Social Security scrutinized

SOUTH BEND -- President Bush pitched his plan to privatize portions of Social Security Friday in Joyce Hall on the University of Notre Dame campus, where he emphasized that allowing workers to set aside portions of their Social Security tax will benefit young Americans.\nAbout 6,000 people attended the president's speech by invitation in South Bend. Among the thousands were 10 members of the IU College Republicans.\nThe South Bend stop was part of Bush's "60 Stops in 60 Days" tour to promote his Social Security plan. This comes as only 35 percent of Americans support his handling of the federal program, according to a recent CNN/USA Today/Gallup poll.\nBush painted a dreary picture of the state of Social Security in the coming years. \n"More people are living longer, getting greater benefits, with fewer people paying into the system," he said. \nIn the 1950s, 16 workers paid for every Social Security recipient, Bush said. Now about 3.3 workers pay for every recipient.\nSocial Security is a "pay as you go" system, where the money that workers pay into Social Security pays current retirees' checks. With less money coming in and more money going out, "at some point, the system starts to go into the red," he said.\nBush said the system will be in serious trouble within the next 50 years.\n"In 2027, the government will need to raise $200 billion more than the payroll taxes just to make good on the promises," he said.\nBush said Social Security will be "flat broke" by 2042. \n"It's a problem I think needs addressed," he said. "The longer you wait, the harder it is to find a solution."\nTo solve these problems, Bush proposes allowing workers to invest part of their money into "a conservative mix of stocks and bonds," getting that portion of their payroll taxes out of the "pay as you go" system.\n"I believe that as part of a Social Security reform package, younger workers ought to be able to take some of their own money," he said, "and set them aside in a personal savings account."\nBush outlined two major advantages of this system. First, recipients' money will grow faster than it does in the current Social Security system, which will help make up for cuts in Social Security pay out. In this regard, his plan will primarily benefit younger workers who invest at the beginning of their working careers and are able to let their accounts grow over time.\nBush said another advantage of partial privatization of Social Security is the promotion of an "ownership society."\nBush also quelled any doubt seniors had that his plan will affect their Social Security checks.\n"If you're relying on Social Security today, nothing will change," he said. \nAccompanying Bush on stage at the town hall-style gathering were six selected citizens who all spoke in favor of his privatization plan.\nAmong them was Jeffery Brown, an assistant professor of finance at the University of Illinois at Urbana-Champaign.\n"I've been studying it for about a decade now, and the good news is, it doesn't really require a Ph.D. to understand that the program is in trouble," he said.\nIU College Republicans Chairman Andrew Lauck, who attended the speech, said he agreed with Bush's plans for Social Security.\n"The details are complicated, but the problem is simple," he said. "The system is flawed."\nBut IU finance professor Charles Trzcinka, who read the transcript of Bush's remarks, said he found a number of large holes in the plan to privative parts of Social Security.\n"Privatization does not solve the problem that the charts show," he said. \nTrzcinka said he supports partial privatization of Social Security -- a plan originally introduced by President Bill Clinton -- but that there are more pressing issues in the economy. \n"The Medicare and Medicaid systems are huge holes in the federal deficits," he said. "Health care is an expense that is bankrupting the states."\n-- Contact Staff Writer Michael Zennie at mzennie@indiana.edu.