The Social Security Trustees' 2001 report to the public hailed the slight improvement in the short term outlook for Social Security as the date when Social Security payroll taxes will no longer cover benefits moved from 2015 to 2016 while the date of insolvency moved from 2037 to 2038. However, there is more to the story than just those dates. In fact, buried in its 190 pages of charts and graphs, the report documents how Social Security's long-term deficits are deepening despite the superficial progress noted by the press.

There are two global forces that ultimately will affect most countries of the world: The aging of society and the declining birth rate. Social Security and Medicare that depend on workers to finance benefits are affected by these trends. Digging through the various charts and data in the Trustees' Report as well as from other public policy institutions corroborates this analysis:

• This year we will spend $475 billion on Social Security.
• By 2017, it will be $734 billion annually and payroll taxes will not cover benefit payments.
• Without change there will be a $127 trillion shortfall this century.
• Between 2015 and 2075, the cumulative unfunded liability in inflation-adjusted dollars is projected to be $22.2 trillion. This is more than six times as much as the national debt. Despite the "improvement" in the insolvency date, the long-run deficit has remained about the same.
• Comparing this year's and last year's reports, the estimated inflation-adjusted deficit in 2075 alone has jumped from $671 billion to $677 billion--an increase of more than $6 billion.

 In addition, independent experts conclude that the cumulative shortfall is about $2 trillion worse than indicated, since the trustees count the payroll taxes of federal employees as real revenue flows. In reality, no money changes hands. The government simply creates an accounting entry within Social Security that is offset by accounting debits across the federal workforce. The bottom line is that Social Security continues on a path to insolvency because Americans are living longer and having fewer children. That means fewer workers to support each beneficiary. Yet, a crisis that is imminent in the eyes of an actuary, looks like a long way off for too many politicians. As a result, Congress has ignored and delayed action on what is probably the country's most serious and long-term challenge. Saving and reforming Social Security for current and future generations always remains a top priority for me. It has been frustrating at times, but I've worked for more than a decade in Congress to focus attention on fixing Social Security. Every generation of Americans has left a legacy of prosperity for its children. The Baby Boomers must not let Social Security's tidal wave of red ink be our legacy to the next generation.

 While I was in the Budget Committee, I had the privilage of chairing the Bipartisan Task Force on Social Security. After numerous hearings from some of the nation's most knowledgeable experts, the Task Force released its findings showing that Social Security will begin paying out more than it takes in beginning around the year 2014. It will have drained all of the trust fund by approximately 2030. After that, the fund will begin devouring a larger and larger percentage of the government's budget. I introduced my first Social Security reform bill in 1994 and based on these findings, I released my latest revised and updated Retirement Security Act (H.R. 3055 in the 108th Congress), to allow workers to voluntarily own and control a portion of their Social Security contributions. This legislation has constantly been scored to restore Social Security's long-term solvency while also providing tax credits to help workers save and insure for their retirements, and help seniors who are living on their own or with family.

My new legislation would allow workers to set aside 2.5% of their wage in a personally-owned account and would guarantee a a return at least equal to those not selecting this option. Workers, who own these accounts, can put their money in well-diversified investments deemed safe by the Secretary of Treasury. The government would supplement low-income workers' accounts to help them build up significant balances to help them build up savings for retirement. People would continue to receive government benefits as in the current system as part of their retirement income. Those participating in the private account would have their government benefits reduced to reflect the amounts deposited into their account.

 There are some important costs to the bill, which eliminates $10 trillion in unfunded liability from Social Security. It calls for a $900 billion loan from government to Social Security (in addition to the repayment of the Social Security trust fund), which will be repaid after the program becomes solvent. It also slows down the increase in benefits for the highest-earning retirees. It does not, however, change benefits for those who have already retired or are close to retirement. H.R. 3055, which includes a title designed to enhance retirement security outside of the Social Security program, would increase contribution limits for IRAs, 401(k)'s, and pensions. It also includes a 33% tax credit for the purchase of long-term care insurance up to $1,000 ($2,000) for a couple. It would also create another tax credit to make it easier for low-income seniors to live at home or with family, rather than going to retirement care. Low-income seniors would be eligible for $1,000 for expenses related to living in their own home, and households caring for dependent parents would also be eligible for a $1,000 credit for expenses. I am pleased to see that awareness has increased and the political climate in Congress is much better than when I started. Today, most members are aware that there is a problem, even if there is still a reluctance to tackle it. President Bush's support has been encouraging and I'm hopeful that we can soon work together and move ahead to strengthen Social Security. Shortly after coming into office, President Bush organized a commission to study the strengthening of Social Security for which I have endorsed most of their conclusions, and I have talked with presidential advisor Karl Rove to discuss the advancement of Social Security reform legislation in the 108th Congress.

 It is now more difficult to demagogue the issue in political campaigns. Americans recognize there is a fundamental problem with Social Security that needs to be corrected if it's going to serve America's seniors and future generations. From the beginning, Social Security has been touted as a savings program, but financed out of current revenues like other government programs. A falling ratio of workers-to-retirees is exposing this political conceit. As the number of workers per retiree falls from 17 in 1950 to three today to just two in 2020, taxes will have to rise or benefits will have to be cut. The key to restoring and strengthening Social Security is savings. Instead of simply shifting money from workers to retirees, we need to start setting aside money and allowing it to grow. In addition to raising returns, it would be a boon to our economy. Increases in national savings would reduce interest rates, encourage business expansion, promote productivity, shrink the trade deficit, and create jobs. Ultimately, I believe that reform based on worker-owned accounts is the right solution because it reestablishes Social Security as a true savings program. By acting now, we can reduce the costs of restoring Social Security for our children and grandchildren. By increasing the return earned on our Social Security surpluses, we can make the transition to a better system cheaper and easier. The Retirement Security Act is my proposal to move forward on this important issue.

More Information: For more on my thoughts and comments on Social Security, please see my:

• Social Security Press Releases, or;
• Social Security Weekly Columns