Last week the President released his latest budget, proposing policies that would result in a $1.33 trillion deficit this year and continued budget deficits for as far into the future as government bureaucrats project. As budget experts like the non-partisan Congressional Budget Office have explained, the main cause of the looming fiscal problems going forward is unsustainable spending in entitlement programs like Social Security. Yet the President’s FY 2013 budget does not propose major reforms to this broken program.
Social Security has nearly $18 trillion in unfunded liabilities, and with continued waves of Baby Boom retirees and sluggish growth in the number of workers to support them, the problem is only likely to get worse. Opponents to reform often argue that the program can be fixed with minor tweaks around the edges, but those changes tend to make what is already a bad deal even worse for workers.
Unless the program sees major structural reforms, massive benefit cuts, tax increases, or more government borrowing will be needed. This would be a huge disappointment to retirees, a drag on the American economy, or an even bigger debt burden onto the shoulders of our children and grandchildren.
Today, Americans for Prosperity Foundation is launching an effort to educate the American people about the benefits of optional personal savings accounts for Social Security. It’s a policy that relies on freedom and choice instead of forcing Americans to stomach benefit cuts and tax increases.
And it’s a policy with several success stories where it has been tried. For example, more than 94 percent of Chilean workers have opted in to their country’s personal account system, taking advantage of the retirement benefits that are 50 to 100 percent more generous than what their old system offered.