Sweeping Legislation Targets Social Security Time Bomb  

(Washington, D.C.)  On behalf of its more than one million members, the Council for Citizens Against Government Waste (CCAGW) today endorsed legislation introduced by Representatives Sam Johnson (R–Texas), Pat Toomey (R–Pa.), and Jeff Flake (R–Ariz.) to allow individuals the option to divert their half (6.2 percent of payroll) of Social Security taxes to individually owned, personally invested accounts.   

“Washington’s collective state of denial will lead to a day of reckoning for Social Security when the nation’s 77 million baby boomers begin retiring in 2012,” CCAGW President Tom Schatz said.  “Only personal retirement accounts or outright privatization will offer today’s workers a chance for a livable retirement income.” 

Dubbed the "6.2 Percent Solution," the bill will give individuals born since 1950 a personal investment option.  Employers will continue to contribute 6.2 percent to assist in funding continuing benefits under the existing program, help pay transition and administrative costs, and fund disability and survivors' benefits.

“Years of trust fund fiction and runaway spending have led to the Social Security fund shortfall,” Schatz continued.  “The 6.2 Percent Solution protects current retirees while giving younger workers an escape route from the pyramid scheme accounting of Social Security.  It is time for workers to wrestle away their hard-earned money from politicians’ wasteful grasp.”     

A CNN/USA Today/Gallup poll in 2002 showed that Americans' biggest financial worry is the loss of their Social Security benefits.  A majority of Generation Xers expect the program to go broke before seeing a dime in benefits.  However, according to a separate Gallup poll, 62 percent of voters favor individual retirement accounts (including 83 percent of younger workers), which would increase the payout for future generations without cutting benefits for current retirees.  

“The political climate is ripe for an overhaul of Social Security,” Schatz continued.  “But time is running out.  When Social Security begins running a deficit in 2019, personal retirement accounts will no longer be feasible because every cent of payroll taxes will go directly to retirees.”     

The current system allows lawmakers to redirect the Social Security surplus to general government expenses, robbing the program of a trust fund to deal with the approaching wave of retirees.  A likely outcome after 2019 is a cycle of benefit cuts and eligibility restrictions that will squeeze the program’s payout to barely a trickle.  Some analysts have predicted an electoral war of generations between retirees suffering dramatic declines in their standard of living and workers facing crushing tax increases in their most productive years.

“Most of our elected leaders either deny or completely ignore what is potentially the most devastating problem facing the nation,” Schatz concluded.  “We commend the efforts of Reps. Johnson, Toomey, and Flake to renew the push for Social Security reform on Capitol Hill.  Defusing a war of generations is more important than squandering the Social Security surplus on pork-barrel projects and over-budget programs.”

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.