Wednesday, January 10, 2007

Boomer Denial May Bankrupt Social Security for Future Generations

Robert Samuelson's got a hard-hitting piece on the future of Social Security and Medicare today over at RealClearPolitics. With the social entitlement system facing a funding crisis at some future point, Samuelson argues that the baby-boom generation bears responsibility for failing to get America's fiscal house in order:

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 pillage our children and grandchildren, putting the country's future at risk in the process. On one of the great issues of our time, the costs of our retirement, we have adopted a policy of selfish silence.

As Congress reconvenes, pledges of "fiscal responsibility'' abound. Let me boldly predict: On retirement spending, this Congress will do nothing just as previous Congresses have done nothing. Nancy Pelosi promises to "build a better future for all of America's children.'' If she were serious, she would back cuts in Social Security and Medicare. President Bush calls "entitlement spending'' the central budget problem. If he were serious, he too would propose cuts in Social Security and Medicare.

They are not serious, because few Americans -- particularly prospective baby-boom retirees -- want them to be. It's no secret that the 65-and-over population will double by 2030 (to almost 72 million, or 20 percent of total), but hardly anyone wants to face the realistic implications[.]
Samuelson notes all the routine arguments against reform: that cutting benefits represents a violation of the social contract; that the Social Security trust fund has been raided by greedy politicians; and so forth. Yet:

Social Security, Medicare and Medicaid are pay-as-you-go programs. Present taxes pay present benefits. In 2005, 86 percent of Social Security payroll takes went to pay current retiree benefits. True, excess taxes had created a "surplus'' in the Social Security trust fund (it hasn't been "plundered'') of $1.66 trillion in 2005; but that equaled less than four years of present benefits. More important, Medicare and Medicaid represent three-quarters of the projected spending increase for retirees by 2030.

All the misinformation bespeaks political evasion. With his rhetorical skills, Clinton might have raised public understanding. Instead, he lowered it by falsely denouncing the Republicans for attempting to "destroy'' Medicare. And Bush's credibility is shot, because he made the problem worse. His Medicare drug benefit increases spending and amounted to a political giveaway.

The failure to communicate also implicates many pundits and think tanks, liberal and conservative. Pundits usually speak in bland generalities. They support "fiscal responsibility'' and "entitlement reform'' and oppose big deficits. Less often do they say plainly that retirees need to lose some benefits. Think tanks endlessly publish technical reports on Social Security and Medicare, but most avoid the big issues. Are present benefits justified? How big can government become before the resulting taxes or deficits harm the economy?

These public failings are also mirrored privately. I know many bright, politically engaged boomers who can summon vast concern or outrage about global warming, corporate corruption, foreign policy and much more -- but somehow, their own Social Security and Medicare benefits rarely come up for criticism.

Our children will not be so blinded to this hypocrisy. We have managed to take successful programs -- Social Security and Medicare -- and turn them into huge problems by our self-centered inattention. Baby boomers seem eager to "reinvent retirement'' in all ways except those that might threaten their pocketbooks.
The coming Social Security crack-up is a hot topic in my American government classes. I've posted previously on Social Security reform, here and here. President Bush's privatization proposal kicked off with a lot of promise in 2005, but failed to generate traction among the public. For some insight into the difficulties of entitlement reform, be sure to check out Business Week's discussion of the future of Social Security in its article, "Safety Net Nation."

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