Counterpoint: the case against social security reform.

• Author: Burrell, Jason

Reform is commonly associated with restructuring a current policy or program with the goal of improving a model that adapts to changing needs or conditions. On February 2, 2005, President George W. Bush delivered his annual State of the Union address to the American people. In so doing, he presented his agenda for the first year of his second term, establishing several ambitious goals for America's future including the controversial issue of Social Security reform.

Social Security has served as a lifeline for U.S. citizens for the past seventy years, providing the opportunity for workers to 'pay-as-they-go' into a government program which pays out benefits upon retirement. Under the current system, 12.4 percent of wages earned (up to $90,000) are included in a payroll tax with both employee and employer contributing equal amounts. (1) This system is currently under attack by President Bush's proposed reform. In his State of the Union address, Bush declared:

Thirteen years from now, in 2018, Social Security will be paying out more than it takes in. And every year afterward will bring a new shortfall, bigger than the year before. For example, in the year 2027, the government will somehow have to come up with an extra $200 billion to keep the system afloat--and by 2033, the annual shortfall would be more than $300 billion. By the year 2042, the entire system would be exhausted and bankrupt. (2) Bush's proposal calls for the establishment of voluntary personal retirement accounts, or the privatization of Social Security. Under this plan, an employee would be eligible to take a portion of his/her payroll tax contribution (up to four percent) and place it directly into a personal account, thus controlling how the money is invested within several specified stocks. The remaining amount of the payroll tax (2.2 percent) would be used to pay benefits to current beneficiaries or be added to the Social Security trust fund. (3)

There are several criticisms concerning the ability to predict the fallout of Social Security as well as the effectiveness of the president's proposed reform. The current condition of the Social Security program is in no real crisis. That is not to say the program will not need to undergo some reform in the future. The Congressional Budget Office (CBO) estimates that the trust fund will be able to pay out full benefits until 2052, and even then the program will not be bankrupt. The trust fund will continue to collect payroll taxes and be able to pay approximately eighty percent of benefits. (4) Bush's proposal, however, threatens to deplete the existing trust fund surplus thus making it impossible to continue to pay out...