Letter to the Editor

New business for Wall Street

Monday, February 7, 2005

Dear Editor,

I have just read on the Internet your cogent article of Feb 4 on Social Security, "If Bush plan not the answer, what is?"

I hope that a retired person with experience in business, banking and government -- I was the Executive Secretary of the Treasury Department in 1977-78 --may offer a reply.

First, Social Security was never intended to be the only retirement system for Americans. In the first few decades after World War II, many and perhaps most Americans working for corporations could count on their Social Security benefits being augmented by company retirement plans.

In many cases those plans have been cut back in recent years. At the same time, individual Americans are saving less on their own, and are falling deeper into debt, both credit-card and other kinds. Bush will not say so, because it would not help him in popularity polls, but a solution requires in good part that Americans become more thrifty, even when it hurts; and it will.

It can be done, though. Look at the immigrants who come here -- and I particularly have in mind many who have come from Asia -- who initially work at unskilled jobs but still manage to save a large percentage of their income, to provide themselves capital to invest in business and professions. Americans used to pride themselves on being self-reliant; today this quality is seen most among new Americans.

Second, it is true that financing Social Security will become more difficult in coming decades. Bush says he is willing to listen to any ideas except increasing Social Security taxes.

I agree that to increase the tax rate would impose hardship on many Americans, especially the self-employed.

But why should we not require wealthier Americans to pay Social Security taxes on all their income, and not just income up to $90,000?

Of the 105 million households in this country, four million are "millionaires" in assets.

These four million have an average taxable income of $131,000. If they and their employers paid Social Security tax on $131,000 rather than $90,000, the additional revenue raised for the Social Security system would be a good twenty billion dollars a year, or two hundred billion in a decade -- the full amount of the shortfall that, as you say, is expected by 2027.

That measure alone, then, would remove the worries Mr. Bush professes to have about Social Security.

Mr. Bush's main motivation is however not worry, but the desire to provide, through privatization of Social Security, new business for his supporters on Wall Street.

Sincerely yours,

Peter Bridges

Crested Butte, Colo.

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