Social Security Must Be Saved

BY DAN KITCHELL, CNHI News Service
Commonwealth Journal

October 08, 2009 12:10 pm

— BY DAN KITCHELL
CNHI News Service

Supply and demand is such a simple concept, you’d think we’d get this one right by now.
The fact of the matter is that the demand for U.S. goods and services has decreased, and that’s why we’re in a recession, and have been since George W. Bush was president. When the economy is slow, workers are laid off, consumption declines and the downward spiral of bad things begins. People become pessimistic about everything. Some even blame, gasp, the media and columnists. For shame.
The real concern with this latest recession is not that we will never come out of it. Many, in fact, have suggested it’s already in our rearview mirror, while other experts say we’re getting out of it, even if we’re not out of it yet.
But the worst news is that Social Security has become a casualty of the recession. There are fewer people working, and more people taking early retirement or disability. The net effect of that is that Social Security will be paying out more money than it is taking in to its trust in 2010 and 2011.
For years, politicians of both parties have warned of the day when that would happen. Doomsayers pledged to make it a lockbox entitlement that no one could touch to pay for their pet congressional program. In every case, there were reassurances that Social Security would be there for every American retiree.
Unfortunately, the current recession is not the only problem facing Social Security. The Labor Department reports that the ratio of jobs to unemployed Americans is the lowest it has been since it began keeping records. Add to that the reality that, at some point, thousands of veterans will be returning to the work force once they leave Iraq and Afghanistan, and that should raise unemployment levels. Add to that the feel-good news that our life expectancy continues to rise, and suddenly we have some harsh realities.
Baby Boomers are budget busters for Social Security, and once we all retire, it will require more workers to support us than ever before.
Something has to give. Most of us who have paid into Social Security — make that all of us if we’ve ever worked — want the “give” to not be us, as in “give up” Social Security. Means testing, or basing benefits on what retirement assets we have, is an issue that’s been touched on before in reform efforts. But there also are those who would contend that if someone has paid for entitlement benefits, they ought to receive the full benefit they have coming, even if they don’t need the money.
The central issue is that Social Security must provide for retirees for decades to come. By design, Social Security is not a poor concept, but it did not project the realities before us. The federal government has to come up with a way to provide more funding for Social Security if the economy does not improve.
Before radical reforms happen, some attention has to be paid to related issues. One of those issues is personal income. With levels either flat or rising minimally, the rise in Social Security revenue will be miniscule compared to the demand for it. The other issue is simply the economy. If the economy continues to hemorrhage high-paying manufacturing jobs and replace workers with service sector positions that pay a fraction of the salaries manufacturing has paid, it will hold down personal income growth for an extended period.
The latest news on Social Security will probably redouble calls for Social Security investments in the stock market, and there will be critics of that as well. But regardless of the debate, government cannot let “Social Security” become a contradiction in terms.
If Social Security cannot provide for the people who have contributed to it and expect it to be there when they need it most, Uncle Sam is no better than Bernie Madoff with federal authorization.
Social Security has to be predictably profitable and compatible with actuarial tables. If it can’t be, our national debt in the trillions, will grow exponentially over the next 50 years. Much like the growing cost of health care, Americans cannot afford to go without it.