To many, the ongoing debate over Social Security reform can be likened to a sign pointing in many different directions. Unfortunately, to some it doesn't matter which way we go to "fix" the system, just so long as we go somewhere.
The National Association of Manufacturers is one organization that believes we shouldn't just go anywhere - we care where we end up. While we don't pretend to have all the answers, we believe the nation has no choice but to reach a consensus solution on Social Security that honors promises, strengthens the safety net and promotes economic growth.
Social Security reform must ensure that the system can provide promised benefits to those near retirement, retain a safety net for the truly needy and, for the rest of us, move toward individual savings rather than collective entitlements.
Specifically, we propose transforming a portion of the Social Security program to a system for retirement savings by individuals, funded with a choice of investment opportunities. These individually owned retirement savings accounts would be mandatory, used exclusively for retirement and be the sole property of individuals and their heirs. They should be managed and invested independently of government control, and allow employees who are setting aside their own money reasonable flexibility in selecting among investment funds.
For example, under this system a married couple in their mid-30s, with combined annual wages of $60,000, who invest 9% of their income yearly in the U.S. stock market, could accumulate $1 million by the time they retire in 30 years, assuming historic returns.
Restructuring the Social Security system would leave intact the "safety net" for those who truly depend on the program, while greatly increasing the prosperity of American workers by allowing them to control and own their own retirement savings, and leave unspent savings to their heirs.
Entitlement reform, particularly Social Security, is critical in fostering economic growth, no less for business than individuals. Higher economic growth remains the means to achieve economic security, through lower taxes, a balanced budget and a brighter future for today's workers and their children.
It does matter which way we go and where we end up. If we can act now to save Social Security, we'll spare the generations to come from an uncertain economic future.
The baby boomers are turning 50 at an astounding rate of 10,000 per day, with little assurance of what the future holds for Social Security. In fact, it's estimated that the Social Security trust fund will pay out more than it takes in when the baby boomers begin to retire in the year 2012.
Moreover, the number of senior citizens on Social Security will double to more than 80 million by the year 2030. At the same time, only two to three workers will be available to support each retiree - a far cry from the 20 workers who supported each retiree 50 years ago.
This unsustainable pay-as-you-go system will require raising payroll taxes dramatically to pay for those benefits. The new generation of workers would pay ever-increasing taxes, and get a poor return on what they had "contributed" through the wage-withholding of a lifetime.
Failure to reform Social Security will leave an unconscionable tax burden on our children and grandchildren. We can no long wait.
It's time to awaken to reality and demand real solutions - no Band-Aid quick fixes.
Sharon Canner is vice president-human resources policy at the National Association of Manufacturers, Washington.