>
>
> What's the pen-l line on social security reform? Cut benefits? Increase taxes?
> Increase retirement age to 70? Other?
>
> Or is there less to the standard argument about the "baby boom bulge busting
> the bank" than meets they eye?
>
> -bob naiman
>
>
There's a lot less than meets the eye. Last year I attended a seminar
given by C. Eugene Stuerle, author of a well-respected book on the so-called
crisis of the social security system. One of his graphs showed
soc. sec. revenues and outlays, with the former exceeding the latter
for the next ten years or so, then a ballooning deficit as baby
boomers retire. I asked him, at what interest rate are you assuming
the government will pay back the surplus it borrowed from the
soc. sec. trust fund (last time I looked it was about $50 billion
a year). He said he assumed that it wasn't going to paid back at
all! What if it was? Well then the deficit wouldn't appear for
another 20 years after the one shown on his graph. So, I suggested,
the crisis is not really a crisis of the social security system,
but a crisis of whatever the Federal government spent the trust
fund's money on. His response: "It doesn't matter, the government
is still going to have to raise taxes to pay social security
benefits."
The logic of this is incredible, even for a neoclassical
economist (Steurle's work has been for Brookings and the American
Enterprise Institute). It is often repeated in the media, which
for years has pointed to social security (usually lumped with other
"entitlements") as the biggest item in the budget, saying it is
impossible to reduce the deficit without cutting the latter, neglecting
to mention that social security itself has not contributed one dollar
to the deficits of the last decade and a half, since it has been
running a surplus.
Steurle's seminar was a joke; I imagine the book is too, altho
if any pen-l-ers have read it I would like to hear their opinion.
The most these people can say is that sometime in the next 35 years
the government will have to raise taxes to maintain the current level
of benefits. So what? He has all kinds of wonderful suggestions to
avoid this calamity, e.g. people live longer so we should raise
the retirement age or limit the number of years after age 65
that people can collect.
Sorry but I don't have much sympathy with those who are
losing sleep over this far-off "crisis" which may force us to
return to pre-Reagan concepts of progressive taxation
sometime in the unforeseeable future.
Mark Weisbrot
[EMAIL PROTECTED]
