Jewish World Review June 10, 2002/ 1 Tamuz, 5762
http://www.NewsAndOpinion.com | You can always tell it's an election year when Democrats begin demagoguing on Social Security.
A June 4 story in The New York Times reports, "Democrats have resumed, with gusto and more edge than they have shown in years, their favorite role in a midterm election: The Guardians of Social Security."
Says Rep. Martin Frost, a Democratic leader in the House, "The Republican effort to walk away from privatization is something we can not let them do." In other words, they can run, but they can't hide.
Of course, being the hutch critters they are, Republicans are diving for cover. Forget the "p-word," they won't even talk about reform. Instead, GOP candidates say they want to "modernize" the system -- which does in fact resemble a Model T designed by a dyslexic engineer.
Skittish Republicans have taken to ritualistically repeating President George Bush's Three No's of Social Security reform -- no benefit cuts, no tax hikes, no rise in the retirement age.
The president proposes allowing young workers (aka, victims) to place a portion of their Social Security taxes in government-approved investments. For those in their 20s and 30s, the system is an incredibly bad deal. On retirement, the average worker gets a 1.23 percent return on his forced investment. (Even Series I U.S. Savings Bonds pay 3.4 percent.)
Young workers love the idea of options. With Democrats making scary noises offstage, the elderly are terrified. Social Security reform may make economic sense, but using the issue as a club makes political sense.
More than any other age group, seniors vote. In 1998, 28 percent of all votes came from those over 60. Democrats need only whisper four words ("take your benefits away") to send them into a frenzy.
All of this prevents anything meaningful from ever being done about our fraudulent national retirement system. Pity. You don't need an MBA from the Wharton School to see what's coming.
The present system is often compared to a train wreck. Actually, it's two high-speed trains on a collision course. People living longer plus women having fewer children equals the screech of brakes and the sound of metal tearing.
Life expectancy rose from 68.9 years in 1950 to 76.5 years in 2000. In the next 30 years, seniors will increase from 12 percent to 20 percent of the population.
The Congressional Budget Office estimates that Social Security benefits will soar from 4.2 percent of Gross Domestic Product today to 6.5 percent in 2030, better than a 50 percent increase.
At the same time, Americans are having smaller families (that's why we're converting schools to senior centers). The fertility rate has fallen from 3.5 children in 1950 to about 2 today.
While each of today's retirees is supported by 3.3 workers, by 2030 there will be only two workers paying into the system for every beneficiary. In the words of that great economist, Professor Sinatra, "Something's gotta give!"
Absent real reform, that something is taxes, benefits or the minimum age to begin collecting Social Security.
Since a welfare state always finds it easier to take from taxpayers than from the recipients of government programs, look for brutal tax hikes down the road.
Today's rate for workers and their employers is 12.4 percent of income subject to taxation for Old Age, Survivors and Disability Insurance. To cover the shortfall that's expected to begin accumulating in about a decade, by 2035, Social Security taxes will have to increase 4.6 percentage points to keep things in balance -- close to $2,000 per worker.
Which will do wonders for the economy, not to mention starting an intergenerational war the likes of which you cannot begin to imagine, as workers who aren't even alive now revolt at being enslaved to subsidize the retirement of then-geezers like me.
A thoroughly happy prospect, brought to you by those wonderful folks who think politics trumps the laws of economics -- a party that will lie (about the intentions of its opponents), cheat (by telling retirees the system is sound) and steal (the income of young workers). Regrettably, Republicans lack the courage to set the record
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