With an eye toward this fall’s planned congressional debate over Social Security reform, supporters of personal retirement accounts are taking their case to the people who have the most to gain or lose: young Americans.
Rep. Paul Ryan (R.-Wis.), a leading conservative in the movement to reform the troubled system, told students gathered for Conservative University 2005 in Washington, D.C., that his bill, the Stop the Raid on Social Security Act, would offer great benefits to today’s youth.
“Looking at your ages–you’re all between the ages of 18 and 22 years old, I assume–you’re going to get less than a 1% rate of return on your payroll taxes.”
Ryan is following President Bush’s lead in creating awareness that the current Social Security program, a pay-as-you-go system, will go bankrupt in 2041. Ryan points to a change in demographics from the time Social Security was first introduced in 1935.
“When the boomers fully retire, we almost increase the amount of retirees by 100%, but the workers coming into the system that pay their benefit only increase by about 17%,”said Ryan. “In 12 years, we don’t have that money coming in to pay off your benefits.”
Personal retirement accounts (PRAs), according to Ryan, allow for a better rate of return through investment.
“[Under the current system], it’s up to the 535 politicians in Congress at any given time to determine what benefits people get from social security,” he said.
But PRAs more broadly disseminate wealth and ownership within society. Half of American households today are members of what Ryan calls “the investor class,” owning stocks and bonds or IRAs. Personal retirements are designed to increase wealth and ownership to the other 50% of Americans.
“Under a personal account system, every willing worker in America would become a member of the ownership class,” Ryan told the small group of Washington, D.C., interns. “Everyone becomes a stakeholder of our free enterprise system and a beneficiary of our economy.”
Ryan also encouraged the audience to get involved in the Social Security reform effort.
“You can make a difference in this place at a young age,” said Ryan. “The country is run by 28-year-olds, basically, around here.