Fairness to Future Generations

There is great danger ahead for future generations. With only two workers per retiree in the future, Social Security and Medicare must be reformed. If not, Social Security payments must be cut about 45% or payroll taxes must be raised about 95%. This is based on a study by Laurence Kotlikoff, Professor of Economics at the University of Boston. Kotlikoff has been studying the intergenerational problem for many years. He says that if Congress continues to ignore the problem, we can expect a financial meltdown.

So, how to reform? For Social Security, workers should be allowed to choose Personal Retirement Accounts (PRA's) as soon as possible. With PRA's, part of a workers payroll taxes would go into a personal account to be invested in stocks and bonds. Long-term return on stocks has been about 7% after inflation, for over a century. The present Social Security system would be maintained for those retired, and anyone else choosing to remain with the present system.

With PRA's, the future cost of the system would decrease, and retirees would have money to leave to their children.

For Medicare, one solution would be Medical Savings Accounts (MSA's) which employers would provide, along with catastrophic insurance in place of today's health insurance. The tax-free MSA's would belong to the employee, thereby avoiding the present over-use of medical services because the user pays only part of the cost.

Members of Congress who give a high priority to the future welfare of the next generation will do two things. First, push for early adoption of Social Security and Medicare reform. Second, work to decrease government spending and pay off debt before the baby boomers retire.

The big government problem has been building for a long time. The federal government spends too much, regulates too much, and has gone way beyond what the Constitution allows. It is our duty to cut the government down to its proper size for the sake of the next generation.