January 20, 2004

Mending Social Security's Flaws

Strengthen the federal government's retirement program by adding Personal Retirement Accounts

by Timothy Penny and Leanne Abdnor

Timothy Penny is a former Democratic member of the U.S. House of Representatives from Minnesota. Leanne Abdnor is president of the Social Security reform organization For Our Grandchildren. The authors are members of the bipartisan President's Commission to Strengthen Social Security.

President Bush will deliver the annual State of the Union address Tuesday night and supporters of every issue in the political spectrum are wondering: "Will the president make my issue a priority and address it in his speech?"

Those of us who want to strengthen the Social Security retirement program by adding optional Personal Retirement Accounts are no different. As Democratic and Republican members, respectively, of the President's Commission to Strengthen Social Security, we implore President Bush, Congress and candidates for these offices to talk about the crisis facing Social Security. It is their responsibility to discuss realistic ways to keep the financial promises made in the past and to offer options that will allow future retirees a secure retirement.

It's 2004. At the end of the next president's term, 2008, some Baby Boomers will become eligible for early retirement and the financial demands of the Social Security program will then begin to overtake the ability of the program to pay benefits.

Along with other members of the commission, we believe we must guarantee the benefits of the current and nearly retired Social Security beneficiaries by offering PRAs as a voluntary option, in order to give future retirees the opportunity to increase the retirement income they will need during their golden years. We support PRAs for a number of reasons:

Real ownership: The Supreme Court ruled in 1960 that none of us has a right to a Social Security benefit. And because none of our Social Security taxes can be saved for us by the federal government in an account, PRAs would allow workers to have real ownership of a portion of their Social Security contribution. By having the choice to divert a portion of their Social Security taxes into a personally owned PRA, today's workers would maintain the financial safety net of the current program and have additional funds to assure a more comfortable retirement.

Fairness: Women are more dependent on Social Security than men, but in many cases, the existing system treats women unfairly. Giving a woman the choice to create her own PRA would be a step further on the road to real gender equality and opportunity in this country.

In addition, Social Security is unfair to contributors with shorter than average life expectancies. Those who die before collecting their retirement benefits lose everything--everything--they paid into the system. While their survivors, if they have any, may be eligible for Social Security's survivors program, it is just as likely that the money that the deceased paid into the system will be gone forever.

PRAs would give women and workers with shorter life expectancies the opportunity to accrue benefits that they can pass along to their heirs. "Inheritability" is a critical feature of PRAs and it can give future generations a sizeable nest egg.

Economic growth: Many of the 2004 presidential candidates claim the best way to solve the looming Social Security crisis is to "grow the economy," even though government analysts say it would have little effect. On the other hand, PRAs have the ability to add to the economic growth of a nation. As workers invest, their personal savings rates increase. This "trickle-up" system is working in countries all around the world. It's time for it to happen here.

We know that PRAs won't cure cancer or make us secure from terrorists. But retirement security that includes real ownership for everyone, not just the wealthy, is doable and should be the right of every American.

Tonight, we'll be listening to President Bush and, in subsequent days, to the other presidential candidates to see if they will continue to ignore the Social Security crisis. One thing is certain, the problem isn't going to just go away. The longer we wait the harder the solution will be.

This article originally appeared in the Chicago Tribune on January 20, 2004.