Despite the lies promulgated by the Left, it is a self-evident fact that Social Security is on the verge of insolvency. Simply put, Social Security consumes 20 percent of the federal budget – the single largest federal expenditure – and according to government estimates, will be completely bankrupt by 2036. The program, which was created in 1935 to provide a safety net for retired and disabled seniors, has historically provided a valuable service for millions of Americans. Today, however, more workers are retiring everyday and because the labor force is increasingly shrinking, the path we’re on can only lead to fiscal ruin.
As a result, the Americans for Prosperity Foundation released a plan on Tuesday to save Social Security – namely, to adopt and implement a personal savings account plan. This bold new proposal, which has shown considerable success in Chile since it was first adopted in 1981, is perhaps the best way to prevent Social Security from going bankrupt. In fact, the AFP paper delineates a number of ways personal savings accounts can benefit the American worker:
The solution is to allow each worker the freedom to divert their payroll taxes into a personal savings account, as adopted in Chile so successfully 30 years ago. Social Security’s official actuaries have already estimated that such a proposal would achieve full solvency for the program. Moreover, through personal accounts workers could earn full, standard, long-term market investment returns which would significantly outpace the current returns workers are promised in the Social Security program (let alone what it will actually be able to pay given its troubled finances). Adopting such accounts would result in the largest reduction in government spending and the largest tax cut in world history.
Interestingly, it’s also worth mentioning that personal savings accounts have already been adopted in certain parts of the United States. In Texas, as the paper discusses, public employees were offered a similar plan in Galveston County. As it happens, those who opted out of Social Security in favor of personal savings accounts saw at least four times the return on their investments.
Clearly, the Obama White House has refused to tackle this important issue in any meaningful way. Their failure of leadership is not only jeopardizing the future of Social Security, but is exacerbating America’s budget woes. Indeed, personal savings accounts should -- at the very least -- be part of a national conversation as one credible way to save Social Security and get our fiscal house in order.
For those interested in reading the fine print, read the full plan here.