A gathering threat: Seeing Social Security for what it is

Union Leader ^ | 1/11/05

[kattracks]

DEMOCRATS HAVE a problem with the word “imminent.”

Leading up to the Iraq war, President Bush carefully avoided calling Saddam Hussein an imminent threat to the United States. He said the dictator posed a “gathering” threat that had to be dealt with before it became imminent. This did not stop Democrats from setting up a straw man and arguing that Hussein should not be removed from power because he posed no imminent danger. Rather than address the real argument, they avoided it and created one that suited them better.

Now they are playing the same game with Social Security. President Bush has repeatedly said that Social Security must be fixed now to save it for future generations. He has based this assessment on sound research. The nonpartisan Congressional Budget Office estimates that Social Security pay-outs will exceed revenues in 2019. That’s only 14 years away. Yet Democrats continue to pretend that the program is not broken.

In the official Democratic Party radio address last week, U.S. Rep. Charles Rangel, D-N.Y., accused President Bush of trying to scare Americans into believing Social Security was in a crisis, “but the facts prove that there is no imminent crisis,” he said.

Note the careful wording. Rangel did not say there was no crisis. He said there was no “imminent” crisis. That is the same word game the Democrats played with the Iraq war. It is a disingenuous argument. Rather than challenge what President Bush has actually said, they add the word “imminent” and challenge an assertion that no one is making.

The fact is that Social Security is unsustainable in the long term. Our changing demographics combined with the structure of the program make this so. President Bush wants to fix it now, before it gets any worse. Democrats, fearing that Republicans will take the Social Security issue away from them, say it does not need fixing at all.

Which is more dangerous to the future of Social Security: altering the program so that it remains viable, or letting it crumble under its own weight while denying there is a problem?

[freepforfun]

The author of this article is being a bit shifty by suggesting a crisis will occur in 2019 when payments exceed revenues. Here's a more honest description of what the CBO and Trustees' reports say:

---snipped from elsewhere---
The year that interest on the Trust Funds’ assets is first tapped to supplement tax revenues in order to pay for benefits: CBO estimates 2019, the Trustees
estimate 2018. However, the Trust Funds will continue to run annual surpluses for another two decades.

The year that the bonds held in the Trust Funds begin to be redeemed to supplement payroll taxes in order to pay for benefits: CBO estimates 2033, the Trustees project 2028.

The year that the Trust Funds’ reserves are fully drawn down: CBO projects 2052, a full ten years longer than the Trustees’ 2042 date.

Note that this does not mean that benefits can no longer be paid, however. Social Security will continue to receive payroll tax contributions. These will be sufficient to pay about 80 percent of benefits due in years following 2052, according to CBO; the Trustees estimate that ongoing revenues can finance about 70 percent of benefits due.
---end---

The point of the fund is to cover periods when payments will unavoidably exceed revenues (when the baby boomers retire, for example). To suggest that using the trust fund (for the very purpose it was created) constitutes a "crisis" is a silly argument. Time would be better spent on the prescription drug plan, which will run far larger deficits over the same period.

[kattracks]

Please post a source and link for your information.

Thanks.

[bobjam]

Do these take into consideration our rapidly changing demographics? For example:

Young people are taking longer to finish college- 5 years for undergraduate degree and another 2 for an increasingly necessary graduate degree. Many opt to "take a break" for a few months or even a year before delving into their careers. Other young people try to balance a part time job with junior college or night school for a number of years. Part time jobs typically don't pay enough to contribute significantly to social security. The net result is that the age at which Americans enter their careers and begin meaningful contributions to social security is rising. Now it is somewhere in the mid-20's; in 1935 it was right after high school.

The retirement age for social security purposes hasn't changed, but many workers, who are able to, retire early and live off of other investments. They may keep a part time job. Although they aren't drawing off the system, they are no longer significantly contributing to it. Typically, they leave well-paying jobs that contributed handsomely to the system. The result is that the age at which Americans stop making significant contributions to social security is remaining steady, if not falling.

Average life expectancy is climbing across all demographics. In 1935 it was in the mid to upper 60's. Now it is in the upper 70's to lower 80's.

As a result of these, and other, demographic trends, the percentage of the population that funds social security, as well as pay all other income taxes is falling. This is going to become a major problem for not just social security, but our entire entitlement culture.

[marktwain]

The point of the fund is to cover periods when payments will unavoidably exceed revenues (when the baby boomers retire, for example). To suggest that using the trust fund (for the very purpose it was created) constitutes a "crisis" is a silly argument. Time would be better spent on the prescription drug plan, which will run far larger deficits over the same period.

The point of the fund is to give the *appearance* of the ability to cover periods when payments will unavoidably exceed revenues. The fund is not any money or value at all. It is only a tab on future taxes. The whole point is that taxes will have to be raised, and that the structure of the system makes the ability to raise those taxes unlikely.

It is brilliant for Bush to work to reform the Socialist Insecurity program, to convert it from a ponzi scheme for buying votes to one of helping Americans to become independent of government.

[kittymyrib]

Though many on this forum poo-poo the outsourcing problem, the Social Security system is not getting funded by the workers in India and elsewhere. Couple that with the decreasing middle class and the increase of the immigrant lower class and it is obvious that the system will be in deep trouble by 2025.

[G-Man 1]

Most likely most people would contribute to the private side of SS. So if I may imagine, why couldent people who did not contribute to the private side get full benies. and those who contribute to the private side would get reduced benies. After all they would be makeing more money with their investments.

[G-Man 1]

You came up with a good idea. Why dosent the Gov. impose SS tax own the wages of these jobs that were sent over seas? Would be better than nothing.

[Logophile]

The point of the fund is to cover periods when payments will unavoidably exceed revenues (when the baby boomers retire, for example). To suggest that using the trust fund (for the very purpose it was created) constitutes a "crisis" is a silly argument.

You write as if you believe that the Social Security "Trust Funds" actually exist.

[BIGZ]

The system allows government employees to opt out of the system. Lets get them back into the SS system.

[Jack of all Trades]

"The Fund" - that's a good one. The assets in "the fund" are U.S. government back securities. Who backs the government's debt obligations? You and me, and all the other sorry losers who will get left holding the bag.

I would call "the fund" an IOU, but in reality it's going to be a giant b!+ch slap. Better have some ice ready.