If you know someone under the age of 50-anyone at all-who confidently thinks he's going to get all the retirement benefits promised by Social Security, please send me that person's name and phone number. I'm not much of a salesman, but I think I could sell that person just about anything.
I celebrated a birthday last week that qualifies me, if I were willing to settle for a reduced amount, to begin collecting Social Security benefits right away. And as shaky as Uncle Sam's budget might be, I have confidence I'd actually get those checks every month-at least for a little while.
But I'm also aware that I'm in one of the last generations of Americans to have such confidence. Poll after poll of folks who are younger than I am finds skepticism and cynicism about the government's ability to make good on its Social Security promises.
That's why I leaped from my chair a few days ago when I read of a new measure being proposed in Congress that would move the whole Social Security debate into a competitive marketplace, testing whose arguments are best, and giving my children and grandchildren a chance to discover an income stream in their retirement years.
I know. This debate has been going on since folks opposed the launch of Social Security two generations ago. Some wise people knew way back then that it was actuarially unsound. We've kept it going only by taking more and more from the paychecks of our children-and it's still not enough.
Into that debate now comes the unusual and bold proposal of Wisconsin Congressman Paul Ryan. The Ryan measure, if enacted, would allow anyone now paying into the Social Security Trust Fund to switch part of those contributions into personal accounts invested in funds managed by private investment firms. The investments could be made only in funds officially approved for this purpose and regulated for safety and soundness in much the same way retirement funds for federal employees are presently regulated.
The unusual wrinkle of the Ryan plan is that benefits would eventually be paid out to participants based on the proportion of the money they had elected to move to the private funds-compared to the money they left in the traditional Social Security fund. A participant's ability to move to a private fund from the public fund would be limited by a formula-but the Ryan plan aims at moving about half of all such "retirement" taxes in that direction.
The assumption, of course, is that privately invested funds will produce a heftier return than the paltry payoff promised by the Social Security people-and that such a prospect would encourage millions of participants to take that risk and move their contributions accordingly. But that's not just blind optimism. As long as Social Security has operated, its rate of return on investment has lagged far behind even average private funds. The present chief actuary at Social Security says the Ryan plan would achieve full and permanent solvency for the program.
Mr. Ryan's plan also says to everyone: "If you don't like this idea, fine. Stick with traditional Social Security, and you'll get all the benefits it now promises." In fact, he says, those benefits are more likely actually to be paid with his plan in effect than if we try to stick with our present efforts. He quotes Social Security's chief actuary as predicting that without some plan like this, Social Security taxes will jump from the present 12.4 percent to something like 20 percent.
Mr. Ryan's legislation includes a "transition" that is especially noteworthy for including a strict limitation on any congressional spending that might use Social Security surpluses for any purposes other than funding the program itself. That facet of his plan-absolutely critical to making the proposal work-is perhaps also the biggest stumbling block in gaining the approval of a Congress that is always greedy for any stack of cash it sees within arm's reach.
But unless we do something along these lines, says Mr. Ryan, one of four things is certain: (1) We'll have to borrow to pay Social Security benefits; (2) we'll have to cut the promised benefits; (3) we'll have to raise our taxes again and again; or (4) some combination of 1-3.
There is, of course, no risk-free plan. Life almost always boils down to the question: Whose risks do you want to live with? For my money-and that of my kids and grandkids-I like the sound of Paul Ryan's risks.