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HOW HE SEES IT Social Security needs new thinking



Published: Tue, August 23, 2005 @ 12:00 a.m.



By BOB DOLE

KNIGHT RIDDER/TRIBUNE

Seventy years ago this month, Franklin Delano Roosevelt signed the Social Security Act. Passed with bipartisan support, this great achievement of FDR's New Deal established a basic retirement safety net for all Americans and has lifted millions of seniors out of poverty.

However, some critics today invoke FDR's name to attack any effort to modernize this great American success story. As Congress faces difficult decisions this fall to ensure that Social Security remains solvent for the long term, it's worth remembering some of the principles FDR used to build the program that has been so good to the Greatest Generation.

First, he emphasized innovation. He proclaimed the motto of the New Deal was "bold, persistent experimentation." He was a pragmatist who believed in results. He was not wedded to old ways of doing things, and today we face a situation that desperately needs new thinking.

The facts are clear: in 1950, 16 workers supported each beneficiary in the Social Security system. Today, the ratio of workers to beneficiaries has dwindled to nearly three-to-one, and it will fall further to just two workers for each beneficiary before today's teenagers retire.

Dramatic impact

The impact of the baby boom retirement on Social Security's finances is dramatic: by 2017, the government will pay out more in benefits than it receives in taxes. When today's younger workers begin to retire, Social Security will be bankrupt, resulting in a 26 percent benefit cut or a 35 percent tax hike to make the program whole again. Over the last 70 years, the solution to this problem has been unchanged: raise payroll taxes. It's clearly time for some new thinking.

FDR was also adamantly opposed to burdening future generations with Social Security debt. As he told his Secretary of Labor Frances Perkins in a discussion of the issue: "It is almost dishonest to build up an accumulated deficit for the Congress of the United States to meet in 1980. We can't do that. We can't sell the United States short in 1980 any more than in 1935."

Yet today, our grandchildren face $11 trillion in Social Security debt. We have an obligation to do something about this. While this effort will require difficult choices, it will also present an opportunity for visionary leaders to strengthen Social Security. One part of the solution is simple: give every American the opportunity to choose a voluntary personal account.

A voluntary component to Social Security is not a radically new idea. In a 1935 letter to Congress, FDR proposed that Social Security should include an option for voluntary annuities "by which individual initiative can increase the annual amounts received in old age."

Today, we have the opportunity to create a voluntary option through personal retirement accounts. These accounts would build on Social Security's legacy by giving millions of Americans the opportunity to benefit from the power of compound interest. The accounts would be simple: workers could choose to invest part of their Social Security payroll taxes in safe investment options, ranging from no-risk Treasury notes to a conservative mix of stocks and bonds. The administrative fees would be low, and the money invested would be held until retirement.

Bipartisan fashion

Many Democrats claim they are willing to negotiate in a bipartisan fashion, and they often hold up the agreement that President Reagan and Democratic Speaker Tip O'Neil reached in 1983 as a model. Well, I was a member of the commission that negotiated that agreement, and I can tell you that it never would have happened had the Democratic leadership, particularly Sen. Patrick Moynihan and Congressman Claude Pepper, taken the stance that it has today.

In June, House Minority Leader Nancy Pelosi was quoted saying that Democrats' goal was to "destroy" President Bush's "brand" and "take him down" on Social Security. This isn't the kind of leadership that will strengthen Social Security for another 70 years and beyond, but because Democratic leaders have taken this approach, many pundits have pronounced that Social Security reform is "dead."

On the contrary, President Bush remains committed to fixing the system, and Congress has another opportunity to take it up this fall. House leaders have proposed a plan to save the Social Security surplus in voluntary personal accounts -- the first step toward making the system a good deal for America's younger workers. Add in measures to ensure the program's solvency, and all we need to secure Social Security for future generations is the kind of bipartisan support that made passage of the original bill and the 1983 reforms possible.

X Bob Dole is the 1996 Republican nominee for president and former Senate majority leader. He is author of his World War II memoir, "One Soldier's Story." Distributed by Knight Ridder/Tribune Information Services.




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