Everybody talks about fixing Social Security, and that's about it.
President Bush last week ruled out raising payroll taxes to shore up the system, and called again for legislation to allow younger workers to divert part of their payroll taxes into private investment accounts. Federal Reserve Chairman Alan Greenspan favors raising the retirement age.
And members of Congress, with their eyes always on the next election, are reluctant to propose a fix that might upset the young, old, or any voters in between.
But time is running out to fix the system without having to take Draconian measures.
"The fix is harsher if we wait 10 years," says Ron Gebhardtsbauer, a senior pension fellow at the American Academy of Actuaries.
The first of the baby boomers will begin tapping benefits in 2008. The Social Security Administration figures its trust funds will run out in 2042. Payroll taxes then would cover up to 80 percent of promised benefits.
So, since no one in Washington seems able to act, it's up to you. You fix it. Play the Social Security game, developed by the American Academy of Actuaries, to keep the system solvent, using frequently suggested repairs. Find any combination that fixes 100 percent of the problem, or better.
But here's the catch: You're in Congress and want to remain so. Raising taxes on the wealthy means you could lose your biggest contributors. Cut benefits, and the evening news features seniors picketing your office. Increase the retirement age, and angry spam pours in from cubicles nationwide.
A note: President Bush's private accounts aren't in the game, because they're not a fix - at least not for a long time.
Here are some commonly recommended reforms to Social Security, and the impact they would have on the system's trust fund. The goal: Solve 100 percent of the problem, or better. Remember, you're a politician who wants to keep your job. Each fix comes with consequences that are sure to anger different constituencies. To play the Social Security Game online, go to baltimoresun.com/ssgame.
1. Increase the retirement age for full benefits.
You get 68% - Raise the retirement age to 70 by 2030, adjusting thereafter as people live longer.
You get 33% - Or accelerate increase in retirement age to 67, adjusting thereafter. The argument: Since Social Security was created, life expectancy has gone up from 61 to 76.
You get 0%
The argument: Hurts those in physically demanding jobs. Employers might not want to hold onto older workers.
2. Reduce cost-of-living adjustment by half a percentage point.
You get 41% - The argument: The index used in annual adjustments overstates inflation.
You get 0% - The argument: Oldest retirees would fall far behind in purchasing power.
3. Reduce benefits by 5% for future retirees.
You get 32% - The argument: Everybody should be part of the solution.
You get 0% - The argument: Hurts low-income workers relying entirely on Social Security for retirement income.
4. Gradually reduce benefits for retirees with annual incomes exceeding $50,000.
You get 75% - The argument: Saves benefits for those who need them most.
You get get 0% - The argument: Discourages savings, encourages people to hide assets.
5. Raise payroll tax on workers, employers by 0.5 percentage point each, to13.4% total.
You get 51% - The argument: A gradual increase won't hurt because wages are going up.
You get 0% - The argument: Makes taxes too burdensome, especially on low-income workers.
6. Increase wages subject to Social Security tax by about $20,000 from $87,900.*
You get 26% - The argument: Those workers can afford it.
You get 0% - The argument: Higher-income workers would get little for their extra contribution. Costly for employers.
7. Tax Social Security benefits like pension benefits.
You get 20% - The argument: Simplifies tax rules, and low-income retirees would still pay no income tax.
You get 0% - The argument: Increases taxes for middle-income retirees.
8. Include new state and local government workers.
You get 10% - The argument: These workers should pay their fair share to keep the system solvent.
You get 0% - The argument: They do fine with their own pensions, and this would divert money from those plans.
9. Invest 40% of Social Security's assets in stocks or other private investments.
You get 36% - The argument: Could boost returns, and bring in professional investment management.
You get 0% - The argument: Brings politics into the stock market. Could increase taxes.