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Friday, 13 May 2005 |
As decisions are made in Washington that will have considerable impact on the long-term financial standing of the United States, CED has issued two new reports to inform policymakers and the public about the critical choices, and their consequences, facing the U.S. As Congress deliberates on spending priorities for FY 2006 and beyond, considers making recent tax cuts permanent, and debates various options for Social Security reform, CED has issued a new policy statement, The Emerging Budget Crisis: Urgent Fiscal Choices. The new report presents a sober examination of the large, long-term federal budget deficits facing this country. The report also strongly warns that, with the retirement of the baby-boom generation a few short years away, policymakers can afford to wait no longer to make the difficult decisions necessary to prepare the country for the economic consequences of an aging population. Prudent action is needed now on all budgetary fronts to avoid a financial debacle -- with significant implications for important issues such as taxes, health care, and Social Security.
Social Security reform continues to be the top domestic issue on the national agenda. Congress must recognize the fiscal situation in considering the options to strengthening the finances of this vital program. CED has updated and restated the comprehensive Social Security reform package detailed in the 1997 CED policy statement, Fixing Social Security. The new report, Fixing Social Security: A CED Policy Update, presents CED's plan for strengthening and modernizing the system. The proposal was prepared by a distinguished task force of business leaders and academic experts. The CED plan acknowledges that some changes must be made to Social Security to prepare it for the challenges that lie ahead, and to make it more attractive to a new generation of workers; but CED also recognizes that the essential safety net provided by Social Security must be preserved. CED recommends creating a two-tier system that would both restore the fiscal solvency of Social Security and convince young contributors who perceive a low and diminishing return on their contributions that Social Security will provide a meaningful benefit to them. The first tier would return the current basic system to long-term fiscal solvency through relatively modest adjustments. The second tier would "add-on" a new system of individually controlled personal retirement accounts to increase the rate of return for younger workers.
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