Social Security in trouble over long lives
The federal budget deficit for the month of February was almost $221 billion. There are wars to pay for and bailouts, but commentator Todd Buchholz says we ought to be paying attention to Social Security too.
Commentator Todd Buchholz (toddbuchholz.com)
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TEXT OF COMMENTARY
Kai Ryssdal: I have this economic indicator to try to wrap you brain around: The Treasury Department announced yesterday that the federal budget deficit for February was almost $221 billion. That's February, a single month. It is bigger than the yearly budget gap was not all that long ago. There are, of course, wars to pay for, the stimulus package and the bailouts as well. But commentator Todd Buchholz says we ought to be paying attention to something else, too.
TODD BUCHHOLZ: What's the toughest job in Washington this year? Toyota's customer relations phone operator? John Edwards' outplacement counselor?
No, the toughest job is talking about Social Security and Medicare without either scaring people or watching their eyes glaze over. Though this is radio, I can almost see your pupils retreating back into your head. Yet with the budget exploding, it's the real moose in the room.
When Franklin Roosevelt set the Social Security retirement age at 65, the average 65-year-old was dead. Life expectancy was less than 65. That's why the numbers worked. But now we're living longer.
No one would be so heartless or stupid to walk up to a 65-year-old woman at her retirement party and say, "Guess what Aunt Harriet, we know you've been counting on Social Security, but we've decided to reform. You're on your own."
Likewise, would anyone be so stupid to go up to 12-year-old Jake, who just finished his paper route and say, "Jake, we know you've been counting on Social Security all your working life, so it would be cruel to change Social Security and Medicare since you're so dependent on them."
The kid has 60-70 years to get ready. Americans must decide at what age people have enough time to save for their own retirements. I know the answer is not 65. But I also know the answer is not 12 either. We just need to agree. Then young workers can make regular deposits to buy an annuity that will cover future medical care and living expenses. If we steady our rocky federal finances, the government can match those contributions.
Personal accounts will come someday. The only question is whether we wait till the whole country looks like a crowded pawn shop, and we're just rolling the dice like Nathan Detroit trying to get lucky.
RYSSDAL: Todd Buchholz was an economic adviser to the first President Bush. His latest book is called "New Ideas From Dead CEOs."
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From Sacramento, CA, 03/18/2010
When Medicare was set up doctors made house calls, medical care was very inexpensive, there were no expensive tests and surgeries and life expectancy was 65. The World War II generation paid one half of one percent into it. The baby boomers paid big money into it, while new extensive tests and procedures were developed, and the WWII generation lived to be almost 100. They paid a few hundred dollars into Medicare when wages were much lower in the 40s and 50s and so on, and then ended up receiving millions in free health care. In those days, there were fewer people, only the WWII and baby boomer generations, the WWII people were the voters, so politcans raised the social security payments over and over again to get votes. It went from about 200 a month in payments to upwards of 1,200 a month in payments. That's when a lot of young people found out they could be declared disabled and live off of social security, and welfare tells welfare recipients that unless they apply for total disability, they have to do some work in order to receive their food stamps. So, they all apply for disability. Then, welfare recipients found out they could get their children on SSI, full disability and receive 1,000 a month for each child they get on disability and continue to get free housing and free health care and dental care and food stamps. What was intended to be 200 a month for one out of 1,000 participants, has mushroomed into 1,200 a month for the worker and their spouse, kids on the disability component and people on welfare moving off welfare on to the disability component of social security. 75 milion people are on Social Security in one form or another, and 70 million baby boomers are scheduled to go onto it in the next few years. That's half our population. People pay 10,000 into it, and receive over 200,000 out of it by their spouses who didn't pay into it receiving it and by receiving it for 30 or more years. Socalized medicine would be people paying 10 percent of their income in taxes and receiving government health care. Medicare is not socialized health care, it's free health care for one segment of our society. Social Security is free money after the first year of receiving it. The 85 TRILLION in unfunded liability is due to people living much longer and due to the politicans raising the amount paid out. We would all be better off with socialized health care, with everyone paying for health care, and the new health care bill forces seniors to pay for part of their health care. They say they don't want socalized health care, that's because they want free health care and they don't want Medicare cut. Both programs have to be phased out. They are obviously unsustainable. When the politicans saw one million people on the programs, they should have then taken action to phase out the programs. Today there are 75 million people on it, and all to get reelected, the politicans didn't say one thing about the train wreck that was taking place.
From Weeki Wachee, FL, 03/17/2010
Senioritis – The American Pandemic
A few facts supporting that headline. When seniors of today purchased their first stock, the stock market was around 500; over their lifetime it went to over 14,000. They purchased their first home for around $10,000; over their lifetime the value increased to around $200,000. Through their vigil of silence, and wanting to protect their entitlements, they blessed political pilfering of excess Social Security tax contributions that were to be saved and invested. This blessing allowed politicians to turn 2.5 trillion dollars of Social Security trust fund assets created by hard working Americans, into 2.5 trillion dollars of Social Security IOU debt, those same hard working Americans and their families will have to pay again, plus interest. Additionally excess Social Security payroll deductions denied millions of average working Americans the means to save and invest for their own retirement; senioritis can be costly, can’t it?
Then seniors became card carrying members of AARP, and used their collective lobbying clout to run up their children and grand children's credit card debt from 2.87 billion to 12.6 Trillion over their lifetime; senioritis is addictive, isn't it? At age 65, their children and grand children subsidize their health insurance costs through Medicare, lowering their health insurance premiums from something around $500 per month, to in some cases no cost per month at all, if they're enrolled in a Medicare advantage plan. History suggests current seniors have had a pretty nice ride, wouldn't you agree?
Then to add a little more salt to an open financial gash, they feel they're entitled to senior discounts for meals, airline tickets, or whatever else they can have at the expense of their children and grand children. Senioritis has put America on a glide path to our financial demise, and if a cure isn't found, the next generation will create 250 trillion dollars of Social Security IOU debt, and another 52.9 quadrillion dollars of credit card debt, and the annual Medicare costs will be astronomical; senioritis - it’s contagious.
Those were facts, now an opinion. With all due respect seniors, and they do deserve some, here's a news flash, You are the last best hope for future generations, and you have an obligation to give up a little of your leisure time to be part of a solution, but first, your day in the sun at the expense of future generations has got to come to a screeching halt. Having one more party, supporting a party, or a political party’s politician isn't a solution; if it were we wouldn't be in this mess. The real solution resides with that person looking back at you in the mirror; it's time the two of you had a heart to heart regarding “me thinking" and "we thinking". The current “all about seniors” AARP plan needs to be replaced with an “all about us” American plan. This will open the door for a constructive intra-generational dialogue, focusing on real solutions that best serve this & future generations; our children and grand children are entitled to that conversation at the very least. Now take the energy, and the emotions you feel after readi0ng this, and join us in a no finger pointing, no name calling, no sign carrying, no appointing blame, "we thinking", stamp out senioritis dialogue, by going to www.americaretoday.com and activate your voice on behalf of the next generations
From Milan, MI, 03/14/2010
Social Security is a pyramid scheme. It worked at the beginning, since there were large numbers of workers per retiree, but unless our population starts and keeps growing exponentially it will inevitably go bust. And it's telling that the same people who are vehemently against fixing this are the same ones who think an expanding population is a bigger problem than national bankruptcy.
(As an aside: I'm rather disturbed, if not entirely surprised, that again the comments show that any commentator who shows some common or uncommon sense is nearly universally accused of being a far-right propagandist, while an *actual* far-left propagandist goes unremarked except when he breaks from the usual script to show some common sense for once.)
From San Diego, CA, 03/13/2010
Re: Comments by Todd Buchholz, 11 March 2010 - Social Securtiy
Doesn't anybody screen these right wing nuts? Social Security is a pay-as-you-go
insurance program. It's been a piggybank for the government's General Fund for decades. It's not going to become insolvent in anyone's lifetime, though it may take in little less than goes out for a few years till the baby boomers pass through the system.
There's never been a time in SS history when life expactancy of 65 year old SS recipients averaged less than 12 years.
Below is a URL that will take you to a SS website to confirm the above information.
http://www.socialsecurity.gov/OACT/NOTES/as116/as116_Tbl_10.html#wp1098786
Social Security is one of the few gov programs that pays for itself. We should put the War Department on the same diet.
So, who's next? Beck? Limbaugh? Hannity?
VERY sincerely, Bart Boyer
03/12/2010
This commentator completely misstates the issue to try to push for privatization without actually using that word. The issue is that right now payroll taxes are too high, and the excess is being spent on other things, making the tax code much more regressive that it appears. And in the future the ratio of workers to retirees will require a cut in benefits or an increase in payroll tax rates. Privitazation without an increase in payroll tax rates would 'save' the money for later, and reduce the taxes needed later, but would require an increase in some other taxes to make up for the lost revenue, or would require much higher deficits to fund the 'private' accounts, or would require massive spending cuts now.
Somehow the commentator never says anything about increasing taxes or massive spending cuts, because what he is really pushing is a scam to try to down size government without ever saying that.
From Durham, NC, 03/12/2010
Too much payout and too few providers? Okay... so why are we in the schizophrenic pursuit of wanting to scale down/eliminate Social Security, while spinning up health care? The same situation is in effect there.
From San Diego, CA, 03/11/2010
It's Sky Masterson that rolls the dice in the crap game to get the guys to go to Sarah's Salvation Army meeting not Nathan Detroit. :o)
From Las Vegas, NV, 03/11/2010
The age issue is just a red herring. For decades, boomer payments into Social Security kept the government flush with cash. Instead of planning ahead for when boomer retirement was going to drive Social Security into a deficit, elected officials just ignored the problem. What a sad commentary we have to depend on those same elected officials to bail us out.
From WA, 03/11/2010
http://www.ssa.gov/history/lifeexpect.html
The life-expectancy canard Mr Buchholz retrieves to make his point was past its sell-by date the day it came out. Though _mean_ life expectancy was low in the mid-1930s, this was due to the higher rates of infant mortality, Big Gummint not having interfered much in this area yet. Someone who had made it to age 65 could easily expect ten to fifteen years' more life.
Beyond this, he ignores an essential component of the situation: increases in per-capita productivity mean that even though the ratio of retiree to worker is much higher than in the thirties, each worker on average produces much more...the advances we will likely see in biotech, nanotech, and what-have-you-tech will keep this trend going, unless the increased profits all go to the ones who rule and own us to begin-with....
From Memphis, TN, 03/11/2010
Good points, Mike.
Also-- I think that Social Security needs to be kept out of Congress' General Fund. As every working American pays into the SS Fund-- and it's given that the Baby Boomers paid in nearly twice as much as previous generations in order to account for the sheer size of their generation, while continuing the regularly scheduled practice of paying for the previous generation (that was Ronald Reagan's biggest tax increase on Americans)-- it simply doesn't hold that the fund should be "going broke."
Sure, SS has been tapped repeatedly to cover General Fund layouts. It also rarely sees Payroll Tax boosts to keep it's flow, at the least, on-par with inflation. Both of those problems are easily remedied by a Law mandating SS be isolated and un-tappable for any other purpose, and that FICA withholding should keep up with inflation. Neither of those fixes should be politically untenable. We can always adjust the caps, temporarily or permanently, if hard-pressed, but that WOULD be politically difficult.
I am of GenX. I am cynical enough to expect that those in Mr. Buchholz's camp will ultimately get their way, but as long as Social Security is with us, I want it to work well for every generation, and am willing to pay my share. Especially to ensure something for those less fortunate and more infirm than me.
I've learned too much from my elders in my forty-odd years to know that I don't want a system that forces me away from helping them when they need help the most.
Individualizing Social Security will atomize American Society just that much more. Social Security is a constant reminder of our responsibility as Citizens of the UNITED States of America. I like the idea of knowing that my FICA payment is helping to keep an elderly person in his or her home, and it is equally assuring to know that my young paperkid is going to help me.
It seems a shame to have to remind Mr. Buchholz that had President Bush, and his Republican-Majority Congress gotten their way, Social Security would have been thrown to the Wall Street wolves just in time for the BIG CRASH. Most of my retirement-aged co-workers lost upwards of 40-45% of their stocks-based retirement funds. It would take some serious mental gymnastics to call loses like that "Social Security."
Privatizing the fund seems like a recipe for social INsecurity, especially when very simple and relatively cheap fixes are available.
If one has the extra money to set aside in a retirement fund, then good for them! Some might even have enough to gamble their retirement on the Wall Street casino, but please, Mr. Buchholz, do not make the rest of us act as markers on your bets. We've already seen how that could have gone.
--mf
From Cambridge, MA, 03/11/2010
"Todd Buchholz was an economic adviser to the first President Bush."
Of course he was a Bushman. You can see this right where he suggests that the solution is in individual saving and so forth. That's part of the solution for the wealthy, but it's not *the* solution. The solution is higher taxes, serious questions about retirement ages, etc. The solution is *not* cutting back on services for the poor, needy, or the elderly, no matter what some Conservative says.
Jon.
03/11/2010
He told us to put money aside for when we retire... speaking as someone in their twenties and of the prime age I'm guessing he's thinking of drawing the cut off at, I have but one question. WHAT FSKING MONEY!?
Everyone I know my age who doesn't still require parental support works multiple part time jobs, cannot find enough hours to complete education to move into better paying work, have NO health insurance of any kind, and spend 80% of their monthly income on JUST RENT. My 3 roomates and I live on a two hundred dollar food a month bill for the entire house.
Were I to walk in to Charles Schwab wanting to set up a retirement account, would anyone, really, truly listen to me? I wasn't aware you could open a 401K with a bus transfer. What do you think the interest on that would be? Oh wait, never mind, it just expired.'
This is just another example of the boomers dining and dashing, reaping all the delicious benefits, and leaving us to scrub dishes in the back to pay off the bill.
From Waltham, MA, 03/11/2010
"Todd Buchholz was an economic adviser to the first President Bush."
Can't you find anyone who wasn't a failure to comment on your show? Can you imagine if we'd had implemented his ideas before the market crash?
And look at this, right on the Social Security web site:
Is it true that life expectancy was less than 65 back in 1935, so the Social Security program was designed in such a way that people would not live long enough to collect benefits?
A: Not really. Life expectancy at birth was less than 65, but this is a misleading measure. A more appropriate measure is life expectancy after attainment of adulthood, which shows that most Americans could expect to live to age 65 once they survived childhood.
So is Todd Buchholz lying or just too lazy to do a 4 second google search?
From FL, 03/11/2010
Re: Todd Buchholz says `when Franklin Roosevelt set the Social Security retirement age at 65, the average 65-year-old was dead. Life expectancy was less than 65. That's why the numbers worked. But now we're living longer.'
This is a popular argument for raising the eligibility age for SS bene's these days. But before they make me wait any longer to collect my due, show me the actuarial tables they used way back when, and then show where it says the distribution of SS benefits is supposed to tied to these tables. Maybe then I'll reconsider when I should expect to see a return on the 12.4% of my income that me and my company have paid into the system all my working life.
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