| Congress can be an unwieldy, cantankerous
bunch of men and women, often capable of finding ingenious ways of imitating
the ostrich. At other times, it can act with remarkable, almost astonishing
speed to get things done.
As a genuine cross-section of the population of
the United States, Congress embodies both the best and the worst of our
traits. One of the latter is the American tradition of putting things off
until tomorrow. We don't seem to act until moved by a flashpoint, a crisis,
and like the hero in an old "Perils of Pauline" serial, we rush to the
rescue and ride off into the sunset.
It's been no secret that Social Security, one
of our most popular and successful social programs, faces serious financial
problems. But Congress has yet to act. Now we are running short on time,
and we simply must face up to it: Social Security desperately needs financial
reform and it must be done by this Congress.
Beginnings
Social Security began in the 1930s as a simple
program. It was to supplement the income of retirees and to provide pensions
for widows.
Supplement is a key word here -- because it seems
to have become virtually forgotten as the years have gone by. Americans
who receive Social Security payments today frequently lament that their
checks are not enough to live on. And they are right. But Social Security
was never intended to be anything more than a supplement to a worker's
other retirement income. Sadly, too many public men and women have contributed
to that erroneous concept and too many campaign speeches have lent credibility
to the notion that Social Security is supposed to be enough to live on
in retirement.
But Social Security, in the beginning, was only
designed to offer some measure of security to Americans who faced the prospect
of otherwise having nothing at all. It was a program born of the Depression,
a time that showed us the terrible price of not planning ahead.
Prior to Social Security, the prospect of growing
old in America could be a grim thing. You might be fortunate enough to
have children who were caring enough and prosperous enough to take you
in. Or you might be taken in at the county poorhouse -- if the county in
which you lived had a poorhouse.
But if those options were not open, there was
nothing else. Unless you have managed to save enough for retirement or
had belonged to a retirement plan or had been born independently wealthy,
the retired American faced a future that was bleak indeed.
Those Good Old Assumptions
In earlier years, while our economy seemed on
the verge of finding the secret to the golden fleece, it seemed as though
there was no limit on what we would do for our people.
Highly popular economic theories of the day, embraced
by men and women of every political stripe in public life, told us that
those good old days would never end.
We would keep adding people to the work force.
Our Gross National Product would continue to increase. More and more jobs
meant more and more tax revenues.
Lyndon Johnson used to enjoy telling visitors
that every January 1, he would wake up knowing that government had increased
revenues, without any new taxes, by another $35 billion. He was confident
it would always be that way. In his time, it was. But he could not forecast
the future, and in the 1970s, our economic assumptions collapsed. |
| * |
In 1973, Americans learned that cheap energy,
which had fueled our incredible decades-long boom, was a thing of the past. |
| * |
We found that, contrary to what experts had told
us, it was possible to have a recession, unemployment and inflation all
at once. |
| * |
The growth of our Gross National Product slowed.
Our ever-expanding work force stopped expanding. |
Everything changed.
Inflation placed increased demands on Social Security
for higher and higher benefits. Unemployment, meanwhile, continued to cut
into contributions to the treasury.
Old economic assumptions that had fueled Social
Security for so long suddenly collapsed, and economic conditions that the
experts said were not possible were placing an incredible strain on the
program.
Clearly, changes were in order.
'What About My Money?'
Not too many weeks ago, a Social Security recipient
wrote a letter to the editor of one of the Tucson newspapers. He complained
that Washington had squandered all the money he had paid into Social Security,
and that Congress had no right to spend his money that had been accumulating
in his account all these years.
The man's complaint was sincere, but it points
to a common and persistent misunderstanding about how Social Security works.
Money paid into Social Security by workers has
never been held in an individual account. The government does keep track
of how much each worker pays, but the program has never functioned like
a bank account, and it never will.
Social Security, while frequently referred to
as a trust fund, really is a transfer account.
The gentleman who wrote the letter, for example,
paid into Social Security during his working years -- and that money went
right back out in the form of benefit payments to people who were retired
then.
The money he is receiving today is not the money
he paid into the fund. It's the payroll taxes being paid by the young worker
at Phelps-Dodge, the waitress at the cafe down the street, the baker, the
supermarket clerk and thousands of others.
Social Security has always been a contract between
generations -- the generation in the work force helps the generation that
is not, and both are constantly changing.
In the beginning, those old economic assumptions
I mentioned earlier told us that such a system would work well, forever,
and they were proved wrong. We had relied on some other assumptions as
well -- that the work force would always outnumber our retirees and our
birthrate would keep growing. Those assumptions also collapsed.
| * |
In 1935, when the Social Security Act became
law, the average life expectancy for Americans was 61 years. Today, if
is 73.8 years. The average American on Social Security today gets 13 more
years of benefits. |
| * |
As our population has grown older, our birthrate
has declined. The growth rate of the population in the United States in
the 1970s has been the lowest of any decade in history except the 1930s. |
| * |
While general population growth has slowed, the
number of older people has increased considerably. The number of Americans
65 and older grew
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