From The Philadelphia Inquirer: http://www.philly.com/philly/opinion/inquirer/20120729_Social_Security_is_not_headed_for_disaster.html
Barbara R. Bergmann
Sun, Jul. 29, 2012
Sun, Jul. 29, 2012
The
gloomy annual report of the trustees of Social Security has provoked
the usual ominous predictions of big trouble ahead. Media accounts spoke
of significant deterioration in the financial outlook of the system,
and declared it unsustainable unless structural changes were made. The
scare words might seem to justify the often-heard prediction that Social
Security may last long enough to sustain our current oldsters, but that
it is headed for bankruptcy and "won't be there" for our younger
citizens.
Nothing could be further from the truth.
Into the
future, Social Security can and will provide wage replacement at about
the same level it does now. It does not depend for its resources on an
entity that might run out of money, that has no way to raise more, and
could go into bankruptcy. The U.S. government has the ability to raise
enough revenue to pay out whatever level of Social Security benefits the
public wants. In that, Social Security resembles all the other things
the government pays for, including the national parks, the Food and Drug
Administration, and the Department of Defense.
At what level does the public want retirees supported?
All
indications are that the public is satisfied with benefits that replace
wages at about the present level. Can the richest country in the world
afford to continue to do that? Of course. Our taxes are very low
compared with those of most other developed countries. Our ability to
spend more than we now do on government is very high. If necessary, the
public would support higher taxes to maintain Social Security benefits.
The
doom and gloom about Social Security, and the claims that it needs
radical restructuring, derive from the way Franklin D. Roosevelt's
administration explained the system to the public. To avoid accusations
of "socialism," citizens were made to understand that the pensions they
would get would consist of their own money that they had put into a
trust fund.
The trust-fund story made it politically easier to
start the system and maintain support for it. But that story has made it
vulnerable to the prediction that it is going bankrupt and will have to
be radically changed. After all, if the pensions come out of the trust
fund, and the fund will shrink to zero in about 2033, as predicted, then
isn't the system unsustainable?
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