I could grab a 6 minutes past 11 today's programming is made possible in part by The Advocates Minnesota Public Radio contributors include Peregrine Capital Management Incorporated and Hammel green & abrahamson Incorporated full service Architects engineers and planners. Good morning, and welcome to midday on Minnesota Public Radio. I'm Gary acting glad you could join us a Republican senator Rod grams is introducing a plan today to save Social Security by phasing out Social Security the plan would phase out the existing social security system over the next forty years and replace it with a program combining Ira style personal retirement accounts and Welfare style government safety-net plan does not call for any increase in the retirement age and no payroll tax increase later this month Senator. Graham's will begin a series of meetings around the state to discuss his Proposal with minnesotans. My day's been going to have to join us from Washington this morning to give us an overview of the plan and take some of your questions. So we hope you'll be able to call a we're talking with Minnesota senator Rod grams about his personal security and wealth and retirement act. Give us a call at 227-6002 to 76051 cities. 1 800 to +422-828-227-6000 or one 802-422-8287 or thanks for joining us this morning. This is pretty complicated. Of course, I and World try to work our way through the plan bit by bit but in general, let me start here. Give him the the beating the stock market is taking is this the that's the best time to be talking about essentially privatizing the system even if the market according to our numbers lost nearly 90% of its value in one day that a person was going to retire they would still be better off than if they have continued with the old Social Security System. But basically if that's never happened in history, and we know that investments into long-term retirement goals, if you look over the last 70 years of the market 70 years including the Great Depression and all the up and down Cycles in It is produced about a 7.56% of return on investment and Social Security today for most people will be less than 1% and 4 many leaving. The negative returns. Another Would You Do Better Off putting your money under a mattress and investing it in the social security. So and also when there's a downturn there's opportunities, but know when you look at the long-term goals and then of course you going to figure in and factoring many things like Good Financial Planning Sound finantial Advice excetera that you're going to be much better off even if the market has its normal fluctuations, but for those young people, especially 25 years old today that are looking down the road 40 years to their retirement. They are going to be much much better off if they have this type of opportunity and choice to make these type of investment decisions rather than the old government system Nigeria. I'll say one thing to Social Security is provided a great safety-net from millions of Americans for many years, but the system now no longer is going to work because it One-time the Rover 100 workers for every retiree in 20 years is going to be less than two workers for every retiree. The system is heading toward bankruptcy. It cannot be sustained today as we know it in order to even try keep the Social Security System around as we know what today it would mean at least doubling the taxes would mean cutting benefits by a third and nobody wants their benefits reduced and it would mean raise the age of retirement. So we have to look at Alternatives safe Secure Retirement Alternatives. My understanding is you built in a safety net here for people who for whatever reason they were there their Investments don't work out. It's right not like people are just going to be left high and dry but one of the advantages that you often hear about the existing system is that it creates a kind of social contract. So everybody's in the same program and everybody has a vested interest in making sure that it continues to work and so on longer-term if you moved A system whereby everybody's kind of on their own don't you open the possibility that eventually people will say while the heck with you, you know, you didn't do very well. We're not going to continue to support you. This is still a social contract. I mean we tried to do everything in this system to mirror at least a minimum benefits to match at least the maximum benefits of social security. So we we do try to do that it whether it's disability insurance, whether it's a survivor benefits in case of a person dies early or whatever but know this is still a social contract. This is still done collectively. Most people won't notice much difference except for checking off exactly in a which one they want to choose they get more options Choice participation in the retirement plans and we build this around a very safe and sound financial environment. It's much like when people go to the bank so, you know, the safety and soundness of our banking system. The FDIC people are are assured that if we put money in it's going to be there through Insurance factors. Cetera and that's the way this system is in the safety net is not for people who make bad Investments because those Investments are going to be handled very well. And if you know, even the wealthiest people in our country have financial advisors and planners in the end. It'll be no difference here. It's not going to be that you have to be a financial expert, you know, you're not an expert when it comes to heart surgery. But if you need an operation you go to the expert and whatever level you choose and that's the way this is going to be and you'll only be able to put your money into financial institutions or agencies that have been approved and meet the guidelines that we set up in this program again for very safe and very sound and for those who say they've been you know, only minimum wage workers all their life or for some reason. I've never been able to contribute more than the minimum share and if they do not if they're not able to meet we call the minimum require retirement requirement and that is 150% of poverty, by the way. So nobody in this country will retire into poverty, but above pop But then the government will come in and say they only say the requirement is $1,000 a month in all of their savings and investments will only reap them $800 a month. That's for the safety net comes in the government would adding the $200 to make them whole so we've tried to build in a very safe very sound program also that provide safety nets and to mirror those type of programs were survivors benefits disability benefits, excetera are built into this program, but the major different scary is it takes it out of government control, which is very little return and puts it into the private markets to use with Albert Einstein call the most powerful force on Earth that is compound interest us through this past week and we supposed to get into all the details of the plan. But at least in terms of an overview, let's assume that that your plan is is becomes law tomorrow people over. People have a choice then write what the howl at work when you have to go into the system because we want to have a date certain somewhere in the future where we go off from what is now the public of social security system and into the personal retirement accounts. But if you're 25 or older, you will have a choice than of whether you want to stay in to the current system if that's what you feel comfortable with or whether you decide to move into the public or personal retirement account and say you're 40 years old Gary and it paid in now for 15 years. And are you look up in your records in the Social Security Administration says you put in $68,000. We will give you a recognition bond for that money. So that is like seed money into your private recounts our account. So we recognize what you have done. And so we will allow that to be your seed money and You Begin from there but people will have to sit down and determine whether they want to stay in the current system or move to personal retirement account. They can do it through financial planning. Hopefully there's going to be many programs out giving all kinds of information. So people can make the best decision. But yes, the choice will be theirs. That's if they want to move into personal retirement accounts. That will be their option to stay with the current system. That would be there other option people who are currently retired would they be affected at all? In fact real quick one was to protect current and future beneficiaries. And that's why we said we will make no cuts and benefits. We will raise no age limits or increase any taxes. We give Americans of freedom of choice as we just mentioned to stay with the system are going to personal retirement accounts. I'll preserve the safety net we which we just talked about provide a better and improved retirement security for workers than is currently available replace the current pay as you go because this is the problem we're heading toward bankruptcy and solvency the system cannot stand it would be so onerous as far as taxes on our children and grandchildren that if they couldn't sustain I'm going to get no tax increases across the board. But yes, those benefits right now outlined in current law would not be changed. We would guarantee the promises that have been made to our seniors and Those About to retire at their benefits with be there as promised. Okay, right. Now those benefits are paid for by worker contributions. There's there's a and what I think of 5% of what a worker puts in 5% would an employer puts in under your plan would instead go into the personal retirement accounts. That's right. So that would leave presumably a shortage and how would the current beneficiaries get their money or right now Gary we've identified and we talked to Chairman Alan Greenspan of the Federal Reserve and said, what are the liabilities in other words, you know, I promised or the government has promised so many benefits to so many people what Amount to Woburn say 70 years and that's what we're looking at and they would say it's about 20 trillion dollars that we have to come up with. So we have tried to identify what it's going to cost to make the transition to personal accounts and we've come up with a roundhouse number of about 13 trillion. So it is cheaper in the long run to go to personal accounts. And in fact, when we balance in other words when it comes to a point where this system is now solvent, it'll be in the USA 2050 2055 somewhere in there. But at that point it'll be some of the greatest problems facing Social Security. So real problems are only beginning where we have solved ours, but we've identified that you know first how much is it going to cost and then we've outlined how do we make up this money? Where does it come from? It'll come through recapturing all the Social Security trust fund going to make sure we fence off if there's any budget surplus save Social Security First there are Provisions for that. We're going to look at ways. Like I mentioned the recognition Bond we're going to have to sell. Bonds, because one generation is not going to be able to pay the bail this system out. It's going to have to come over several Generations. So we were going to issue these new recognition bonds over the life of saying 70 years as I mentioned so we can Finance this way out of it without raising taxes today, but one thing to remember to Gary is a we do not create a new debt at all. All we're trying to do is honor the promises that are already there. So we do know how much it's going to cost. We do have ideas and how to finance it cuz there will be shortfalls. We know that in Indianola to what's coming in right now. Hope you've got ways to to make that up without putting a huge burden on today's workers and without putting a huge burden on tomorrow's workers, but to be able to finance this over a long. Of time, I should ask you before we get to some callers hear. I know you've been a real champion of tax cuts. Could we afford both the tax cuts and setting aside all this money? To finance the transition to your Social Security program. It comes from the FICA taxes Etc. But we also need to look at tax relief right now. I averaged minnesotans frenchtons paved between 42 and 45% of everything. They make in taxes federal state and local taxes property taxes Etc. But the government takes nearly half of what they make. This is more than we even were spending during the height of World War II we are overtaxed and we need to provide some tax relief as well. And we need it also to provide economic stimulus to make sure this economy continues to keep growing because the future is more secure if we have a very thriving and healthy economy and putting more money into the private sector rather than in Washington does that so I believe Gary that they're kind of go hand-in-hand out of there has to be some tax relief across the board. During the tax rates of Americans keep more of their money invested wisely in their families their businesses and jobs Etc. And then we also have to make sure we find ways to fence off any other Surplus excetera or be very very prudent and how we spend the tax dollars. We do collect in that Social Security is at the top of the list, so I can't see one without the other Minnesota Republican senator Rod grams is joining us from Washington this morning to talk about his new program is new proposal to essentially save Social Security, and if you'd like to join our conversation again to 276 thousand to 276 thousand outside the Twin Cities one 800-242-2828 Erica first place. All due respect to the senator. I've I've looked at a lot of these. Social Security privatization ideas and what I see is yet another large transfer of wealth from working people to Bankers to fund managers to stockbrokers. These are stock Brokers and fund managers were currently wreaking havoc in many economies by pulling out their Investments with no thought to the people who live in those countries IHOP in the Bank US Treasury bonds are a great investment and that happening and that is what the Social Security trust fund is invested in now, there is a surplus in the fun. Now it would take very little tinkering in order to ensure that that fun would be solving for another 75 years some estimates. I've seen his just raising the estimates as far as growth by half a percent for over the next 20 years other estimates say if you raised the payroll deduction by one percent Turn on the employee side 1% on the employer side. You could keep the fun solving for another 50 years into the banks into the pockets of wealthy bankers and investors. Well. I had no there might be some people who believe that but I don't believe that and want to talk about a transfer of wealth is really transfers the wealth and people can keep it. They always say where the wealthy don't have to work for their money cuz they got all these Investments. They would have all these, you know shares of stock excetera. This would put all that into the hands of the poorest of the poor of our country. They would be able to control their money. It wouldn't put it in the hands of people to spend as her own money. He's a very safe sound accounts that are overseen by the government with the yearly audits many many controls put in place. So why we call him personal retirement accounts, they are on a very strict safe and soundness type of policies and when the gentleman says tinkering with Social Security, we could save it. Let's just give me a little history of it for one thing when it was first introduced in 1935. I think it passed in 36, but even after they are at the time had very very strong feelings against a government run type of retirement program. And in fact the gentleman a Democrat from, Kentucky I think of his name I think was mr. Play or something like that all that had offered at that time personal retirement accounts. And there were some that wanted to drive through public retirement or we have today and what they promised him. He is our first it passed overwhelmingly on the floor of the senate in 1936 to make sure there was they were personal accounts. It got pulled out in conference with the promised. They would bring it back the next year. We'll of course that promise was broken. It's never been there. But over the years many times that this type of programs have been offered but the Gary to Tinker with it our numbers don't show a half a percent or 2% one from the employee or the employer we have numbers and you can get them anywhere they'll be on the Internet or whatever that it says. You're going to have to double the FICA tax. You're going to have to go from 12.4% somewhere around 26% within the next 30 Years in order to maintain Social Security as we know it today. Then you add on Medicare you're going to be talking somewhere around 40% FICA taxes now you had a mistake and local income taxes and you're saying that you want to have our grandchildren or great-grandchildren pain may be 75 or 80% of their earnings in the taxes. Where are worth trying to do with this bill is to give Americans information. I hope the gentleman will take a good look at it. You might agree not agree. I mean at least look at the charts, but don't have a closed mind. I'm just saying that this is one of the programs that are going to be on the table for debate. Let's open it up. Let's have from Democrats Republicans everybody. Let's look at it in the more the American people have as far as information the better decision. They're going to help us to make it so my program right now. I'm not saying this is it we're going to ram it down the throat of Americans were they like it or not know we want to look at everything get as much information as we want or can have or can get a hold of and then let them marry can people help us make this decision because it's their future not wealthy Bankers not members of Congress. But the average American who relies on this to make sure they have a good life while they're working but also have a very secure and financially secure retirement Johnny. Well, thank you senator for clearing up a couple of things. I totally disagreed with the previous caller and what's most interesting and evidence by his tone was how quickly an experiment like this which only began in 1935 becomes viewed as a right and an entitlement and I question would be when I look at the timidity with which most politicians approach even discussing. The issue is wide are we at the point where something that is not an unforeseen tragedy like a like a like a flood or something that causes you to have a kind of community something for which everyone has decades to save for their own retirement. Why do we do that as a government responsibilities and bye-bye government respond? No, that mean all of us as taxpayers. Why don't we view it as an individual responsibility and one that if we want to encourage it, I would say, you know, I would even be in favor of totally phasing-out Social Security as it exists today over a. Of say 20 or 25 years and converting to a system where it is your responsibility that doesn't preclude some sort of very minimal safety-net, but I guess I've seen people both in very low income jobs one save their money. They put aside the Pinot 8 or 10% whatever it is and they they end up being 70 years old and doing quite well and someone else spend everything they earn decade after decade and then comes to me and says by the way, I'd like you to find my retirement and that's just not right right hand and I I agree with you too to let Americans look at it have the options personal responsibility and people say right now what we only have a 5% savings rate in that is because the government takes about 15. Just for the FICA taxes in of Americans can have that invested by the way would have to be a mandatory program. I mean we were asking Americans they're going to have to set aside this money for the retirement. So they do not become a burden on society when they become ready for retirement age that they have made those plans. They have made that investment across the board and I'll just give you a couple of it quick examples down in Chile Princeton's 20 years. This program has been on board a 15 countries other countries have adopted a 30 others are considering it. We're not ahead of the curve on this at all. We are behind the curve and I'll give you one other quick instant scary when you look at a county Galveston County Texas the government at one time back in the early eighties was going to give options for people to opt out of Social Security. And when so many made it have locations to get out of it that they had to close the door, but one that did was Galveston County, Texas and if you go through some of the numbers like disability Aurora when my father died at 61 he got $253 for all the money he paid into Social Security cuz he was only 61 years old but in Galveston, Texas right now retirement benefits are over four times more for those people than there are for those under Social Security disability payments, not 25 or $253, but it would be $150,000. If a person died early bus other benefits. So. This isn't something that people are just thinking about it has been used in other countries and we have examples in our own country where the Galveston County Texas is a good example of how the system has worked and it is work very well and we we just got to make sure that it's safe and but we can't ignore the compounding of interest is going to provide a better retirement for people today than under the current system. And that's all we're saying is give them the figures give them the information and then let them help us make the decision isn't there a way that the Could just do this with our kind of keep the same system. So there aren't any wrenching changes or anything and figure out a way to get a little more money on the money that they're at the government's collecting a government handle the witch. Again. Sherman Greenspan said the worst thing you could have the worst of all scenarios would be to allow the government become the investing agent not individual firms like lions Our Savior Lutheran Brotherhood would start a financial business that would help her through retirement or I'll maybe some banks or Northwestern what is now on a relias driving all of these Saint Paul County everybody could see if they would want to try to meet the conditions to become a you know, these deposits for your retirement funds but that you would be I mean, we still handle it much like it is today the the employer would still deduct from your check and his contribution. It would send it off to a firm that you designated not into the Social Security Administration, but it would go to save Lutheran Brotherhood if that's who you designed are designated as Agent of it so it would be much simpler things. But you would be getting an account saying how much money do I have in my account Gary right. Now? A lot of people think they have retirement benefits. There's not one dollar in Washington with your name on it for my name on it for retirement. All we can do is hope that they'll be people working that will be able to support us but this would give you an account and by the way, you know when you pass away, so you're 64 years old Gary and you've paid in $600,000 your family would get all of that as part of your estate. It wouldn't be left with the government. You would get it as part of the estate or whatever money. You hadn't use during your retirement years when you passed away your family would get the benefits from that not the federal government. So there are many things in here in an average working person today who's 25 years old could easily when you use compound interest on top of what he has contributed to have a million-dollar retirement account. And if you spent half of that when he died his children or his wife or whatever are is he would designate Get the other $500,000 tax-free under this program. So there are many benefits. So you're working for your family your retirement your estate and you're doing it with personal responsibility and some Senator Rod grams is our guests at this hour. We're talking about Senator Graham's proposal to radically change the existing social security system and we'll get to some more callers in just a second chance and on the next all things considered a classic first gets a little updating or the Iron Range Meats 18th Century Venice your soul to devil went to another end in Minnesota Nets. You're so full of piss and vinegar you draw the weed bad for the Devil Himself. It's all things considered cities programming on Minnesota Public Radio is supported by Ecolab A supplier of cleaning and sanitizing products and services over the noon hour today. It's off to Today's Minnesota meeting we're going to hear from South Africa's ambassador to the United States Franklin's son. He is in the Twin City area to participate in an international trade conference effort underway to try to get Minnesota businesses interested in investing in southern Africa coming up over the noon hour. We can look for some scattered showers across Minnesota today highs low 50s in Western Minnesota. Low 60s in Southeastern, Minnesota Twin Cities, maybe a shower this afternoon brief shower with a high 55 to 60 right now. It's 51 in the Twin City area. We're talking with Minnesota senator Rod grams about his plan to overhaul the social security system and lots of colors are on the line here or wreck your question. Good afternoon, Senator have only one concern book before my question a quick restating of what I think I'm hearing. It. Sounds like the proposed that you've got is basically bringing back old style tensioning which for my grandparents and and to an extent. My parents worked very well due to the fact that they've they work for particular company for an extended. Of time your proposal sounds like it did doesn't require a person to live at work for a particular company. You take care of your investment company and that's where the money goes no matter where you work. That's that's just my simple retelling of what you're saying. And my question is how does how does the proposal you have affect the repayment of the national debt? It's it's a concern that I think I quite a few people. Have that doesn't get addressed the whole lot with all the talk about surpluses. All right, we'll first it is kind of like the pension plans, but you would be your account and you or your retire or your employer would make the contributions to your account. So if you happen to change employers, you know, it wouldn't matter because that that your next employer then we continue to pay into your account and it makes a lot of difference because I know I've been in about six seven different retirement plans and every time I've left an employer I get a six or seven hundred or $1,000 check in after a year or two and you just go out and spend it and it doesn't have the chance to build the grow under compound interest in our account with basically start when a child was born and you know as a grandparent if you put $1,000 into that account for your grandson or granddaughter by the time they reach the age of 65 that would be that would have grown to about $200,000. So compounding does working does help provide the future and in as you mention about the national debt know this is completely aside this. Only looks at securian retirement benefits and but we do need to have a line item in our budget itself under general fund obligations to make sure we begin to pay down at the portion of the dead. I don't care how small a payment but we have to start doing it. It's just like on your home mortgage, you know, if you pay $100 a month 99 or 98 might go to the interest into dollars. To the principal but you make the principal payment. We need to begin doing that with our debt as well. So I won't be necessary to put a pretty tight cap on government spending to to finance a transition class. So as to preclude any contacts you increase or any of me we have to be very responsible for how we spend our taxpayers money, but we should be doing that anyway, but you look at it in the other side of the coin, but if we don't make this transition and if we go with Social Security was we know what today we're going to have to put an even tighter cap on government spending and we're going to have to look at raising taxes tremendously at the same time. So we would rather Individuals be able to take their earnings and put it aside. So each generation would prepare for their retirement and that government then would be able to do what it should do. And so annoyed ours plan. I think we have less of an impact. It would mean less constriction on spending and would also mean we're not going to have tax increases to support A system. That is failing. Thank you very much. I send her because of the stagnation of wages for the working people of the last 10 or 15 years yet the increase in the incomes and the possibility to the higher income when I remove the FICA cap tax limit all together. From where it is now and cancel the existing plan in place. Yes, or thank you very much. Then. You're just looking at a huge tax on some individuals and Society in order to to help subsidize the retirement of others and that is the transfer of wealth and what we're saying there was you can be a 64 year old. Janitor all your life have worked very hard and you can now be looking because of your contributions and interest at an account that could be for $500,000 rather than probably if you live out a normal life a hundred and $40,000 in Social Security benefits. So I think most people would rather have the 500,000 than the 400 so I don't think we have to begin raising taxes on some that the shift as well to others. I think people can take care of themselves. They can do a good job in providing their retirement. And so I don't propose raising taxes on 1 segments of the society or another but I think we got to look at a program where it's going to work for everybody. And when when you have that say 64 year old janitor or truck driver or school. Do all of a sudden now have this type of security in their retirement. They're going to be much, you know, I think more secure and what they're going to do for their life rather than thinking am I going to get a cutting my social security is Congress going to reduce the colas? Are they going to raise my retirement age? This is their account. They control it Washington does not if taped their benefits in the Long Center. We're always told that you know, there's no real reward without some risk. What's what's the risk here that that people when they get to retirement age. They're their account won't be as big as they thought it would be is that is that the ultimate risk or that they actually lose their money that they put in and like I said, we should be there in that envelope. You can't lose your principal. Anyway why you can't do that and we have a guaranteed return of 2.5% minimum and And that's even more about three times better than what Social Security is pain. But again here you go back and look at the average of 7 and a half percent of 470 years and our figures are all based on about a 4% growth cuz we want to be very conservative. And if you talk about the risks a the day, you're going to retire the market all of a sudden takes a 20% drop. Well, I can tell you that most people as they near retirement are not going to take those risks when people are talking about their money and their retirement say you're three years out the market. Is that a good level you're going to turn all your money from safe stocks or whatever maybe into government t-bills. You're going to be very prudent and how you plan those last year's end. You might be 55 years old and say, okay I'm going on I've got enough money. I want to get out of the market. I'm getting too old to take those risks and I'm going to move to something else more secure. So good financial planning is going to add to the value as well. So I know there's people out there that does not mean there are risks, but to Gary one of the biggest risks is not making a decision now because if we're going to rely As I said on Social Security in these are my numbers. These are numbers that have come out of many many. You don't think tanks University's many scholars have looked at this and examined it and they are the ones we're saying the system cannot survive as we know it today. It's heading toward bankruptcy. It's going to become in. You know, if I broke it, so we need to make sure we have some plans and if people want to interface tax increases if that's their choice well in the end that's what Americans are going to get is what they want. But I think if we give him the choice and that's all I'm saying we need to do and that's why this plan should be at the table with other issues dealing with changing Social Security or other retirement plans because Americans need this information center. I know you have to run here shortly, but let's let's go get one more call Valerie. Calling for Bemidji Minnesota high and I I'm for anything that will stop fostering dependent on the government and it sounds like the plan that you were opposing puts more responsibility of the individual and I think that's great. But I'm a mother of a 25 year old who receive disability benefits because of a mental illness that she has and I see that the present disability benefits guidelines and whatever they go by Foster dependents and that's not what I want for my daughter. I'm wondering what your plan has to offer those who receive disability benefits are planning. A lot of that would have to be handled on out of the of the government side because you know right now within Social Security, there are several parts of it, you know, there is no survivors benefits. There's disability benefits. There's SSI type benefits and what we're saying is those programs can continue if that's what's going to happen, but we want to retire concentrate really on the retirement side. Well, unfortunately. We messed up here technically and we cut off sooner to grams and our apologies to you those be listening into centigrams. Of course, nothing more than a operator error hear my fault. Sorry about that Senator Graham's certainly like to thank him for joining us this hour to give us an overview of of his program again. He's going to be holding several meetings around the state. I think the first one is on the 15 next week and we'll be holding several meetings around the state to talk some more about his about his program and to encourage discussion as he says of the broader issues the White House originally scheduled a summit meeting on Social Security, which was to be held right after the November election and they're still talk that will be such a summit meeting. But of course it would coincide with The impeachment process as well. So we'll have to see if in fact the Social Security discussions get sidetracked in any way by that to impeachment process but thanks to all of you who have been calling in with questions. Now, we're going to be speaking next with a person who has been spending lots of time working on the social security issue, Virginia Reno who is the director of research for the washington-based nonpartisan National Academy of Social Security social insurance rather. That's a group that focuses on Social Security issues. And let's hope here that damn is Rena was with us or are you there or Virginia? Virginia Reno Nuts not Virginia Reno. Senator Graham's is back with a senator. Thanks. I'm sorry for disconnecting you there. You know I should not be allowed in the Machinery. The only thing I was saying is about the lady at call Valerie for my for Bemidji when she talked about you know of this is good responsibility for individuals, but and I just tried to stress that this is just great opportunity as well and other people have this opportunity to you don't make retirement even better than what they can have now. But again, they need the information they will make a good decision and choice I asking a senator I raised the question while we were trying to get you reconnected. They're supposed to be this White House Summit after the election here to talk about social security issues. And is this all going to get sidetracked you think the by the impeachment inquiry? I hope not and I don't think so. I think Congress has to continue doing what it needs to do that is to finish out the session now, but we have a lot of work to do right now the impeachment proceeding hearings are going on and that's confined to the de. Mary Committee of the house and are they have a lot of work on their plate? But other areas of government of the work on the senate floor continues to work on the house floor and all these plans, you know for the Social Security Summit excetera will go on there very necessary and we need to make sure that the Wii complete that task and very briefly Senator you think Congress is ready for the kind of dramatic change that you're talking about or are they more interested in a kind of incremental tinkering security perform? Cuz I talked to many young people surprised that they were so concerned that they wouldn't be there for them. So we've been working on this plan for a number of years and more seriously know all that now in the last year-and-a-half, but we have everybody talking about it. As you know, the president has become involved in this we have Senators Moynahan and Carrie from the Democratic side of the aisle. We have a number of Republicans. So right now what it used to be as the third rail of politics and that is you couldn't talk about social security or you weren't Get reelected but right now the American people out there what they want is to they're saying we have some concerns about the current Social Security System. It is heading toward bankruptcy. Give us some honest numbers and give us some honest options and let us be part of this debate and that's all we're trying to do. We're trying to put a program or a plan on the table that will be one of many that Americans will consider down and look at attend meetings here these Social Security Summit excetera and then help us make up their mind because we want what's best. So when you retire I retired Gary we want the best retirement for ourselves before importantly we are concerned about our children and grandchildren and that is what we're trying to do. Thank you so much son of getting my apologies for disconnecting you that's alright. I appreciate the time Rod grams joining us from Washington with that unfortunate Interruption now, Virginia, Reno joins us director research for the washington-based National Academy of Social insurance. Good morning. Misery. No. Thank you for joining us. Talking with you about social security and where we are with it. Well, I think you had a chance to hear most of what the senator Graham's was saying at this sounds like a much more sweeping proposal than most of the others that are that are being talked about. Is that a fair characterization and many of them do involve features that would involve individual Social Security accounts, but I think it's really important in thinking about social security reform to step back and kind of Define. What is the nature of the problem? We're trying to solve here and according to the best estimate the long-range projections it is that by the year 2032 Social Security will run short of money to pay all promised benefits. At that time the actuaries forecast that there will only be enough money to pay 75% of benefits that so we have it a financing shortfall. It has to be one way or another but it's is not an imminent problem. Perhaps you can help us out here. I think it gets confusing. I know it gets confusing to me and I suspect a lot of other people we hear such Divergent opinions as to what's required to keep the system going on the one hand. We hear that a little tinkering around the edges is all that's needed and Social Security will let will be able to get past that insolvency problem and continue on indefinitely and other instances. We hear that a major overhaul is going to be required a huge tax increases in the rest would be necessary. Is there any way to sort that out? That are made by the actuary for the social security system and the way one way they measure the future, you know imbalance is what percentage increase in that's in the Social Security tax would be needed to balance the system right now. We workers and employers each pay 6.2% of their earnings for Social Security. They pay additional FICA taxes for Medicare. But Social Security is 6 to according to the 75 year projections, if those if that rate we're now a 7.3 that is a 1.1% increase the system would be in balance for 75 years. That wouldn't be in Balance breast be on 75 years, but that's kind of the magnitude of imbalance if it is a change would be adopted today or 1% increase on both employer and employee with no other additional changes would essentially keep things in balance for a while. 1.1% That's according to the 1998 projections. Centigrams was talking about under his proposal the government would essentially ensure that people would at least get payments equal to 150% of the poverty rate any idea what the current payments work out to a relative to the poverty poverty level average benefit. I think for a retired worker is somewhat above the poverty level. I don't believe it's as high as 150% but that's a fact we could check. Is there a in terms of the current Social Security payments are fairly wide range. maximum benefits. The person not retiring last year the highest benefit would be about $1,300. That's for one returning at 65. Then that's a month and for a low or it would be under $600 a month. So in some cases people are getting more than double what other people are getting earnings or they had a more steady work record because Social Security is based on both your earnings and your work record, but it is also wages are tilted to pay a higher percentage of your pastor needs to low earners, but the high earners so it helps to achieve adequacy while still basing benefits on people's work. Is there any way to calculate roughly what kind of rate of return people get on the money that they're paying into the system right now centigrams is talking about guaranteeing at least a two and a half percent rate of return on money. That would be put into these private retirement account. His proposal anyway to guesstimate how much people are getting back on the money. They're paying in under the current system. I know Economist and actuaries have calculated that and of course what they're calculating is an average for everybody who is of the same age, but what people actually get depends on what happens to them in their lifetime if they should become disabled. They of course get a lot more out than they put in a particular if they're disabled at a young age likewise people who live a very long time and retirement and that's more likely for women than men more likely for widows and other than widowers. They to make it a lot more out than they put in though. The current system isn't really designed to pay anybody a particular return is designed to provide benefits when they need them to give us some advice as to what we should be looking for as this debate moves forward. What are the kinds of things that people ought to be considering is that here one proposal versus another proposal versus another proposal. I guess one one important thought is that there is really no free lunch. There is no way to balance the social security system without someone getting less or someone paying more Eve. And that's true whether you have private accounts. It would also be true if you collectively invested some of Social Security surpluses in the stock market. There's no simple Silver Bullet out there. And I guess a second point would be that this really is a choice about values and I think that's a choice that it's the American people are very capable of making as they think about what extent we want to move Social Security to be more like kind of a private savings account where what you get out is what you put in versus retaining the kind of shared Security in and Collective provision that we have a system. Where do we go in either direction that will involve either to increase taxes or or lower benefits simply to keep it in Balance. Finally. Do you have the sense that the Congress is ready to take this issue on? I really don't know I think. A lot of that will depend on what happens over the next few months. There certainly is a great deal of interest in Congress, but As people look more closely at various reforms they may decide. Maybe we need more information before. What's thanks so much for joining us. We appreciate it, Virginia Reno is the director of research for the washington-based National Academy of social insurance. It's a nonpartisan group that focuses on Social Security issues. This is midday coming to you on Minnesota Public Radio reminder that coming up over the noon hour. We're going off to the Minnesota meeting. We're going to shift work will still be talking about Investments. But of a different sort, we will be talking about the weather or not. Minnesota businesses should be investing in southern Africa been here today from the u.s. Ambassador to the United States from South Africa Franklin son, and that will be coming up over them in our I'm Lynn Neary. So you're a registered Republican or you call yourself a Democrat. What did these labels tell us about you not as much as they used to according to one pole and that there seems to be Large gap between our political identity and the parties we belong to which begs the question do political parties matter anymore. We'll talk about modern polling public opinion and Party Loyalty on the next Talk of the Nation from NPR news. Talk of the Nation begins at 1 here on Minnesota Public Radio time now for The Writer's Almanac