Robert Samuelson has a worthwhile column today, blasting journalists for not getting at the real story in the Social Security debate. The problem in Samuelson's eyes is that they are ignoring the enourmous costs coming as the Baby Boomers retire. He explains why this is such a big problem:
" Our central budget problem, as I've noted in earlier columns, is the coming spending explosion in Social Security, Medicare and Medicaid, driven by aging baby boomers and rising health spending. In 2004 these programs cost $965 billion, or 8.4 percent of the economy (gross domestic product). The Congressional Budget Office projects that by 2030 their costs will rise to 14 percent of GDP, or more than $1.6 trillion in today's dollars. Avoiding a (nearly) $700 billion annual increase in taxes or deficits would require comparable spending cuts in other government programs. It won't happen. The projected increase in retirement spending nearly equals all federal "discretionary spending" -- a category that includes defense, homeland security, environmental programs, national parks, scientific research and much more. We're not going to eliminate all these programs.
Once you've done this math, you recognize that benefit cuts in Social Security, Medicare and Medicaid are inevitable. They're the only other way to limit massive tax increases or immense budget deficits."
He goes on to say that Boomers would have to face these benefit cuts and adds that the proposed plan by Bush does nothing to prevent this. He then assails journlists for missing this issue and instead focusing only on the political issue:
"The public is understandably confused, and the media feed the confusion. Tackling Social Security's long-run sustainability sounds like dealing with the baby boom -- but it isn't. Generally, the media overlook the distinction. Most stories dwell on Social Security's politics and on the advantages and disadvantages of personal accounts. Journalists echo Democratic criticisms, but that's not balanced or clarifying, because the Democrats, like Bush, aren't acknowledging the unpopular choices posed by an aging baby boom generation. Reporters have to reach independent judgments, but this founders on math phobia."
Samuelson acknowledges something that has been bothering me for a while concerning this debate. All this talk has been basically about ideology and politics; for the most part, the Right talks about private accounts as being the savior , while the Left seems content in not making any changes at all. One side doesn't like government programs and frames policy in that discussion, while another side likes government programs and is loathe to make changes to them. One side talks about Social Security going bankrupt and the other side says that Social Security is being destroyed by politicians right now. All of this is politics. None of it has to do with making sure that the program can handle the coming huge wave of Boomers.
I think somewhere in this debate, pragmatism has been lost. There is no sense that people want to come together and solve a common problem since both sides ignore the real problem and instead fight over issues that really have no importance.
I do think we need to do something to make sure Social Security is sound. It might mean raising taxes or raising the limit at which one's salary is taxed; it might mean raising the retirment age, or cutting some benefits. None of these are popular ideas, and for that reason, no one wants to talk about them. Better to rely on the fantasy of doing nothing or borrowing against the future than act like real leaders and lead.
But then again, politicians are no better than the persons who elected them. If we aren't willing to support someone who can make the hard decisions, then we have only ourselves to blame.
Posted by Dennis at February 24, 2005 12:41 AMThis Moderate Democrat is back! What is the purpose of dissing Congressional Democrats? The problems associated with Social Security are everyone's problems - at least those under the age of 60. The proposed solutions that Bush has introduced will hurt the poor, the disabled, the unintelligent. We need to pay attention to what has happened in the U.K. and Chile. Only the wealthy have done well with investing on their own. Paul O'Neill has raised some great solutions, as have many others Moderates. Let's go with the ideas that have been proposed by those who seem to "get" the problem, not those who are only concerned with themselves or seem bent on making money for the securities industry. Bill Frist has Got To GO! UGH!
Posted by: Teena at February 26, 2005 10:14 PMAt its core, social security is an annuity (with employer matched contributions) with a sole, life-certain (single/joint) payout.
If the intent is to make the program actuarially sound (self-sustaining) the benefit should be based on the wealth generated by capital (our contributions) rather than on something like wages or inflations.
Also, I'd vote for removing the disability benefit (less than 15% of distributions I think) from the program and address that with general tax revenues.
But the Bush wing wants to get the government out of the social security business altogether (which is ideological blindness) - and its willing to borrow trillions from China and Europe to do so.
Posted by: dorsano at February 26, 2005 02:37 AMDennis,
A couple of articles in our local paper recently spotlighted the sham of proposed reforms in Social Security. You're absolutely right that no one on either side of the aisle wants to implement the things that could actually keep SS afloat, because they're too politically damning.
George Will made an excellent case for the simplest patch of all - raise the retirement age. It's simple and makes sense. It keeps people in the work-force longer, which increases the amount of time workers are putting money into SS. At the same time it cuts back on the amount of time people will draw on SS. Perfectly sensible reasoning.
But no one wants to even touch this idea. Whatever party backs this reform and passes it will lose out big in the next election - simply because it will affect a huge portion of the voting population immediately, the baby boomers. A lot of them are people that have been backing the Republican Party lately, and suddenly upping the retirement age would turn most of them away from the GOP. Voters are pretty fickle that way.
The Democrats don't really have a political need to do anything on this issue - because they're in the minority, they can simply vote against any reform that will obviously be unpopular, and then in 2006 blame the GOP for robbing the AARP-age group. They just have to vote against it and make an issue of it.
But if the Republicans do nothing, or can't pass anything, then the Democrats again get the advantage - because they can point to the GOP's inability to save Social Security. Yes, voters have a short memory and won't even look at the fact that Democrats right now are saying "There's nothing to fix."
Really what people should be looking at is the fact that with the Boomers retiring, it's not just Social Security that's in trouble, it's our country's finances as a whole. We're signing in more and more senior citizen benefits, to the point where some predict that within another 10 to 15 years, almost half of our budget will be paid as benefits to retired citizens.
Posted by: Mark Kittel at February 25, 2005 11:36 AM