THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Thursday, January 30, 1997 TAG: 9701300002
SECTION: FRONT PAGE: A14 EDITION: FINAL
TYPE: OPINION
SOURCE: By MILTON H. KAPLAN
LENGTH: 64 lines
Over the past two months, The Virginian-Pilot has presented a number of editorials, columns and letters to the editor about problems facing our Social Security system. All but one, which took the position, ``It ain't broke, don't fix it,'' agreed that our 60-year-old system needs an overhaul. Even the American Association of Retired Persons agreed that changes have to be made, but like every other PAC organization, it wanted no change in the status of its 32 million members. Given that the unbiased Social Security Advisory Council stated that the CPI has been inflated for many years, influencing Social Security payments, and that seniors are living longer and therefore drawing Social Security payments longer, the position of the AARP is unreasonable.
It is unconscionable for us to leave our children a weaker system than we inherited. It is without merit to think that a 60-year-old wonderful Social Security experiment would not require periodic overhauls. It is irresponsible to allow our representatives in Washington to continue to put the problem on the back burner because it will change the status quo and they lack the guts to face up to reality.
In the beginning, it was sensible to invest the Social Security fund in government bonds only. But not anymore. A 30-year Treasury bond for $1,000 in 1966 is still a $1,000 bond with accumulated interest at 6 percent or 7 percent. The present-day purchasing power is about $300. One thousand dollars invested in a fund of Dow-Jones stocks 30 years ago, when the Dow averages were under 1,000, would enjoy today the profits of a Dow average of almost 7,000, plus a modest dividend for 30 years. Certainly, there were down periods in the market during these 30 years, but the long-term experience is always up. Future higher Social Security taxes could be avoided if investment of a portion of the tax payments were made in the American economic market system.
There are those who feel our government is not competent to manage this huge sum and would become politicized. Why not establish an independent board, like the Federal Reserve Board - free of pressure from the president or Congress? This board would be appointed by the president, confirmed by Congress and answerable to Congress but not controlled by Congress. There are many good government and independent economists, college economics professors and bankers who could serve as advisers for investment of these funds.
Any plan that does not suggest a change in the payout or taxing of the present schedule is ducking an important issue. Means or need testing must be considered in any change that is made. The average Social Security recipient receives $725 a month. But there are many who receive $2,000 a month. Moreover, the larger monthly checks usually go to Americans who have been able to establish retirement funds, IRAs, Keoghs, etc. An example: Members of Congress created generous retirements for themselves. Double-dipper former government employees, corporate CEOs and board members are examples of Americans who should pay taxes on 100 percent of their Social Security, not 85 percent. They should be happy to share a little of their good fortune with less fortunate Americans. Means testing would protect those who draw smaller payments. It is the American way!
The recommendations of the bipartisan Advisory Council were intended to ensure Social Security for another 100 years and were not radical. They were sensible and reasonable. Now we need a Congress with guts enough to do the job to save Social Security, not for senior citizens but for our children and grandchildren. MEMO: Milton H. Kaplan of Norfolk describes himself as ``a very senior
citizen.''