WASHINGTON – Conservatives touted personal accounts as the revolution that will fix what they say is a broken Social Security system at a panel celebrating the program's 72nd birthday.
The Social Security Act was signed by President Franklin Delano Roosevelt on Aug. 14,1935. The retirement benefits program is today a source of complaints for many elderly who say they aren't getting enough out of the program and for youth who say they fear all the money will be gone by the time they're old enough to collect.
The panel was presented by 60 Plus,which bills itself as the conservative counterpart to the AARP. Conservative ideas like privatizing Social Security and starting personal accounts were the most popular.
Social Security was designed to pay benefits from the tax revenue it collects each year. Any surplus is invested in U.S. Treasury bonds. An April report from the Social Security Trustees said in 2017,taxes won't be sufficient to meet that year's benefits. The surplus will run out by 2041,and Social Security won't have enough to pay full benefits,the report said.
That news is breathing life into an old debate about what should happen to Social Security.
Americans should have personal accounts and choose what that money is invested in,said Ryan Ellis,executive director of the American Shareholders Association. Under his plan,people would control their accounts and could choose from a “menu” of investment options.
They could also opt to stick with the traditional program,Ellis said. Because so many people will want personal accounts,Social Security as it exists today would be able to support those who don't want to change,he said.
Personal accounts are the alternative to “passing the buck to younger generations,” said Patrick Wetherille,cofounder of the conservative group Students for Saving Social Security.
One panelist suggested a different solution.
Spreading the extra money into more diverse investments to help the program as a whole instead of creating individual accounts would be a better choice,said Nancy Altman,chairman of the board of directors for the Pension Rights Center and author of “The Battle for Social Security.”
“Social Security is vitally important to all Americans” and should be fixed,not ripped apart,Altman said.
Altman said personal accounts would put the burden of risk on individuals,who could lose their investments in a stock market crash or would miss out on getting more money depending on when they retired. For example,people who hit retirement age when the market is down would get less money than those who retired during a market upswing.
Ellis said that most people will invest in stocks early on and move to bonds as they get closer to retirement age,so they won't be subject to market fluctuations.
Altman said it would be safer for Social Security trustees to invest the surplus in both bonds and private equity funds with interest and dividends used to pay benefits. She said doing that would increase revenue enough to make the program secure for decades,instead of it running out in 2041.
The likelihood of either change becoming reality soon is slim,the panelists said.
“I'm not of the opinion that it can happen any time in the near future,” Ellis said of personal accounts,blaming Democrats who have said they would filibuster any attempt to start personal accounts.
Altman said the idea of personal accounts had its best shot when President Bush campaigned for the idea in 2004.
“The American people made a loud statement they're not interested in changing Social Security,” Altman said. She said she's “not sure” about the chances of her idea coming to fruition.