SAN DIEGO - Robert Bixby, Executive Director of The Concord Coalition, testified today at a public hearing of the President's Commission to Strengthen Social Security in San Diego. As the leadoff witness on the opening panel, “The Need For Reform,” Bixby emphasized that any credible plan for Social Security reform will involve hard choices:
“For over 60 years Social Security has provided a vital floor of protection. Its broad range of retirement, disability, and survivors' benefits for millions of Americans makes it an important issue for people of all ages. But changing demographics render the current pay-as-you-go system fiscally unsustainable and generationally inequitable over the long-term. Reversing this trend will require facing up to some hard choices and making far-sighted decisions.
"Now is the time to begin preparing for the aging of America by designing a retirement system that is both more secure for the old and less burdensome for the young. Demographic and economic circumstances will never again be so favorable for Social Security reform. However, the window of opportunity is rapidly closing.
"Given demographic trends, the economy in the future will be called upon to transfer a rising share of real resources from workers to retirees. These resources will be much easier to find in a healthy growing economy than in a stagnant one. The best way to achieve economic growth and increase real income in the future is to increase savings today. Without new savings reform is a zero–sum game.
"Social Security does not exist in a vacuum. The challenge is to prepare for the demographic tidal wave that will transform our work lives, our health care system, our economy, and our culture.
"The Concord Coalition has noticed an unfortunate tendency to rush into a debate over the pros and cons of specific reform options before fully considering the overall problem, and without stopping to consider what will happen if we do nothing. Details of reform plans are, of course, important. But before we can possibly agree as a nation on what the solution is, we need to first define the problem.
"There is no free lunch solution. Each reform option involves trade-offs and each comes with a fiscal and political price.
"But in 2008, the year the first baby boomers will qualify for benefits, the annual cash surplus will begin to shrink, and by 2016 the trustees project that Social Security's cash flow will turn negative. In 2038, the trust fund will be depleted, leaving Social Security with enough annual income to pay just 73 percent of benefits. Between 2016 and 2035 the system faces a cash shortfall of approximately $4 trillion."
The full text of Bixby's testimony at the public hearing (http://concordcoalition.org/issues/socsec/old-doc/010806cssssdtestimony.htm), and the full statement Concord submitted to the commission earlier this month (/issues/socsec/old-doc/0108socseccomissstatement.pdf; requires Adobe Acrobat Reader), are available under “What's New” at Concord's web site (www.concordcoalition.org).
The Concord Coalition is a nonpartisan, grass roots organization dedicated to balanced federal budgets and generationally responsible fiscal policy.