The Social Security debate
I’ve been listening to the recent Republican debates about Social Security and there are times I feel like I’m listening in on a conversation in an alternate universe. Whatever are these people talking about?
There is no significant Social Security problem. There certainly is a Medicare problem, but Social Security, not even close.
So what’s really going on other than a great deal of people jockeying for position in a multihorse race, trying to say or do something so they can stand out from the pack?
A bunch of things are going on simultaneously and, in the main, they’re very good things. First, we’re all healthier and we’re living longer. But sometimes what’s good for an individual is expensive for a society. For example, when Social Security was created in 1937, despite warnings that it would bankrupt the country, the average life expectancy was about 60 years, a little more for women than men, and a little more for Caucasians than other races. Today, life expectancy is about 79 years, give or take. In 1937, if you lived to be 65 you might have had an average of 12 years to live. Today, hit 65 and you probably have an average of closer to 20 years to live.
The solution is relatively simple. As life expectancy increases they’re going to keep raising the age at which you’re eligible to collect Social Security, or raise the contribution you make, which is currently 6.2 percent each for employees and employers. It’s probably not going to be a big increase, maybe a few tenths of a percentage point.
One of the charges is that Social Security is a “Ponzi scheme,” apparently meaning that 25- and 30-year-olds paying into it today are never going to get anything because there will be no money left for them. This is completely and absolutely untrue. Social Security has a surplus, a very big surplus. Social Security is pay as you go. Up until this recent recession, there was always a surplus in receipts over payouts; in fact, the total amount that Social Security has in the bank is roughly $2.6 trillion dollars. In the bank, meaning it is not under the mattress but actually lent to the U.S. Treasury at an interest rate.
True, this year we had to go into the $2.6 trillion because we were short about $45 billion due the recession. But long term, we have enough money in Social Security to pay everything until 2036, roughly the next 25 years. Then, if we did nothing else, there would be enough from tax revenues to pay three-quarters of the scheduled benefits through 2085. No one really believes that we’re just going to do nothing because there are population pressures forcing us to take action. The baby boomers are retiring and for the next 15 to 20 years that’s going to be costly until that generation starts dying out. There is also a demographic shift in that our population is aging and those older than 65 are growing as a percentage of the population, which also means there are fewer workers putting money into the system to pay for your Social Security and Medicare. So when you hear people bitch about illegal immigrants, just remember that the fastest growing, young portion of our population is Hispanics-they are our insurance that will cover Social Security and Medicare. There is nothing unique about the USA. Western Europe, Japan and many other countries have the same demographic shifts and face the same problem.
If you think I’m overstating the issue, just stop and think for a minute. How many people do you know who have more than one or two grandchildren per child? Kids are expensive and people, married or not, are having children later, which means fewer children. On the other side of the scale, I have at least a dozen friends who have mothers in their 90s. Growing up I can’t remember anyone in their 90s.
The bottom line is that the world changes and you can either run around shouting, “Chicken little the sky is falling,” which appears to be the general level of the Republican discussion, or you can say this is the problem and these are the alternative ways we can fix it, so choose.
The wonderful thing about the Internet age is that all of this information is available to everyone and there are all sorts of fact-checking sites. I’d recommend the following: FactCheck.org, PolitiFact.com, OnTheIssues.org, RealClearPolitics.com, opensecrets.org and, of the newspapers, particularly the New York Times and the Washington Post.
I’m throwing the gauntlet down and waiting to see which Republicans will pick it up in an Op Ed.