I have a simple four-word answer: save Social Security first

Democrats are so far succeeding in thwarting the President’s attempt to get the public interested in Social Security reform. I suppose that they are savoring one of the few victories they have scored against George Bush, but their partisan pleasure comes at a cost to all Americans.

The underlying problem for Social Security is not financial; it is demographic. There will not be enough workers to support the burden of the growing non-working population. Demographics are probably the only one of the social sciences that produces reasonably good predictions. All the workers who will have jobs in 2020 have been born already. We can't go back and make more. All the people who will receive are also born already. Some will die early, but most will make it to a reasonable age and enjoy retirement for about twenty years.

Everybody is entitled to his own opinion but not his own facts.

Let's talk about some facts that nobody denies. Back in 1940, forty-two workers supported ONE SS recipient. Each of these workers paid about 2% of his earning to do this. Today there are three workers for every one recipient and we (along with our employers) pay 15.3% of our earnings. When the baby boom is in retirement, two workers will support each recipient. I don't know what percentage of the workers' earnings it will take to make that possible, but it won't be less than it is today.

There is no doubt that we can raise taxes high enough to support the weight of our retired population. The question is should we?

Actually, for many of us the question is a more selfish one, since we will be the ones living off the younger generation: should we force young people to pay higher taxes to support us in the style to which we have become accustomed. Or should we do something today to take some of the burden off our children and grandchildren. As it is going now, many people will spend more time retired than they did working.

The demographic facts are clear and compelling. You can argue with President Bush's prescription but you can't argue with his diagnosis. The crunch is coming. The sooner we do something the better. By all means, let's argue about how we should respond, but let's not pretend we can do nothing.

For a good background on how Social Security works follow this link.

Posted by Jack at March 6, 2005 12:15 AM