Weekend Reading: Unsocial Insecurity
During this snowy weekend that left me trapped inside with time on my hands, I was able to catch up on my newsmagazine reading. It's been a bit difficult to finish all the periodicals in the apartment off each week before the new ones come in, because I now have to plow through The New Yorker in addition to the usual US News and World Report.
Hendrik Hertzberg's column on the possible pitfalls of Bush's Social Security reform was especially memorable. In it he clearly and concisely raises his own worries about such a drastic change to arguably one of the most important government programs in American history.
This year, the Social Security system—the payroll tax, which brings money in, and the pension program, which sends money out—will bring in about $180 billion more than it sends out. It will go on bringing in more than it sends out until 2028, at which point it will begin to draw on the $3.5 trillion surplus it will by then have accumulated. The surplus runs out in 2042, right around the time George W. Bush turns ninety-six. After that, even if nothing has changed, the system’s income will continue to cover seventy-three per cent of its outgo.
That’s using the Social Security Administration’s economic and demographic assumptions, which are habitually pessimistic. Using the assumptions of the nonpartisan Congressional Budget Office, the surplus runs out in 2052. And if one uses the economic growth assumptions that Bush’s own budget office uses when it calculates the effects of his own tax cuts, the surplus runs out in—er, maybe never.
Not content to simply shoot down the Bush administration's proposals, Hertzberg goes on to offer more suitable suggestions to solve this "crisis" that probably shouldn't even be called a crisis. Understanding that privatizing accounts will do absolutely nothing to extend the solvency of the program, as it is dependent on the amounts of money coming in and going out, he brings up possible ways to increase revenue or decrease guaranteed benefits.
At some point over the next couple of decades, of course, some adjustments will have to be made. There are many reasonable possibilities: a modest rise in the retirement age, to reflect increases in health and longevity; a rise in the cap on wages subject to the payroll tax, which now cuts out at ninety thousand dollars a year; adding a bit to the progressivity of the benefits. One can even imagine a national decision to devote a larger proportion of national resources to the care of the old, given that a larger proportion of the population will be old—preferably to be paid for by taxing something we’d like to see less of (like fossil-fuel consumption) instead of something we’d like to see more of (like jobs).
Finally, while agreeing that the values of self-reliance and individual choice are good, Hertzberg posits that Social Security was put in place to support Americans at times when capitalism, a system with manifold benefits but also as many uncertainties, fails them.
“Thou shalt not covet thy neighbor’s house”—that’s a good admonition to keep in mind when making social policy. But so is “Honor thy father and thy mother, that thy days may be long upon the land which the Lord thy God giveth thee.”