My father worked hard all his life and paid into the Social Security system. He filed the paperwork to begin receiving benefits, but he died before receiving a single check. We came from a modest upbringing. My father could never really get ahead enough to save money. Social Security was all he would have had to support himself in retirement. He would have given anything to be able to pass those funds on to his children. Instead, the government kept that money.
Under President Bush’s proposal, my father could have passed on his Social Security personal account to his children and our family could have had a nest egg. Personal accounts would allow a younger worker the option to put a portion of their money into a conservative mix of bonds and stocks. That money would have an opportunity to grow over time at a rate greater than the current system can deliver. For example, someone who earns an average of $35,000 a year over their lifetime could expect to have nearly $250,000 saved in an account upon retirement.
As a Latino-American, I am particularly concerned about the need for the Social Security system to keep its promises and become permanently solvent. The Latino community is the youngest, fastest growing population in America. Nearly 40 percent of Hispanic beneficiaries rely on Social Security for all of their retirement income and three out of four rely on it for at least half their income in latter years.
The ratio of those paying into Social Security is fading fast compared to those collecting benefits. In 1950, there were 16 workers paying into a system for every retiree. Today we only have about three workers for every beneficiary – and by the time our youngest workers retire we will have just two workers for every retiree. Social Security’s cash flows peak in 2008 and deficits begin in 2017. People are living longer and having smaller families and every year we wait to fix the existing Social Security system costs $600 billion.
The President has made it clear that there will be no changes to the system for people born before 1950. He also wants a permanent fix to the problems facing the 70-year old system, instead of another short-term, band-aid remedy. He has made it clear that all options are on the table, with the exception of raising the payroll tax rate. These taxes have been raised 20 times since Social Security was established – and failed to make the system solvent. A tax increase will dampen the economy by making it more difficult for employers to create new jobs.
Smaller businesses, the true engine of our economy, might be forced to layoff employees or make cuts to other benefits, like healthcare, in order to absorb a tax increase. Tax increases are not the answer because they extract too high a price on the economy and on our citizens.
President Bush has called upon members of both political parties in the U.S. Congress to work together to put partisanship aside to strengthen Social Security. The President is committed to finding the best way to fix the Social Security system once and for all. He believes that leaders are sent to Washington, not to put off challenging issues, but to tackle them head on. To do anything less is harmful to this great program and to future generations who depend on it.