I'm Pete du Pont with the National Center for Policy Analysis. If the federal government doesn't use projected budget surpluses for tax cuts, spending increases or social security reform, look for a big push to use it to pay down the debt, then start accumulating assets.
But shortly thereafter, the feds will have to start selling assets to make up for shortfalls in medicare and social security. By 2050 washington will again have to borrow or raise taxes to pay entitlements.
So why not put the surplus in social security personal retirement accounts, replacing some of government's obligation to pay retirement benefits? PRA deposits could – in effect — "retire" the government's existing debt to retirees.
Then, we could begin to cut the payroll tax rate. By 2050, it would be 6.4 percent, compared to the 16.3 percent required if we do nothing. Using surpluses to fund PRAs would cut the long-run social security payroll tax by 60 percent from the level required if today's surpluses were used to pay the debt. It's a bold move, but our grandchildren will thank us.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, stopping John McCain.