The debate on Social Security and personal accounts is about extending and democratizing our capitalistic system so that every worker can become an owner. But the arcane debate over "actuarial solvency" was taken to a new level of absurdity on "Meet the Press" Sunday when Sen. Richard Durbin, D-Ill., accused President Bush of wanting to destroy Social Security and said personal accounts "don't address the solvency problem." To the contrary, personal accounts, properly designed, are the only economically rational way to make Social Security solvent and guarantee workers a secure and more prosperous retirement.
Bush says, "You ought to be allowed to take some of your own money and set it aside in a personal savings account that you call your own." It is, after all, your money - your FICA contribution to Social Security, 12.4 percent of your wages - and the government is not saving it on your behalf as it promised it would 20-some years ago when Congress raised the payroll tax rate for the 20th time.
Instead, the federal government, in effect, borrows most of that money from you to pay Social Security benefits to current retirees, who are now collecting on the debt the government incurred to them when, years ago, it took their FICA contributions to pay Social Security benefits to previous retirees, some of whom you continue to help pay for today. When it's done paying current benefits out of your FICA contributions, the government raids the rest of the payroll tax revenues - the Social Security surplus - to pay for everything else from bureaucrats' paperclips to corporate welfare.
The raid on Social Security revenues will end in 2018, when there won't even be enough of your FICA contributions coming into Washington to cover the entire cost of current Social Security benefits because there will be so few workers contributing to support all the current retirees. And even if there were enough FICA revenue to cover all the promised Social Security benefits, by the time you retire, many of you will receive benefits little better than $1.01 for every dollar you contributed over your working years. Some of you will actually recover less in benefits than you paid in FICA contributions. You could have done better than that if the government had taken your 12.4 percent FICA contributions and put them in a passbook savings account for you at a bank.