Today, Alan Greenspan took to his soapbox and told the nation
something that it did not want to hear: Social Security
is unsustainable and its costs have to be cut back. This is
common sense, given that the necessity of the action is driven by
the demographics of the nation and those demographics are obvious
many decades in advance; the age cohort due to take normal
retirement in 2008 was in kindergarten in 1948. Nobody who
was watching the news the last time Social Security was re-vamped
in the face of a crisis (the first Reagan administration) has an
excuse if they did not see this coming.
This long-overdue bit of sanity was promptly denounced by members
of both major parties. Predictably, the Democrats appeared
to be both louder and less compromising
(as befits their socialist
tendencies like the French
Stephen Den Beste
]). John Kerry said
"... the wrong way to cut the deficit is to cut Social Security
benefits. If I'm president, we're simply not going to do it."
His rival John Edwards said Greenspan's comments were
"an outrage." Republican responses were as much in favor
as an outright evasion can be; Dennis Hastert was so brave as
to stand up and say, "He's a fine man."
None of which deals with the issues facing the nation, and the
fundamental issue of equity: why should a large, long-lived
generation, having paid reasonable but not overly large benefits
to the smaller and shorter-lived generation before it, expect
generous payments and unprecedented levels of medical treatment
from the smaller generation which comes after it - for the duration
of a greatly extended retirement?
While rationality may say that the system is so broken that it
should be scrapped immediately, reality is that this isn't going to
happen. But politics is the art of the possible. It may be
possible that pols can get votes arguing for fairness: if you
are going to live longer, you should work longer and pay for longer
to justify your comfortable retirement. It is not fair that
people trying to buy houses and raise families should have their taxes
jacked up so that others can continue to retire well short of age 70 to
have 15 or more years of leisure. Forget the children, who are
in their 40's and 50's; won't somebody think of the grandchildren?
Had the demographic problem been addressed in a sane and sensible fashion
in 1983, it would have been simple: raise the retirement age by one
month per year, with "leap months" as necessary to keep the fraction of
retirees smaller than some statutory maximum. Had this been
implemented in 1985 the retirement age going into 2003 would have been
66.5; hardly a stretch, but a big boost to the bottom line. Social
Security taxes could have been reduced, as the need for the surplus to
carry the Boomers would have been smaller. The lower taxes would
have boosted the economy, and the elimination of the "Social Security
surplus" and its additional borrowing power would have shown the
irresponsibility of the Washington pols' spending.
All of this is wishful thinking. Nobody in Congress in 1983 was
ready to fix the problem properly, and anyone who proposed such would
have been demagogued to death. It is now 21 years later; an entire
generation has gone from birth to drinking age. The crisis is 21
years closer, 21 years have been wasted, and the only pols who aren't
still busy demagoguing to death the voices of sanity are too timid to
find their own.
The last time anything was changed the Social Security trust fund was
within months of running dry. The "fix" was a massive tax increase
combined with equally massive denial of the true nature of the problem.
Instead of catching the disease and treating it early, it continues
to grow. When we finally face the need to act, how much bitter
medicine will we have to swallow?
The statement by Greenspan seems to have made the issue newsworthy. The treasurer of Australia, Peter Costello, is on the same page
(hat tip: Randall Parker
, "The Treasury paper to be released today warns that the longer Australia does nothing about demographic changes, the bigger the reforms that will be necessary in future." The big question: Will this message be accepted Down Under, or will the demagogues deny reality and continue to get a free pass from the voters?
I have received a pointer to The Retirement Calculator from Hell