Tom Vilsack on Social Security
Democratic IA Governor
A: Letís be up front about the magnitude of the problem. If the US government were a corporation and they had to report to the shareholders, and they had to list the unfunded liability of Social Security and Medicare, can you imagine what that would look like on the balance sheet? Well, Iíll tell you, the most conservative number is $39 trillion. This has been mismanaged for an extended period of time.
A: First and foremost, youíre going to have to take a look at the way in which Social Security is indexed. Currently, itís indexed based on wages and price. We can index it on price and still maintain the stability of Social Security and maintain the purchasing power of Social Security without necessarily jeopardizing the future of Social Security.
Balance Americaís Commitments to the Young and the Old
An ever-growing share of the federal budget today consists of automatic transfers from working Americans to retirees. Moreover, the costs of the big entitlements for the elderly -- Social Security and Medicare -- are growing at rates that will eventually bankrupt them and that could leave little to pay for everything else government does. We canít just spend our way out of the problem; we must find a way to contain future costs. The federal government already spends seven times as much on the elderly as it does on children. To allow that ratio to grow even more imbalanced would be grossly unfair to todayís workers and future generations. In addition, Social Security and Medicare need to be modernized to reflect conditions not envisioned when they were created in the 1930s and the 1960s. Social Security, for example, needs a stronger basic benefit to bolster its critical role in reducing poverty in old age. Medicare needs to offer retirees more choices and a modern benefit package that includes prescription drugs. Such changes, however, will only add to the cost of the programs unless they are accompanied by structural reforms that restrain their growth and limit their claim on the working families whose taxes support the programs.
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