A Business Roundtable
The nation's Social Security system is in a dilemma. Its retirement fund
is paying out more in benefits than it is collecting in taxes, and that has
a lot of people worried—not just the one in six Americans who
currently receives some form of Social Security benefit (retirement, survivor, or
disability) but also the nine out of ten workers in the nation's labor force who
are being taxed by the system and who are counting on receiving Social
Security benefits when they retire. They're concerned that their benefits will
be drastically cut, or that the system will go bankrupt and they will lose their
Since 1975, the annual benefits paid by the Social Security pension fund
have exceeded the annual Federal Insurance Contributions Act taxes collected
and earmarked for that fund. The program managed to pay its bills through
early November with its reserves, which now are exhausted. Congress has
staved off bankruptcy through June by permitting the retirement fund to
borrow from Social Security's separate Medicare and disability insurance
programs. But if that borrowing stops, or if the problems causing this shortfall
are not corrected by July of this year, certain government officials predict that
the system will indeed be bankrupt.
The administration and some congressional members wanted the Congress
to address Social Security's deficits in the '81 and '82 sessions; but due to its
political sensitivity, the issue was assigned instead to the 15-member bipartisan
National Commission on Social Security Reform, established by President
Reagan in 1981. In January of this year, the commission reached agreement on
a $169 billion proposal that Congress will consider in the coming weeks.
Meanwhile, we thought it an appropriate time for the nation's commercial
sector to express its opinion on this timely and important topic, and to
examine the issue from a business perspective. With that in mind, we invited
a group of knowledgeable and influential business leaders from varied
backgrounds to an informal and open discussion of the Social Security issue.
What follows is an abbreviated version of that discussion.
RUSSELL E. PALMER