Is Social Security in Crisis?

George Will casts doubt upon the conservative fiscal argument, preferring the philosophical one instead:

Social Security: Opportunity, Not a Crisis (WaPo)

The president says Social Security should be reformed because it is in “crisis.” That is an exaggeration. Democrats say it should not be reformed because there is no crisis. That is a non sequitur. Social Security should be reformed not because there is a crisis but because there is an opportunity.

What constitutes a crisis is a matter of opinion, and everyone is entitled to his or her own. But not to his or her own facts. Here are some:

Social Security outlays may exceed revenue by 2018 — that date almost certainly will recede further into the future, as it has before, as the economy outperforms expectations. After that, the government bonds that Social Security surpluses have bought (money used to fund the government) will be entirely redeemed, as the Social Security Administration calculates, by 2042. Or 2052, according to the Congressional Budget Office, using different assumptions about the rate of economic growth. That depends partly on the rate of productivity growth: Might a growth rate unusually high by historical standards become normal? Immigration rates will affect the ratio of workers to retirees.

Some people warning of a distant Social Security crisis postulate 75 years of 1.8 percent annual growth. But if America has 75 such sluggish years, Social Security’s insolvency will hardly be the nation’s largest problem — and personal retirement accounts will reflect, not compensate for, the stagnation.

Changes in life expectancy are certain; what they will be is unclear. Since 1900, life expectancy at birth has increased 30 years (from 47 to 77), mostly during the century’s first half, largely from reducing infant mortality by conquering infectious diseases. But since 1950, the most dramatic gain has been in life expectancy at 65. How much more progress can be made there? How many people who live longer will choose to work longer? What unknowable public health developments will intervene? For example, if government succeeds in getting dramatic declines in smoking, some anticipated Social Security savings — from the early deaths of millions of smokers — will vanish.

All these are just the known unknowns; there surely are, as Donald Rumsfeld says, unknown unknowns. Which means that today we may be less distant from the enactment of Social Security (1935) than we are from a real solvency crisis in the system.

Will makes valid points, and I certainly sympathize with the opportunity message. But his case, as I’m sure he knows, is much harder to sell amid other important priorities like the Iraq War, terrorism, and employment. Unless political supporters of privatization create a sense of urgency, the Social Security agenda will be placed in the backburner — and the opportunity that he so cherishes will be lost.

FILED UNDER: Economics and Business, General
Robert Garcia Tagorda
About Robert Garcia Tagorda
Robert blogged prolifically at OTB from November 2004 to August 2005, when career demands took him in a different direction. He graduated summa cum laude from Claremont McKenna College with a Bachelor of Arts in Philosophy, Politics, and Economics and earned his Master in Public Policy from Harvard's Kennedy School of Government.

Comments

  1. Just Me says:

    The problem is that fixig social security will be difficult, when it really does end up in crisis. I view fixing it now as crisis prevention. Sort of like the best way to avoid heart desease is to eat right, excersize etc when you are young, not wait until after you hit your 50’s or have your first by-pass.

  2. ken says:

    If Social Security’s future funding deficit is likened to future heart disease then the Bush current deficits should be likened to stage one cancer. Left untreated the cancer will kill you long before any heart disease does.

    The best solution for America’s ills is a strong dose of liberal fiscal responsibility.

  3. ken says:

    Or should I have said a liberal dose of strong fiscal responsibility?

  4. Just Me says:

    I don’t disagree with you that we need to excersize more fiscal responsibility. But excersizing fiscal responsibility now still isn’t going to solve the problem with social security, the problem with social security is that there won’t be enough workers to support a recipient without taxing them to death.

    I absolutely do think we need to stop spending like money grows on trees, and I think the problem is that both parties are to happy to spend, and use tax money for various pet projects and programs. I think conservatives have moved too far from their roots on this issue, and I would like to see them find them again, I think it is hard to argue that conservative politicians and the GOP are the party of fiscal conservatism, although just because the GOP lost the hat, that doesn’t mean the DNC has found it, when it comes to their pet projects they generally want to expand government and how much government pays even more.

  5. anjin-san says:

    The fact that Bush is trying to create another phoney crisis a’ la WMD is reason enough to reject his social security agenda.

    Lets stop the out of control spending in DC and move back to pay as you go. Perhaps tax cuts for the rich should not be our top priority.

    If the folks in DC are worried about social security, they should stop raiding the SS fund.

  6. McGehee says:

    Nice repetition of DNC talking points there, Anjin.

  7. anjin-san says:

    McGhee,

    I understand that as a Bush supporter you are opposed to the concept of having our own house in order. I mean, why would anyone want a president to veto even one spending bill during a time of record deficits?

  8. LJD says:

    So raiding SS originated with Bush and tax cuts for the rich? Nice talking points, but I don’t think so.

    I credit Bush with proposing good policy- it is a great idea to allow citizens to allocate a portion of their SS into competitive funds.

    I thought the democrats were supposed to be the party of youth? Seems most of them are all too willing to sell their children’s souls so they can retire comfortably.

    I guess all of the young hearts and minds of the democratic party are counting on those campaign promises for welfare (free medical, free education, and a chicken in every pot), or support by their commune(ities).

  9. anjin-san says:

    McGheee,

    Snappy use of Rush comback #3 by the way…