Nevada County Picayune and Gurdon Times Newspaper Archive

Social Security in trouble; no plans from President

U.S. Senator Mark Pryor said theres no disagreement in Congress about the need to do something about Social Security.

However, he pointed out to members of the Prescott Rotary Club Monday, March 28, President George W. Bush has yet to come up with a plan. The President has been touring the nation talking about Social Security, but has not put anything on paper for the House or Senate to work with.

President Bush has made Social Security his top domestic priority, Pryor said, and every member of the House and Senate agree there need to be long term changes made to the program.

Most people, Pryor said, think of Social Security as being a retirement plan, but it isnt, its more. About 69 percent of the funds from Social Security are used for retirement, but the other 31 percent are for disability and survivor benefits. We need to talk about the entire system, not just 69 percent of it.

Social Security, he said, is a classic safety net retirement program, but retirees ideally have a three-legged stool. By this he said those who are retiring should have investments, savings or company retirement and Social Security. In Arkansas most people only have Social Security.

What many dont realize is the money paid into Social Security today is paid out today. There is no investment program for the funds, as those who receive checks are paid out of the taxes now being paid in.

It wasnt always like this, he said, and there is a surplus. The way the program was structured when there was a surplus of money available it had to be used to purchase Treasury Bonds. These are low-yield bonds, but are solid, paying 1-2 percent interest. The nation currently has $1.9 trillion in T-bonds for Social Security.

Pryor brought charts showing how the program can pay 100 percent of the benefits to all recipients until around 2042. At this time the payout will be 75-80 percent of what people paid in. The surplus currently available will begin to decline in 2008, and by 2018 more will be being paid out than is paid into the program. We need to work to fix the problem now, Pryor said. Social Security will be there for todays young people because people are always paying into the system.

Bush, he said, wants to privatize the system to fix the problem. This, though wont do anything about the programs solvency.

According to Pryor, Vice President Dick Cheney said privatizing Social Security would require the nation to borrow trillions of dollars to pay for the private accounts.

The question, he said, is whether we fix the solvency or change the program entirely. If we fix it, privatizing isnt part of it. But, it we change it where the government runs the program, private accounts make sense. Most people in Arkansas want to see it fixed, not changed.

Bush, he said, has talked about doing Social Security like the government employees thrift accounts where there are five investment funds to choose from (similar to a 401k program). The problem is federal employees pay into the thrift plans and the government matches the money. Under the thrift plan we can put in up to 15 percent of our income, but people could only put 4 percent of their Social Security in it and it wouldnt be matched by the government.

Pryor said he also pays in a full load of Social Security taxes along with his thrift investment.

The myth is President Bush has a plan in Congress. Hes talked about it, but hasnt presented anything in writing to Congress. Weve asked him to get something to us to start working on.

The Social Security problem, he said, is easier to deal with than the Medicare/Medicaid programs, as less money is involved with Social Security. Medicare and Medicaid are tied to health care, and theres a lot of fraud in the two programs.

If we can fix Social Security, Pryor said, it will be a positive test run to show we can do it. But, the Medicare/Medicaid problem is much nearer in time.

Taking questions from the club members, Pryor said he supports the Presidents energy program, but its not perfect. We need to emphasize alternate fuels. If we can figure out how to grow our own fuel we can get off dependence of fossil fuel and foreign oil. We hope to get this bill passed this year.

America, he said, is losing its manufacturing base, and this has a direct effect on Social Security. Social Security is a wage based program, and as jobs are lost the amount being paid into Social Security drops. This is a difficult issue, and we in Washington need to come up with long-term policies for the U.S.

The problem, he said, is many countries wont allow the U.S. to export American made products, while shipping theirs here. Fair trade, not free trade is whats needed, Pryor added.