Save Social Security

Each time another too-hot Internet company starts selling off its office furniture on the way to bankruptcy, a plan by two Colby professors to save Social Security looks more like a smart investment. Congress should think so, too, and seriously consider their proposal.

Economics Professors Michael Donihue and Jan Hogendorn observed that as the United States reduces its debt by retiring Treasury bonds rather than rolling them over it is taking away a safe and certain investment that millions of people prefer. At the same time, Congress is again wondering what it will do about the projected shortfall in Social Security – that fund is expected to run out of money in 30 years but will have to be changed long before that to avoid a crisis.

Their answer is both simple and compelling. They propose that the government sell Save Social Security bonds – Triple-S bonds – that would work just as Treasury bonds do now but would be targeted at increasing funds to the Social Security System while the Baby Boom generation enjoys its retirement.

The government would issue the bonds in anticipation of the demand on the retirement system; absent traditional Treasury bonds, investors would be able to put their money in a sure thing.

Professors Donihue and Hogendorn liken Triple-S bonds to the war bonds sold during World War II, when the government needed a quick, temporary way to raise cash. Sixty years ago, some 85 million Americans bought the bonds, and there is reason to think that some of the same enthusiasm would prevail today, if for less patriotic reasons. As the professors pointed out in a recent commentary in The Washington Post: “Citizens could buy Triple-S bonds whose maturity dates were close to their projected dates of retirement. Not only would they earn a guaranteed rate of interest while helping to pay for others’ retirement, but just as they stopped working, they would get their lump-sum investments back.”

By prohibiting the government from using the revenue generated by the bonds to pay for general expenditures such as wages and salaries, operating expenses or national defense, the proposal offers a nonpartisan way for Congress to strengthen Social Security without pushing back the retirement age, increasing FICA deductions or cutting benefits and without the risk of private investment. Sen. Olympia Snowe, who is on the overseeing Senate Finance Committee, says she is interested in looking at the proposal as Congress takes up Social Security later this year.

Congress has an opportunity in Triple-S bonds to solve peacefully what promises to be a divisive debate over this essential government program. Before the debate begins, it should study Triple-S bonds to see whether they would, in fact, save Social Security.