This month, my daughter Meredith graduates
from high school. In the fall, she's off to college and her first
real taste of independence. Unfortunately, one of the things that
she faces in the real world is a bill for $100,000 to fix Social
It sounds steep. But that $100,000 is what each family in the
United States will owe in additional taxes if the program is to pay
full retirement benefits over the next 75 years.
The reason for Social Security's problems is simple. Baby boomers
didn't have enough children, and there will be more new retirees
each year collecting benefits than there will be young people such
as Meredith going to work and paying payroll taxes. Since today's
Social Security benefits are paid directly from today's payroll
taxes, once the ratio between workers and retirees reaches a
certain level, the program will begin to run deficits.
That's why it is time for President Bush and Sen. Kerry to discuss
this issue. Their positions on Social Security will certainly
affect my family and my future. They should focus on that future
rather than talk about who did what during the Vietnam War.
Social Security has plenty of money available to pay full
retirement benefits to everyone who either has retired or is close
to retirement. This isn't an issue for senior citizens. However, it is an issue
for Meredith and for everyone else
The Social Security Administration (SSA) says that starting in
about 2018, the program will begin to spend more in benefits each
year than it will receive in taxes. Once they start, those annual
deficits will continue at least through the next 75 years, and
probably well beyond that. And they will get very big, very fast.
SSA says that about five years after they begin, those annual
deficits will be larger than $100 billion a year and will continue
to climb after that.
Social Security's past surpluses are gone. They were spent over the
last 20 years for everything from roads to aircraft carriers. All
that's left is a stack of IOUs that will have to be repaid by
raising other taxes or cutting other spending. Those IOUs will be
repaid -- they are in the form of government bonds, after all, and
are a national promise -- but it will cost more to repay the Social
Security trust fund than it would to repay the entire federal debt.
And unfortunately, that carries the program only to 2042, about 10
years before Meredith will retire.
The nonpartisan Congressional Budget Office says economic growth
won't solve this problem. That means we must do something to fix
Social Security or leave a growing mess for our children and
grandchildren to deal with. Doing nothing isn't an option, and each
year that we delay, the eventual cost our children will have to pay
There are only three real ways to fix Social Security: cut
benefits, raise taxes or make existing taxes work harder by
allowing younger workers to invest some of them in personal
retirement accounts. Raising taxes or cutting benefits means that
Meredith and her generation will be paying much more for much less.
It's not exactly the legacy I hope to leave my daughter. Some form
of personal retirement account within Social Security at least
gives her the opportunity to do better.
As a parent, my greatest desire is to leave the world in better
shape than it was when I was Meredith's age. Social Security's
troubles threaten that goal. One of the best graduation presents we
can give our children is to begin a real discussion about Social
Security's future -- then make some decisions and act. Our children
may not fully appreciate it now, but in a few years, it will mean
much more to them than any of the presents they get for
John is a senior research fellow for Social Security
at The Heritage Foundation.