Posts tagged with: Social Security Reform

Blog author: jballor
posted by on Tuesday, December 23, 2008

Ramesh Ponnuru says Social Security is worse than a Ponzi scheme.

He’s right. It’s more like an inter-generational pyramid scheme, a pyramid tipped on its side…


To be sustainable, over time (T) it has to take more from more people (thus a three-dimensional pyramid rather than a two-dimensional triangle. It’s really exponential rather than multiplicative).

Social Security. In case you forgot, it still needs fixing. This Christmas, think about the rather unpleasant gift we’ll be leaving the generations that follow in the form of unsustainable and unfunded “entitlements.”

Earlier this month, Washington Post columnist Robert Samuelson complained about the lack of creative thinking concerning the issue of social security. “Washington’s vaunted think tanks — citadels for public intellectuals both liberal and conservative — have tiptoed around the problem,” he wrote. “Ideally, think tanks expand the public conversation by saying things too controversial for politicians to say on their own. Here, they’ve abdicated that role.”

As though on cue, in the publications pipeline at the time was the latest in Acton’s Christian Social Thought Series, Pensions, Population, and Prosperity by Oskari Juurikkala.

Samuelson states the issue that befuddles policy wonks: “The aging of America is not just a population change or, as a budget problem, an accounting exercise. It involves a profound transformation of the nature of government: Commitments to the older population are slowly overwhelming other public goals; the national government is becoming mainly an income-transfer mechanism from younger workers to older retirees.”

A problem of such proportions requires an innovative solution. Juurikkala combines a closely reasoned analysis of current pension systems around the world with a bold and radical proposal to shift responsibility for old-age care away from the state and back to the family. It’s the only way, he argues, to create a “social security system” that is at once durable and humane.

Aaah, Social Security and Medicare: A soothing balm for the young at heart, but a source of boiling rage for the ACTUAL young.

Every now and again, I stumble across an article that just gets me going. Today was one such day, and this was one such article. Robert Samuelson takes aim at the baby boomers and their entitlement mentality in the Washington Post:

As someone born in late 1945, I say this to the 76 million or so subsequent baby boomers and particularly to Bill Clinton and George W. Bush, our generation’s leading politicians: Shame on us. We are trying to rob our children and grandchildren, putting the country’s future at risk in the process. On one of the great issues of our time, the social and economic costs of our retirement, we have adopted a policy of selfish silence…

…It’s no secret that the 65-and-over population will double by 2030 (to almost 72 million, or 20 percent of the total population), but hardly anyone wants to face the implications:

  • By comparison, other budget issues, including the notorious earmarks, are trivial. In 2005, Social Security, Medicare and Medicaid (the main programs for the elderly) cost $1.034 trillion, twice the amount of defense spending and more than two-fifths of the total federal budget. These programs are projected to equal about three-quarters of the budget by 2030, if it remains constant as a share of national income.

  • Preserving present retirement benefits automatically imposes huge costs on the young — costs that are economically unsound and socially unjust. The tax increases required by 2030 could hit 50 percent, if other spending is maintained as a share of national income. Or much of the rest of government (from defense to national parks) would have to be shut down or crippled. Or budget deficits would balloon to quadruple today’s level…

No need to fear, however, because our brave and principled political leaders are stepping up to the plate… and refusing to do anything:

Any reform plan would have to make its way through the Senate Finance Committee, which will be chaired in the new Congress by Montana Democrat Max Baucus. He’s a guy the White House thought at one point might be a vote in favor of Bush’s plan to carve out personal savings accounts as a way to make Social Security a better deal for younger workers.

But I have to say that a brief chat I had late yesterday afternoon with Baucus didn’t imbue me with much confidence. I asked him flat out if there would be major Social Security reform in this new Congress. Baucus slowly and rather unenthusiastically replied, “Oh, I don’t know. The trust fund doesn’t reach zero until 2042.”

What about Medicare reform?

The federal government should join the state of Massachusetts in enacting universal health coverage, said Sen. Edward Kennedy, the new chairman of the Senate committee with jurisdiction over numerous health issues.

Kennedy’s home state is the first to require everyone to have health insurance, just as drivers must have automobile coverage.

Kennedy has his own version of what universal health coverage would look like. He wants to extend Medicare to all.

Well, that should help to keep the program solvent and affordable for many years to come! Although, to be fair, perhaps Senator Kennedy isn’t ignoring reality, and is actually proposing this expansion of Medicare in order to speed the imminent demise of the program and force a crisis which he can then solve…

Naaah.

Yoda: Entitlements = Suffering

So we’re left with a looming crisis that everyone knows is coming but no one with the ability to do anything about it will acknowledge it for fear of the political consequences. And in the meantime, I get to look at my paycheck and see hundreds of dollars fall away every month into programs that will be long gone by the time I would get to the age of eligibility. I try not to think what my 401k or IRA would look like right now if I had just been able to funnel that money in that direction; that way lies anger, and you know what Yoda said about anger: It eventually leads to suffering.

These boomers can rest easy tonight with clear consciences because they gave to FREE RIDE. Why not join them today?

But why should I wallow in anger and self-pity? This is America, the Land of Opportunity – and have I got an opportunity for all of you baby boomers out there! Since you’re going to be helping yourselves to a generous portion of my money over the coming years (barring some sort of political miracle), I’d like to give you the opportunity to say thanks in a tangible way: by contributing to the Fund for Redistribution and Entitlement Equality/Retirement Income Doubling Enterprise (or FREE RIDE for short), a new initiative that I’ve set up to ensure that the boomers have the same opportunity to contribute to retirement security that my generation has. Well, not quite the same – it’s voluntary, whereas my income is confiscated – but still, I have to believe that you’re just as concerned with my retirement security as you are with yours, right?

Just make your check out to me and send them care of the Acton Institute (the address is here), and you’ll be able to rest easy knowing that you’ve helped to ensure the retirement security of at least one future senior.