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THE MISSING DEBATE // Securing the nation's future

There is one month left in the presidential election, during which the candidates will respond to the concerns of the nation. Americans repeatedly voice deep concerns in three different areas.

ONE: Americans feel cut out. Eighty percent of Americans are on a treadmill and cut out of opportunity. We are losing our middle class. Conditions in low-income communities border on despair. And, we are rapidly becoming two separate societies: an affluent top 20 percent, and 80 percent at risk.

Since 1979, wages have been stagnant or declining for 80 percent of workers;

The 75th-percentile family today earns less than $50,000 a year. After paying their taxes and living expenses, there is little or nothing left for savings;

Sixty percent of American families have average lifetime savings of less than $1,259; and

The bottom 20 percent of Americans have average lifetime debt, not savings, of $7,700.

TWO: Entitlements _ Social Security and Medicare _ are in serious financial trouble. Entitlement costs are out of control. We live in an aging society. Shortly after the turn of the century, both Social Security and Medicare will be unable to fulfill their commitments to seniors, and taxes will need to rise to unacceptable levels to pay for them.

When the baby boomers retire, the number of Social Security and Medicare recipients will more than double _ from 40-million to more than 80-million, leaving fewer than two workers to support each beneficiary.

These workers, including my three children and yours, face a 60- to 70-percent lifetime tax rate.

THREE: Economic growth has been stagnant for the last 20 years. For 100 years, 1873 to 1972, real economic growth in America averaged 3.4 percent. Since 1973, real economic growth has averaged 2.2 to 2.3 percent _ a 50-percent difference.

The biggest challenge for the president of the United States will be to craft a bold initiative to address all three crises.

In America, two-thirds of all income comes from wages; one third comes from wealth. But the bottom 80 percent of families own only 13 percent of the net financial assets.

Economic Security 2000 proposes we open the second source of income to all Americans by remodeling Social Security. For the first time in history, we have an opportunity to open the chance of building a nest egg _ of capital ownership _ to all working Americans.

Seniors: This is not about cutting your benefits. Let's make a national pledge to preserve benefits to today's seniors, to preserve the federal promise of a decent retirement income for all, and to open economic opportunity for the young.

Imagine all working Americans with a Social Security savings passbook. Money you currently pay into Social Security will be deposited like clockwork each month into a personal savings account. You own the money. It is invested and managed in the private sector. And you watch it grow. As often as you wish, you can check your balance at store-front computer terminals.

Let's create a funded Social Security system. Gradually change from the current pay-as-you-go tax transfer system to a two-tiered mandated savings system. Tier One maintains a federal safety net. Tier Two allows each of us to have a 401(k)-type account where we own the money and invest in the private sector.

Here's what this means to you. Existing payroll taxes for Social Security are 12.4 percent of wages _ half paid by the employee, half by the employer. A worker earning $8,065 per year is already paying $83 per month _ or $1,000 per year _ into Social Security. After 45 years (a normal working lifetime from age 20 to 65), with annual set-asides and the magic of compound interest, the $8,000 worker can expect to accumulate $147,394 (today's value.) Set aside $167 per month, you can expect $294,788; $250 per month, and accumulate $442,182 for you and your family.

All members of President Clinton's Social Security Advisory Council agree that Social Security faces serious financial imbalance. They all recommend that investment in the private sector is essential to save Social Security.

To remodel Social Security, the window of opportunity is now. If we wait until the deficits strike in 2012, my 6-year-old daughter will be 22, and we can no longer afford to begin the funded accounts. By 2022, Social Security will have annual deficits of $100-billion on their way to $400-billion.

America is the land of dreams and opportunity, in which all should have equal opportunity to work hard and to become owners and stakeholders in a free market economy. Our spark and energy come from the simple belief that we can accumulate savings and nest eggs, and own homes and businesses.

By remodeling Social Security for the 21st century, we can save "security," and at the same time add "economic opportunity." Save our promises to existing seniors and save the promises of a decent retirement income. We can also save the legacy of opportunity and create an economy in which we all have a stake.

Sam Beard is president of Economic Security 2000, a project of the non-profit National Development Council. He also is the author of Restoring Hope in America: The Social Security Solution.

Securing the nation's future

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