This is Floyd Wynne with THE VIEW FROM HERE    3/17/05

            Are you a bit confused over all this hassle over what to do to reform Social Security?

            The President is off on a 60 city tour to promote his idea of letting people take a small portion of their social security withholding and put it into a personal savings account.

            Others have suggested ways to reform the system, including such things as raising the limit on taxes….currently only the first $90,000 of earnings are taxed.  Some have suggested raising that total to $200,000 or even $300,000.   Others have suggested that benefits be restricted to only those with incomes at a certain level.

            And some have suggested that the government go another trillion or two in debt and thus ensure social security programs beyond the expected bankruptcy date.   And even that appears subject to interpretation….some say at 2018 the fund will be paying out as much as it takes in, and that by 2042 it will have consumed all the treasury bond surplus and will be bankrupt with only two workers contributing for each retiree.  Others put that bankruptcy point at 2051.

            So…one might say well if the program will be functioning okay until 2042 or 2051….what’s the hurry to fix it?

            I think that the President’s city tour is two-fold.   First it highlights the problem that social security faces.  Currently the federal budget benefits from the surplus coming into social security by simply moving it into the general fund.  Come 2018 the general fund will not have access to a surplus and that could have a sizeable effect on the budget.

But the President is stressing that all over 55 will have no trouble…and that those getting social security now will continue as is.

            However, his pitch is really to those younger Americans to do a better job of preparing for their future.  There is no doubt that social security was never intended as a complete retirement fund.   It was intended as a partial support for those in the lower income brackets during their work years.   Even now….social security by itself would provide only a bare existence.

            This is one of the messages the President is telling.    The other may be a purely political message designed to solidify the younger American vote.  That may sound a bit crass, but that is its’ effect.

            All right….where is the issue politically?

            Republicans openly state that any solution must be bi partisan in nature.  At the moment, the Democratic leadership says it will not even discuss it unless the President drops his privatization plan….something the President says he will not do.

            However, he has said that his plan is just one idea…he welcomes any others, and there appears to be a number of suggestions being proposed.

            My feeling is that we are dealing with two issues….and for bipartisan discussion they should be separated.   First should come the question of devising a program that will ensure the continuity of the social security system as it now exists with future benefits assured.   That can take a number of measures in itself.    Once that is done…then can come the issue of some privatization.

            In my book, the privatization idea might be handled in a different way…somewhat like the current IRA program that let’s taxpayers set aside so much each year from their income that is not taxable until it is withdrawn.  It could be a certain percentage of their income into a non-touchable account, which would belong to them when they retire, or be a part of their estate in the event of death before retiring.

            As I said before…it will be interesting to watch the issue unfold in Congress.

It may be just another of those ideas that are mostly talk and little action..  Time will tell. 

This is Floyd Wynne and that’s THE VIEW FROM HERE.