I find the resistance of Democratic Party leaders to privatizing a portion of our Social Security accounts puzzling. Not that I’m shocked by partisanship or politics – that’s expected. Nor am I surprised by a sense of vision that can’t see farther than one step ahead – that’s plain human nature and not the exclusive province of Democrats or Republicans.
No, the thing I can’t figure out is which typical Democratic constituency is being served by their opposition. Is it the young, energized base? Not hardly – I can’t imagine that anyone under age 30 has much hope they’ll ever see a dime from Social Security in its present form. Is it the unions? Don’t think so – union memberships are used to having their pension funds managed for a healthy return (do you think CALPERS management would last long investing for a 3% return?). The Hollywood Set? Perhaps – these people are used to saying lines written for them by others and are capable of projecting impressive outrage or heart-rending grief, but I don’t think many of them are spending a lot of time trying to decide whether the direct deposit option is right for them. The Northeastern elites? Again unlikely – though isn’t it fun to think what our political culture would be like today if Papa Joe Kennedy had thrown all his money into T-bills?
I guess that leaves those people dependent upon government checks for their living expenses. In which case, holding the course and steering Social Security into an obvious crash and burn scenario clearly indicates that it’s really about power and not the general welfare.
I haven’t seen enough of President Bush’s proposals to determine if it’s the right course – and I’m not even convinced that, constitutionally, this is the government’s responsibility in the first place, but I do know that a formula of fewer workers, more retired people with longer lifespans, and ever increasing costs is about as stable as, oh, Howard Dean.
The scope of the problem is especially well laid out in the latest The American Enterprise magazine. Editor Karl Zinsmeister in his Bird’s Eye column cites what Democrat Bob Kerrey and Republican Warren Rudman said a couple years ago:
“Suppose a member of Congress introduced legislation called the Social Security Do Nothing Act. Under this bill, promised retirement benefits would be cut…by 35 percent for today’s newborns. Alternatively, payroll taxes would go up by roughly 40 percent…. These are the choices under the Do Nothing Plan.”
Zinsmeister also provides a detailed description of everything that was happening, politically or otherwise, the year Social Security was passed. There was an exciting new entertainment media called radio, and hot inventions like the electric typewriter and the ballpoint pen. 68% of the U.S. had electricity and 32% had telephones. Life expectancy was 59 years and a few months. Against that backdrop he asks:
So: Do you want to base your security in old age on a program engineered at the same time as the Model A and the vacuum-tube radio? Has work changed much since the era when slopping pigs for Auntie Em was a typical job? Does the boundary between state and individual look different now that the USSR has gone from progressive polestar to oppressive flop? Has American finance advanced from the decades when the only choices for ordinary savers were the passbook, the mason jar, or the mattress? Are the retirement goals of Americans still the same as in the days when the Bambino retired? Or is it time for Social Security to enjoy a major-league update?
The answer, I think, is obvious. Nothing but a government welfare program could ever last this long in unimproved form. Our transportation networks, our medical services, our economy are all light-years better than they were in 1935. So why are we still stuck with a gramophone/Hupmobile/fountain pen system of public pensions?
Aside from this common sense observation, his article also notes that our already mind-boggling, acknowledged, national debt does not even mention future Social Security and Medicare benefits:
…The unfunded entitlements of the New Deal and Great Society are collapsing on themselves. For perspective, start with the fact that our officially acknowledged national debt, source of much caterwauling, currently totals $7.6 trillion. Unfortunately, the government’s promises of future Social Security checks and Medicare reimbursements are not counted in our official debt. Those obligations pile up off the books, out of sight, and out of mind. But they are real obligations that will have to be paid. And when economists sit down and do the math on those commitments, the totals are staggering: The retirement checks promised to today’s population add up to $10 trillion more than the payroll-tax revenues slated to flow in over the next generation.
That dwarfs our on-budget debt. Put together our official debt and our unfunded Social Security obligations and you have a sum larger than the entire value of all the companies listed on U.S. stock exchanges. Our Social Security deficits are real, scary, and unsustainable, no matter what Ted Kennedy and Harry Reid may say.
I encourage you to use the link and read the entire article on-line (heck, I encourage you to buy a subscription to the magazine for that matter). I think you’ll find that whoever the Democratic leadership thinks they’re looking out for, it’s probably not you – unless you happen to be in Congress, that is.