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| SECURING THE FUTURE
JANUARY 6, 1997TRANSCRIPT |
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A federal advisory council formed to examine the Social Security system failed to rally around a single course of action. Instead, council members split into three groups, each backing different proposals. Privatization of at least a portion of the Social security system is part of all three plans. After a background report, Margaret Warner leads a panel of council members in a debate regarding the council's proposed options.
A RealAudio version of this NewsHour segment is available.
January 6, 1997
Members of a federal advisory council debate three options for fixing the Social Security system.
July 16, 1996
Ross Perot describes the Social Security issue as he sees it in a NewsMaker interview.
MARGARET WARNER: During the Great Depression of the 1930's, millions of Americans lost their jobs and their retirement savings. President Roosevelt and the Congress responded with the Social Security Act of 1935.
PRESIDENT ROOSEVELT: We have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-stricken old age.
MARGARET WARNER: To pay for Social Security benefits the government essentially borrowed the money. That is, it extracted contributions from current workers and transferred them to current recipients, who were retirees. Unlike a pension fund, which sets money aside to build up in investments over time,
this was a pay-as-you-go system from the start, today's workers paying for today's retirees, tomorrow's workers paying for tomorrow's retirees.
At the outset, there were 159 workers for every eligible retiree. Social Security taxes were modest. By the late 40s, with 42 workers for every recipient, problems in the system still seemed far off. By the 1960s, more and more people were qualifying for a wider range of Social Security benefits. What's more, inflation was driving up the amount those beneficiaries receive. Despite the entrance of post war baby boomers into the work force, by the mid 1960s, the ratio of workers to recipients had dropped dramatically to four to one. By 1983, the problem had grown so acute that President Reagan asked for recommendations from a
new bipartisan commission led by economist Alan Greenspan. The Greenspan commission proposed and Congress approved a plan to create a Social Security Trust Fund and finance it with a major hike in Social Security taxes. The commission hoped to set aside enough funds so that Social Security would be solvent at a future time when there might be only two workers for every recipient.
PRESIDENT REAGAN: It assures those who are still working that they too have a pact with the future. From this day forward they have our pledge that they will get their fair share of benefits when they retire.
MARGARET WARNER: For the first time more money was coming in than going out, creating a surplus. But now, just 14 years later, it's clear that at current rates of taxation and benefits, this positive cash flow will end around the year 2010. That's when the first of the baby boomers retire. And it won't be long after that before the Trust Fund is used up entirely.
LAURENCE KOTLIKOFF, Economist: In 20 years or so when you retire, under current policy, unless we change it, the Social Security system will start running annual deficits, will start using up this Trust Fund, and as a result, by 2029, the Trust Fund will be zero.
MARGARET WARNER: In 1994, Health & Human Services Secretary Donna Shalala appointed a Social Security advisory council to devise a plan to avert this long-term insolvency.
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