After winning re-election in 2004, President George W. Bush immediately began campaigning for his new Social Security plan. The plan was met with heated debate and after months of campaigning, there was no mention of it again. But the issue remains, what will the government do to fix Social Security?

Though the issue may seem irrelevant for students right now, this problem may affect our generation the most. The Social Security Administration predicts the system will go bankrupt around 2041 — just as our generation begins to retire.

The current Social Security program is inherently flawed. The program was set up in the 1930s and operates under the idea that the government will tax people working to pay Social Security benefits to current retirees. But what would happen if there were more people collecting Social Security checks than paying taxes?

Since the program was founded, there has never been a deficit, so the government has been able to ignore the issue for decades. And to be even more irresponsible, instead of saving the surplus of money that workers paid into the system, the government spent it on other government programs. In the coming years, the largest generation ever (the baby boomers) will enter their retirement years and begin drawing Social Security checks, which will inevitably bankrupt the system unless a change is made.

The Republican Party has led the charge for Social Security reform. However they’ve tabled the issue with mid-term elections this November. Politicians do not like to take such “radical” positions during election years for fear of alienating voters.

But just because nobody is talking about Social Security anymore does not mean the problem went away.

Monday, a group of economists and academics met at the American Enterprise Institute to discuss a proposal that may be the answer to the Social Security problem. The plan was created by Jeffrey Liebman, who served as an adviser to President Bill Clinton, Maya MacGuineas, who served as Social Security adviser to Senator John McCain, and Andrew Samwick, a former chief economist on President Bush’s Council of Economic Advisers.

MacGuineas commented, according to CNNMoney.com, “There’s something for everyone to hate.”

The plan creates mandatory private investment accounts, which will appease republicans. Traditionally, democrats have opposed the accounts, a cornerstone of Bush’s plan to fix Social Security. Three percent of workers’ incomes would be placed in the account, and in retirement, the account balance would be converted to a lifelong annuity. Employees will have a choice between 15 different investment options and will earn a greater return on their money than the current system provides.

To appease the democratic side of the debate, the plan raises the cap on the Social Security tax. Currently workers only pay Social Security taxes on their first $94,200 of income; any income over that amount is not subject to Social Security taxes (a “tax break for the rich”). Under the proposed plan, the limit is raised to $171,600.

The proposed plan also raises the current Social Security tax incrementally from 12.4 percent (half paid by the employee and half by the employer) to 13.9% by 2018, with the 1.5 percent increase paid by the employee.

The plan also raises the retirement age from 65 to 68. The early retirement age for Social Security benefits is also increased from 62 to 65.

This increase makes sense because people are living longer today, thus increasing the length of their retirement and the amount of money that the program must pay out.

In addition to increasing the age at which retirees can collect benefits, the plan also reduces the benefits that employees receive. The exact dollar amount is currently calculated by an overly complex formula, which would be tweaked to lower the amounts paid out.

To find out how much you will receive from Social Security, visit www.ssa.gov.

Although raising taxes and cutting benefits are not a well-liked way to help solve the problem, they are necessary. There is only so much money in the system and as more people collect Social Security, additional funds must be raised one way or another.

Although I believe workers would be better off without the Social Security system, overall this plan is the most realistic solution to solving the current problems and ensuring that our generation will receive some money when we retire.

E-mail Todd at [email protected].