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An Open Letter to Congress: Follow President Bush's Social Security Principles to Reform the System Without Raising Taxes!
January 24, 2005
Dear Member of Congress:
On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write to urge you to do everything in your power to reform Social Security in the manner President Bush has outlined. As you know, Social Security reform is necessary in order to secure the retirements of millions of Americans and head off the system's inevitable slide into insolvency. In 1950, there were 16 workers to support every one beneficiary of Social Security. Today, there are only 3.3 workers supporting every Social Security beneficiary. By the time those just entering the workforce today turn 65, there will only be 2 workers supporting each beneficiary. And, if nothing is done to reform the system, today's 30-year-old worker will face a 27 percent benefit cut when he or she reaches normal retirement age due to the eroding trust fund.
As a result of these demographic changes, the current system will not be able to pay the benefits scheduled for our children and grandchildren without enormous payroll tax increases or huge benefit cuts. The Social Security payroll tax, which was once 2 percent, is now more than 12 percent. Economists calculate that under the current system, the payroll tax would have to rise to more than 18 percent if our children and grandchildren are to receive their scheduled benefits. Such a tax burden would not only be unfair to future generations, but it would be unnecessarily destructive to the economy since Congress has the opportunity to act now.
From the perspective of taxpayers, the most important aspects of the President's outline that should be included in any final plan are: large, individually owned retirement accounts and no higher taxes (including removal or expansion of the ceiling on payroll taxes). A successful transition may require the federal government to take on some temporary debt in order to finance the costs. Additionally spending restraint and some modification in the way future benefits are calculated will likely be necessary. Regardless of how the transition cost problem is ultimately addressed, higher taxes are not an acceptable way to finance this process.
Social Security reform is a top priority for American taxpayers at this point in the Congressional session. We need to fix the program now, so future generations won't face crippling tax burdens. Additionally, the establishment of privately owned investment accounts will greatly add to long-run economic growth in America. Any votes Congress takes on Social Security reform plans that enact the President's reform blueprint are certain to be among the most heavily-weighted votes for NTU's annual rating of Congress.
Paul J. Gessing