Social Security Reform
This week in Washington, the debate continues over the financial solvency of the Social Security system. President Bush has made permanent reform of the system his top priority and he has been going from State to State to deliver his message: the Social Security Trust Fund will be broke by 2018 unless Congress acts to sure up the program.
In the 1950s there were approximately 16 workers for every retiree and the payroll tax was just 2 percent. Today there are only 3.3 workers for every retiree and the payroll tax is 12.4 percent, half of which is paid by you, the employer. It is expected that by the time today's children retire, there will only be two workers for every retiree and the payroll tax may be as much as 17 percent.
The President has assured Americans that he will not reduce Social Security benefits for those born before 1950. But for every year that we fail to address the shortfall and protect the benefits of future retirees, it costs the taxpayer $600 billion. Yes, you read that correctly -- $600 BILLION. So Mr. Bush wants to allow individuals to invest up to 4 percent of their payroll taxes in private accounts - accounts that will earn interest and can be transferred to a relative in the event of death.
President Bush is opposed to any new taxes to resolve the Social Security crisis, but he also understands he must negotiate and with less money actually going into the general Treasury, the pressure to raise taxes may increase exponentially. Payroll tax increases seem to be off the table as far as Mr. Bush is concerned, but he has not necessarily ruled out increasing the cap on earnings; some have proposed raising the ceiling from $90,000 to as much as $200,000.
The Mason Contractors Association of America (MCAA) recently joined the Coalition for the Modernization and Protection of Social Security (CoMPASS), a Task Force which will assist the President in formulating and lobbying for a business-friendly reform package. Permanent reform of the Social Security system is an enormous challenge; MCAA needs your help in fighting for an economically viable solution.
About the Author
Marian J. Marshall was the Director of Government Affairs for the Mason Contractors Association of America.