy Research. Comments may be sent to her at [email protected]