The Nature of the Crisis (Billie Ann Myers Commentary)

Is there a Social Security crisis? The answer to that is no, there is no crisis. There is a need to have a serious nonpartisan discussion on the best way to strengthen Social Security and ensure that it is there for all future generations, but there isn’t a crisis. The real question is how best to reform this system that provides the only guaranteed retirement for most Americans.

According to the Merriam-Webster dictionary, a crisis is “a situation that has reached a critical phase.” Perhaps the better definition for this issue is “a decisive moment, a crucial time in which a decisive change is impending.” In that respect, the word has some merit because we are at a place where small incremental changes made now can strengthen Social Security and prevent any real crisis in 2042 (or 2052, depending on whose statistics one uses).

AARP considers Social Security to be one of four pillars of retirement security. The other three are pension and retirement accounts, earnings, and health insurance. The only one of the four that no one can outlive is Social Security. Why would we want to remove that for future generations? The retirement profile of the typical baby boomer is different than that of his or her parents. Today fewer than 50 percent of working Americans have a pension plan, the Federal Reserve reports that personal savings are at an all-time low, and the average older American is spending more than a third of his or her income for health care.

There really is good news though. Social Security is the most successful program in our country’s history. Millions of Americans’ lives have been made better by this program. While we often think of it as a program for retirees, it really is more than that. It has provided a better way of life for some of the more vulnerable members of our society: widows, children of deceased workers and workers who are disabled. In 2002 alone, 528,840 Arkansans received benefits. With no changes, Social Security can continue to pay full benefits to these populations for the next 37 years.

Today the Social Security Trust Fund reserve is $1.7 trillion, and another $155 billion will be added in 2005. In 1983 the Reagan administration made some strategic changes in the program that allowed this surplus to grow from almost nothing to $1.7 trillion. In fact, Social Security is not broken. It has been lending cash to the federal government for the past 30 years. That same Trust Fund loans the rest of government $150 billion a year!

Social Security requires strengthening because of the growing federal debt. The introduction of private accounts will only add to that debt while taking valuable resources from the Trust Fund. There is a right way and a wrong way to approach the problem. The Social Security debate should be about how we fill the future funding gap, not about replacing part of Social Security with an unproven system of private accounts. AARP believes that the solution for strengthening Social Security should not add to the problem.

Future generations must have the guarantee that Social Security will be there for them. To ensure that, we must take the necessary steps now to make simple changes that will provide this safety net for our children and grandchildren.

The Social Security Program can be adjusted in a number of ways. Carving out private investment accounts is not one of them. Some options that are being suggested are to reduce the shortfall by 43 percent with a gradual increase over 10 years of the taxable earning cap from $90,000 to $140,000. The shortfall can be reduced by another 38 percent with a gradual rise over 78 years in the minimum eligible age to receive full benefits, from over 65 to age 70. Another adjustment that has been suggested is changing the fiscal policies that allow government to rely on the Social Security Trust Fund for cash flow.

AARP believes that we, as a nation, are obligated to maintain the dignity and independence of our older citizens. That’s why Social Security was born more than seven decades ago. That is why AARP will continue working together with its allies to keep that legacy available, equitable and financially strong.

(Billie Ann Myers is Arkansas state president of AARP. She is also the mother of Arkansas Business Publishing Group CEO Olivia Myers Farrell. E-mail her at [email protected].)