Summary
The Social Security System worked well when there were sixteen workers to support each retiree, back in 1950. Now there are only three workers supporting each retiree, and soon there will only be two. The system is headed toward financial disaster. Congress must address these concerns, and Oregonians should lead the way toward reforming the system.
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Ask the typical young person what they think of Social Security, and they are likely to tell you that it was fine for their parents, but they simply don’t believe it will be there for them when they retire. Sadly, they are probably right.
A Social Security system designed for the world of 1935 (when it began), and that worked well for years, will not work in the world of 2035 and beyond. Here is why:
In 1950 there were sixteen workers paying into Social Security for every one retiree. Today, that ratio is only about three to one; and when our children retire there will be only two workers paying into the system to support them. That is a recipe for financial disaster, but we can reform the system before we are bankrupt.
What can Oregonians do about fixing Social Security? Isn’t this a federal issue? Remember, Oregon has been a leader in changing the way federal programs operate in the states. We secured federal waivers to alter use of Medicaid funds for the Oregon Health Plan. We obtained waivers to extend our innovative JOBS Plus program, putting welfare recipients to work. So, Oregonians have helped change federal policy in the past, and we can and should do so in the future.
That is why Cascade Policy Institute, an Oregon think tank, has been working to reform Social Security since 1996. We brought José Piñera, architect of Chile’s successful Social Security reforms, to Portland that year. In 1997 we helped the Oregon legislature craft a resolution asking Congress to allow Oregonians to opt out of Social Security and design our own retirement program based on personal accounts. Unfortunately, Congress was not ready to listen.
Now, a national organization called America is Listening has crafted a proposal that could gain real traction in Congress and lead to change for our children and grandchildren. It’s called the SMART Act. The Act recognizes that employers and employees each pay 7.65% of wages into the Social Security System. This money should be set aside to pay future retirement benefits. However, the truth is that the U.S. Supreme Court has ruled that no one has a property right to any of that money upon retirement. Congress can change the rules, and the benefits, at any time.
The SMART Act would let individual workers save for their own retirement in protected, personal accounts. The accounts would be owned by the workers, just like any other financial asset. America is Listening has short videos on its website that describe the problem and introduce its proposed solution. The proposal is financially sound and could form the basis of a real reform effort in the near future. What can Oregonians do to help promote real Social Security reform?
- Go online and visit www.thesmartact.org.
- Read the information there, watch the short videos and enter your zip code for information about how to contact your local media and your federal representatives.
- Contact your local cable access stations and ask them to run the America is Listening videos.
- Contact your members of Congress and ask them to consider supporting Arizona Congressman Jeff Flake’s bill, HR 4181, the Secure Medicare and Retirement for Tomorrow (SMART) Act of 2007.
Some of our national “leaders” tell us that there is no crisis now and won’t be for years, so why act now?
The truth is, the longer we wait, the harder it will be to effect change. The Baby Boomers are already beginning to retire, and the system’s so-called financial surplus soon will disappear. Wait too long, and the only options may be large tax increases or sharp benefit cuts, or a combination of both.
If we act today, changes can be phased in gradually over a number of years. If we fail to act today, future generations will be faced with changes that are large, abrupt and potentially devastating to their financial future.
The time to reform Social Security is now. Please do what you can to make the process a success for all Oregonians, and all Americans.
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Please contact:
Nancy Wheaton
Cascade Policy Institute
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Cascade Policy Institute is a tax-exempt educational organization as defined under IRS code 501(c)(3). Nothing appearing in this Cascade Commentary is to be construed as necessarily representing the views of Cascade or its donors, or as an attempt to aid or hinder the passage of any bill before any legislative body. The views expressed herein are the author’s own.
