Of Course We Should Raise The Age Limit For Social Security
Usually, I don’t bother to write about Social Security because I think Bush should have given up on it long ago. Chances are, nothing is going to get passed and given the character of the Bush administration and the Republican Senate on domestic issues, even if something is done, it’ll probably be little more than a total capitulation to the Democrats (a tax cut and nothing else of significance) that a few sycophantic Republican cheerleaders will call a “Great Victory” for political purposes (See the deal cut by the 7 RINOS on judges).
Yet and still, John Tierney wrote a common sense column in the New York Times today pointing out the obvious: given the fact that life expectancies have gone up significantly, the age limit for Social Security needs to be raised. For this, he has been relentlessly demagogued by the left side of the blogosphere. Here are few examples:
“John Tieney: “Stop Slackin’ Off Grandma or No Alpo for You!” — Rising Hegemon
“Geriatric marathoners are the new welfare queens” — “John Tierney rails against the sloth of America’s elderly” — Majikthise
“Eat The Old. You know what? I want to work forever. I do. No, I mean it. I want to be 93, with big coke-bottle glasses and an out of style suit (because, come age 93, I don’t expect to give a f*ck), striding into my office. Okay — at 93, I probably won’t stride much, but I’ll do the best I can. And I want to greet my many young colleagues, make old Jewish guy jokes as I wind my way to my desk, sit down at my holographic laptop (which will now be a hopeless relic compared to the Cornea Computers others will use), and blog for a bit….Those malingerers and loiterers who’re checking out at 62, collecting reduced Social Security benefits, and hanging out with the grandkids. And John Tierney, as with all the columnists who offer this suggestion, is tough for doing it. He’s taking on a sacred cow, saying what pols fear to say, going where lesser men wilt, speaking the hard truths to AARP’s power.” — Ezra Klein
Social Security, as anyone who understands it realizes, is really nothing but a big Ponzi scheme. The money isn’t saved or put into some sort of trust fund, it’s immediately spent and then in essence, an IOU in the form of a government bond is filed away in place of that money. That IOU is essentially a negotiable promise that one day, other American taxpayers will in turn pay the Social Security expenses of the people chipping in today.
The problem with that whole concept is the same problem you see with a Ponzi scheme — if the payouts get too big or the number of people coming in isn’t large enough, there won’t be enough dough in the pipeline to keep everything in the black. In about a decade or so, we’re going to reach that point with Social Security — and no wonder given our demographics. From the Wall Street Journal:
“Demography made the whole arrangement work for a long time. In the 1930s there were 41 workers for every retiree; the payroll tax could thus be set at a low rate–about 2% for the first $3,000 of earnings. It was quite a deal for the beneficiaries–the average rate of return for people retiring in 1940 was 114%.
And like all income redistribution programs, Social Security presented politicians with lots of incentives for sweetening. In the 1950s, Congress started increasing both benefits and the number of people covered. At the same time, however, the demographics were turning sour. Life expectancy was rising to the 78 years it is today, from 69 for men born in 1940. And fertility rates were declining, from 2.2 children per woman in 1940, to a peak of 3.7 in 1957, to two per woman right now.
No surprise, then, that the ratio of workers to retirees began to fall–in 1950, it had dropped to 16 workers to one retiree and now it is just three to one. Payroll taxes have had to rise accordingly–they are now 12.4%. And real rates of return have gone into a free-fall; real returns for workers born in 1960 and retiring in 2025 are less than 2%.
Bad enough, but it is all about to get much worse. Over the next 20 years, as the Baby Boomers start retiring, the number of retirees will jump to around 77 million from 47 million today. The worker-to-retiree ratio will drop to two to one, and real returns for some could be negative.”
If people are living longer, it makes perfect sense to raise the age limit on Social Security. In fact, if they’d been smart (unfortunately, our government is never all that smart), FDR’s administration would have tied Social Security to life expectancy from the get-go.
Now while that may be water under the bridge, it’s not too late to edge-up the eligibility age for Social Security. Why not do it on a sliding scale based on age? If you’re 50, you have to be a year older to collect. If you’re 40, two years older. At 30, 3 years older.
In and of itself, that wouldn’t close the entire funding gap, but it should make a nice dent in it, help keep the program solvent, and also help ease the enormous Social Security tax burden that is going to be dumped on younger Americans in coming years.
That would be much more responsible than the left’s hypocritical and delusional claim that “All is well” with Social Security and that anyone who says otherwise wants to “eat the old” or make grandma eat Alpo. Because of the recalcitrance of Democrats who have chosen to put short-term political gains ahead of actually looking out for the American people on this issue, we may be put in a position a decade or so from now where we have to choose between massive tax hikes or draconian cuts in Social Security just to make sure the books stay balanced.
That’s probably what’s going to happen in the coming years and it’s too bad because if the Democrats were willing to do something besides shriek, “no, no, no,” at the top of their lungs on this issue today, we probably could avert the full-blown crisis we’re going to face down the road. That’s a real shame…