76-07-A3
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Update on Social Security[edit]
Transcript[edit]Fifteen months ago I devoted three of these broadcasts to describing Social Security's financial trouble. I presented the evidence: an actuarial deficit of more than $2 trillion, a dwindling trust fund containing less than a year's worth of benefits; and an ever-increasing tax bite on American workers. I predicted that no worker under the age of 40 would get back in retirement benefits as much as he was being taxed during his working career. And, I concluded that the politicians in Washington knew all about the problems but didn't want to admit them before the national election. The reaction was immediate and intense. The Potomac politicians, Republicans and Democrats alike, accused me of distorting facts, exaggerating the problems, and trying to frighten the American people. They declared solemnly that Social Security was solvent and stable, and that workers could be secure in the government guarantee of their future retirement benefits. My facts, based solely on official government projections, were overwhelmed by their rhetoric. Their hypocrisy was exposed the day after election, when Treasury Secretary Simon published an article in the Wall Street Journal titled "How to Rescue Social Security". Here is what he said. First, about the system in general -- quote -- "As chief financial officer of the U.S. government, I am required to assess the soundness of the Social Security system. I have been shocked at what I have learned. The future prospects of the system as we know it are grim." And about the trust fund: "The trust fund is so meager that it is barely enough to keep the program going for six months. Current taxes and the fund combined are only sufficient to keep the program above water for another six years. There is really nothing we can do about the insufficiency of the trust fund. It is far too late to rebuild it to the required size." And about benefits: "If the beneficiaries are to be paid the amounts to which they are legally entitled, Social Security tax rates are projected to have to increase by between 50% and 100%. I can see no way in which the government's current promises can be kept. If we do not reduce the growth rate of Social Security benefits, an eventual financial crisis is inescapable." What are Secretary Simon's solutions to these problems? First, decrease benefits so that they do not keep pace with the cost of living. Second, raise the minimum age for collecting benefits to 67. Third, tax all benefits as normal income. So much for the government's guarantee of future retirement benefits! We must now face the damage of preserving the myth that everything was alright: a permanently damaged Social Security system, and depleted retirement incomes for 100 million workers and their families. This is Ronald Reagan. Thanks for listening. |
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