Chicago Daily Herald

February 21, 2002, Thursday Lake

SECTION: NEWS; Fence Post; Pg. 14

Congress must act now to fix Social Security

by John F. DiLeo

At 65, Social Security is old enough to qualify for retirement. We can't let that happen, but we also can't allow its current collision course with bankruptcy to continue. No other political issue is as riddled with inherent flaws and popular misconceptions as Social Security. To most of us, FICA looks like a 7 1/2 percent tax, because only that half is shown on our paychecks, but our employers must pay the other half as a "matching contribution." So in truth, we are taxed 15 percent from our first part-time job until we retire. Politicians market Social Security as an insurance program, but it isn't. There is no investment of premiums; it is a "pay as you go" program. It operates exactly like government's many other entitlement programs - taxes come in, checks go out. As a worker paying into Social Security, you don't own an account that you can count on when you retire. If politicians don't fix it soon, it may not be there at all.

Politicians have been speaking of a "Social Security trust fund" for 20 years. There is no such investment fund. The so-called lockbox is nothing but an accounting fiction. An investment is when you put your money into somebody else's hands (bank or stock market) -but all Social Security surpluses are put into U.S. Treasury bonds. So the government is just moving money from its left pocket to its right pocket, putting an IOU in its place. Rather than today's $10 surplus becoming a $20 nest egg in 10 years, today's $10 surplus is really just a means of creating another $20 burden on tomorrow's taxpayers, when the notes come due!

Washington has put off this issue for far too long. Something must be done to keep our promises to those who have paid in, without dooming future generations to an ever-increasing tax bill. There is even a short-term benefit to acting now: Fixing Social Security would do a great deal toward bringing America out of this recession. For example, if just a fraction of our Social Security taxes could instead be invested in the private sector, that alone could bring about a recovery.

As soon as he took office, President Bush appointed a bipartisan commission to study options for fixing Social Security. The president's commission released its preliminary report in the fall, chock full of ideas for reform - some bold, some mild. The national news media buried the news, and the congressional Democrats attacked it with their typical refusal to acknowledge that a problem exists. The president's commission released its final report in December. It will say a great deal about the integrity of the political class if Congress agrees, finally, to act on this long-overdue matter.