USA Today is running this week a fact-heavy series about the imminent retirement of the Baby Boom generation. The first two articles, available at USAToday.com in its Money section, are great on cogent advice to individuals, but are very weak on public policy implications for our country.
As one whose parents enjoyed financial security in their senior years in large part because my late father was militantly, evangelistically against retirement, I agree with the general thrust of the articles that people should delay retirement as long as possible in their own financial interest. I commend USA Today for making it clear to people that they can be losing over $100,000 in today's money by taking early retirement as most choose to do even as life expectancy continues to rise.
But I am disappointed at the sparsity of analysis of the broad public policy implications of the fact that many many millions of people prefer earlier retirement to financial security. This choice is good for the Social Security System even if it is bad for individuals.
I am not a believer in the likelihood of a Social Security funding crisis. I agree with the title of Matt Stoller's old website: There Is No Social Security Crisis. The only crisis that I see is that the crisis the financial services industry has been hyping for generations now will likely never come, thus eventually risking a credibility problem for the financial services industry and the inhererent reduced sales of its products.
When FDR first proposed Social Security, Republicans warned darkly that money paid out would never be paid back. In 1964, Presidential candidate Barry Goldwater warned of an imminent collapse in the Social Security system. In 1978,an unsuccessful Texas Congressional candidate, who unfortunately went onto bigger things, one George W. Bush, issued a similar warning of the Social Security System running out of money in the 1990's.
In the Clinton Administration, so-called experts talked about how the Social Security System would run out of money in the 2020's. At the start of the unsucessful Congressional candidate's Presidential administration, the official word was that the Social Security system would run out of money by 2037. Now the USA Today article on January 14 puts the date the Social Security system cannot pay its bills at 2041, by which time the youngest baby boomers will 77 years old and the vast majority of baby boomers will have already died.
It would then be a simple a matter to borrow money for a few years to pay off obligations to the small minority of baby boomers still alive. After the baby boom generation goes, there will be many years of surpluses due to a much smaller number of recipients.
I do not concede, however, that even the 2041 date is real. My guess is that it will continue to be pushed back a year or two or more at a time for the rest of my life.
Yesterday's USA Today article refers to the 79 million baby boomers in our country. But for many years the figure was 76 million baby boomers, and millions of them have to have died already. Like all too many members of the Baby Boom generation, I can come up with a good list of deceased contemporaries.
There are now about 305 million Americans, and by 2041 there should be well over 400 million Americans. The Baby Boomers will be well under 10% of this total population.
I am fed up with plans to erode financial security of future retirees by taking a scalpel to the Social Security benefits. I am irritated with pandering to the financial interests that benefit from the false perception of a crisis.
If Congress really believes that there is a crisis, they should not cut anyone's benefits. They should allow well performing state, local, and non-profit pension systems to invest a share of the Social Security Trust fund: Pennsylvania's State Employees Retirement System, for instance, earned a 22% return last year.
Second, Congress should raise the minimum wage to $9.50 as Ted Kennedy has proposed to get more tax money into the Social Security system.
Third, Congress should double or eliminate the cap on Social Security payments, so that people earning over $100,000 a year pay social security taxes on their entire base of income.
These ideas, and others like them, have little or no chance of being enacted quickly, because they do not serve the goal of crisis creation or pain creation.
It is time to end scare tactics. It's time to make the well-being of retirees, not the purchase of financial service products, the top focus of debate about the Social Security System's future.
All too often, telling the truth means advocating pain to beneficiaries or governmental programs. Here, telling the truth means saying the pain of future cuts is in all likelihood unnecessary. This is not the kind of truth that powerful interests want to be told.