Which is why the legislation I introduced last month with Sen. Bob Kerrey of Nebraska includes optional personal retirement accounts into which can be deposited up to 2 percent of wages. We can thus respond to the argument of the privatizers without compromising the basic structure of the Social Security program. The time to act is now, because we have a balanced federal budget for the first time in almost 30 years and because Social Security's problems become more difficult the longer we delay. Recall that those who for so many years prevented any change in the welfare system looked up one day to find that Title IV-A of the Social Security Act, Aid to Families with Dependent Children, had been repealed. Under our bill, private accounts would complement Social Security, not replace it.
Markets go up, but they also, frequently, go down.
The bill would permit voluntary personal savings accounts, which workers could finance with the proceeds of this cut in the payroll tax. We would also increase the retirement age to 68 by 2023 and to age 70 by 2073. Finally, Social Security benefits would be taxed to the same extent private pensions are taxed. And Social Security coverage would be extended to newly hired employees in currently excluded state and local positions. Beginning in 2025, payroll-tax rates would increase gradually to cover growing outlays and would rise only slightly above the current level in the year 2045.