Social Security Reform - an Honest Debate?
The debate on Social Security reform is something that the Democrats have never been overly fond of. Its not that they don't like the Social Security Program, after all it is a government entitlement program and thus synonymous with Big Government, a core Democratic platform.No, the problem is that when there is an attempt at true discussion, it appears the Democrats idea is more of an emotionally charged screaming attack, than true reasoned discourse. Burned in my mind is the T.V. image of an apoplectic Sen. Kenedy, who appeard on the verge of a stroke, voice suffused with rage, vowing that the Democrats were going to take Medicare back from the Republicans. The source of his tantrum? The fact that President Bush and the Republicans had dared to pass a change to the Medicare program, that gave beneficiaries a new prescription drug benefit. After all, how dared the Republicans give something to those in need - they acted as if this program was to actually benefit the American people and not the sole property of the Democratic Party.
We now see much of the same in respect to Social Security reform. The same talking heads, Senators, Congressmen, and reporters who were, just prior to election, bemoaning how the Social Security system was on the verge of collapse from Repuplican cold heartedness and mismanagement, are now saying that the system is just fine. How dare the Republicans/President Bush try to fix something before it is an actual disaster, especially to offer a solution that would reduce Joe Citizens dependence on the American Government. Such gall...
Alan Reynolds has written an article for Human Events that attempts to grade the different 'debaters' on SS Reform. AARP gets an F, as one may surmise for attempting to argue both sides of private investment accounts at the same time (OK for Us elites, bad for average citizen - you're just too dumb).
Bruce Bartlett writes for the NCPA about the looming crises and growing productivity Gap for the EU. In his report, he references a paper by Edward Prescott for the Federal Reserve Bank of Minneapolis. This paper attempts to directly address the productivity issues between the US and the EU. In doing so, he points out where and how Social Security reform can work with minimal transition expense. He also addressed the core differences between the American and EU economic models and the impact on living standards (the EU is significantly below the US).
The actual cause of the problem with Social Security is pretty simple, but no one talks much about it (for one reason, its too late for the responsible generations to do anything about it). Social Security, when it was first put in place, had about 13 workers for every beneficiary. Now the ratio is down to 3:1 and will be approaching 1:1 within two decades. The system will be income negative before that point.
The reason? We, the Baby Boomers (I'm part of the last year class considered to be part of the Baby Boom generations), did not have enough children to insure our own support. We forgot, or never learned, that children are both the future for themselves and for us as we age. Like good tires on your car, children are the best insurance we have, both personally and for our Nation. I say that we forgot - however, the Democratic leadership has no problem pushing Social Security problems off on our grand kids instead of dealing with it now.
We, for those that had families, averaged 2 - 2.5 kids. Taking into account mortality rates, and those that did not have children, the required rate to 'maintain' the Social Security system in its current form appears to be more on the order of 4 - 5 children. If we pass nothing else on to the next and future generations, it should be this lesson. That Children really are the future, and not just a glib cliche for an advertising campaign.
There are other demographic impacts, some that are particularly significant in light of the current threats we face from Islamic terrorism. But that's a subject for a different post.
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