NCPA’s Goodman Applauds Appointment Of Saving, Encouraged by Direction of Commission
WASHINGTON (May 2, 2001) — The Bush Administration announced today the appointment of Dr. Tom Saving, professor of economics at Texas A&M and a senior fellow with the National Center for Policy Analysis (NCPA), to the bi-partisan commission on Social Security reform. Saving, who also serves as one of two public trustees for the Social Security and Medicare trust funds, is the director of the NCPA’s multi-year project on reform of Social Security (www.mysocialsecurity.org). Saving is also the director of the Private Enterprise Research Center at Texas A&M University.
According to the White House, the bi-partisan commission is charged with the task of studying the financial crisis facing our nation’s retirement system, and to come up with a solution that meets the principles for reform previously established by the president. Such reforms will include the creation of personal retirement accounts.
“I am honored for the opportunity to serve,” said Saving. “We’re going to try to save the system so that when today’s young people reach the retirement age they will have a financially secure retirement.”
According to the “intermediate projection” from the latest Social Security trustees report, when today’s 18-year olds begin to retire in the year 2050:
- The nation’s Social Security obligations will equal almost 17 percent of taxable payroll.
- Additionally, the burden of Medicare Part A (which mainly pays hospital bills) will equal about 7 percent of payroll by mid century, bringing the total taxpayer burden to 24 percent.
- And if all other health programs that pay elderly medical bills are also included (e.g., Medicaid, the VA system, etc.), the burden of elderly entitlements will be about 33 percent of payroll. That’s about 70 percent greater than the burden today.
“The question the commission must answer is, will the government be able to collect over one-third of the income of future workers to pay these benefits,” said NCPA President John C. Goodman. “If you’re inclined to say ‘no,’ then you understand the need for reform.”
Earlier this year, Saving co-authored and oversaw the production of several studies on Social Security issues for the NCPA. One groundbreaking study entitled “Saving the Surplus,” examined the long-term effects of the two most commonly proposed uses for the Social Security surplus: paying down the debt and establishing personal retirement accounts.
Two others, “Social and Education” and “Social Security and Race” demonstrate that while most young workers lose money to Social Security, some fare worse than others. These studies explain how Social Security’s rate of return – the relationship between payroll taxes paid over one’s working life and the expected benefits one will receive – is affected by educational attainment and race.