False Hopes

October 20, 1999

The Associated Press yesterday released a story entitled "Social Security Checks May Increase." Bad news: it's only a cost of living increase designed to keep benefits in step with inflation. The real story is that under the current system, there's only one place for Social Security checks to go: down.

By 2014, payroll taxes will be incapable of paying full benefits. By 2037, when today's 30-year-olds retire, Social Security might be able to pay as little as 61 percent of promised benefits. For low-income workers, already receiving sub-poverty line benefits and unable to save privately due to high payroll tax rates, these cuts would be disastrous.

If future news stories are not to be about the latest cuts in Social Security benefit checks, then raising Social Security's rate of return by investing payroll taxes in the market is the only option. The sooner we begin the privatization process, the sooner we can put the thought of large benefit cuts out of our minds.

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