Response to Maureen West's first question

[National Dialogue Moderator <moderator>]

Response to Marueen West's first question:

Maureen makes an excellent point: We need to know what the purpose of the
system is before we can design it. Regardless of whether Social Security was
designed to be a supplemental retirement program, a full-fledged insurance
program for workers and family members, or "insurance for society itself",
the fact is that, by and large, it fails to meet any of those objectives in
a fair or efficient manner. Social Security consumes 12.4 percent of every
worker's income (up to the maximum taxable amount, $72,600 in 1999) and
gives us a miniscule stipend in return. Professor of Economics at Boston
University Laurence Kotlikoff reports that today's 18-year-olds in every
economic class will pay more in payroll taxes than they will receive in
Social Security benefits. In addition, the average benefit check is about
$700 per month. Combine that negative rate of return with that small check
and Social Security, whether a supplementary, primary, or safety net
program, isn't doing a terrific job. In addition, Social Security faces an
unfunded liability of $9.5 trillion, which, unless structural reforms are
introduced, would require benefit cuts of nearly 30 percent or payroll tax
increases to nearly 20 cents on the dollar. In a paper for the Cato
Institute, Professor of Philosophy at West Virginia University Dan Shapiro
argues that a retirement system based on personally owned accounts meets a
wide range of moral criteria far better than does the current
system--whether judged by its ability to be fair, provide more freedom,
provide more economic security, or foster a sense of community. People who
are interested in the moral arguments for personal accounts might be
interested in reading Shapiro's paper at
http://www.socialsecurity.org/pubs/ssps/ssp-14es.html 
 
Darcy Olsen