Jeff Bell on Social Security

Structure is good but we have to make adjustments

A: "[Social Security is] too big for the number of workers that will have to support those that will retire." He said the structure is good, but there will have to make adjustments to balance out the system.

No means testing or other confiscatory schemes

A: Compared to such out-of-control Federal entitlement programs as Medicare, Medicaid and food stamps, Social Security is in reasonably good shape. The bipartisan rescue plan of 1983 built up the trust fund in anticipation of the retirement of the baby boomers. I disagree with those who say the trust fund should be regarded as mythical because there is not some vault in Washington with government bonds sitting in it. This money from worker and employer payroll taxes was committed to future retirees. It is not the fault of those retirees or of the Social Security Administration that Washington spent the payroll-tax surpluses of three decades on other government programs to make the annual Federal deficits look smaller. Millions of Americans paid into the system, roughly proportional to their lifetime income, in anticipation of future retirement, and there is no way their benefits should be cut back by way of "means testing" or other confiscatory schemes.

Cut payroll tax rate to reduce baby boom deficit

A: The future deficit in the system is due to the reduced birth rate since the 1960s, and to return to balance the Social Security system should be modestly downsized without changing its contributory and pro-family structure. The best way to do this, in my view, is by a payroll tax cut of about 20%--from the current 6.25% Social Security portion of the tax for both employer and employee to 5% for each. This would trigger a corresponding decline in the growth rate of future benefits, but only to the extent a worker benefited from the tax cut. Under this plan, everyone's projected benefits would continue to rise--they would still increase with both wage growth and price inflation--but for beneficiaries of the tax cut they would grow less than under current law. This would be enough to rebalance and fully fund Social Security for decades to come.