Background:
The Social Security system is funded primarily from payroll tax deductions by employees and their employers. The Social Security Trust Fund, held in United States Treasury bonds, provides interest to cover a shortfall in any given year between the payroll tax income and the benefits paid to retirees. Current predictions that the system will be “bankrupt” by 2018 may be overstated for the following reason: If, as some estimate, by that year the tax income will be less than the benefits paid out, some of the interest from the Fund will be used to offset the difference. The remainder of the interest will be reinvested in the trust fund. At that rate it is estimated that the fund will cover costs for another decade.
The question today is whether to make major changes in the system, as the President and his Commission are suggesting, or to make more small adjustments, as have been made in the past. Individual investment accounts may be more appealing to those who favor minimal government involvement in individuals’ income, but threaten to remove needed capital from the system and subject these funds to the vagaries of the marketplace. A more conservative approach to fine tuning the system could strengthen it well into the foreseeable future.
Resolution:
WHEREAS the Torah commands us to show honor to the elderly in our community (“Rise before the white-haired, and dignify the bearded face,” Lev. 19:32); and
WHEREAS Social Security has been one of the most successful government programs to improve the quality of life for millions of Americans and currently keeps 48% of its elderly beneficiaries from falling below the federal poverty line; and
WHEREAS revenue from interest on the Social Security Trust Fund exists to maintain this system even when economic conditions change leading to a shortfall between income and benefits paid out in a given year; and
WHEREAS the President and his Commission have recommended addressing this problem by allowing individuals to invest a percentage of their payroll deduction privately and the establishment of private accounts will necessitate a huge influx of government funding to sustain the system; and
WHEREAS some economists seriously challenge the “crisis” analysis, pointing to more moderate changes, similar to those made in 1983 under Pres. Ronald Reagan and bipartisan Congressional leadership, which would allow the system to remain viable well into the future; and
WHEREAS if one believes the crisis as predicted for 2018, the individual investment accounts could weaken the existing Social Security system by removing necessary income from the Trust Fund, thereby hastening a shortfall according to the Social Security actuaries by 2006 and jeopardizing the savings of millions of older Americans whose retirement income would be subject to fluctuations of the market and changes in the economy;
THEREFORE BE IT RESOLVED that the Rabbinical Assembly advocate for a bold bipartisan effort to fine-tune the Social Security system; oppose the strategy of carving individual investment accounts out of the Social Security Trust Fund, as such accounts will not address the inherent need to adjust the system; and
BE IT FURTHER RESOLVED that the Rabbinical Assembly advocate making necessary adjustments to keep the Social Security system solvent by balancing changes to benefits with changes in payroll taxes; and
BE IT FURTHER RESOLVED that members of the Rabbinical Assembly promote discussion within their organizations of various options for strengthening the current Social Security system; and
BE IT FURTHER RESOLVED that the Social Action Committee of the Rabbinical Assembly provide background materials for such discussions.
Passed by the Rabbinical Assembly Plenum, March, 2005