Social Security is the cornerstone of our social welfare state, giving a safety net to older Americans, as well as paying out disability and survivors benefits. Yet Social Security is in deep financial trouble. You know the story. In about ten years the amount of the Social Security trust fund begins to decrease. In about twenty years payments out of Social Security will out strip its receipts. But there is a trust fund to live off of for about ten years, so it is thirty years out that we can no longer maintain Social Security.
This problem is caused by various factors. First, we live longer than ever. Life expectancy now reaches close to 80 years old. But that includes those who die young. If you make it to 65 you will likely see 85 and beyond. So most people who begin to collect Social Security get out more than they ever put in. So how do we make up the difference? By taxing the young. But we have fewer young people working for each person drawing Social Security benefits. When the program was instituted it was about 15:1. Now it is 3:1 and soon will be 2:1. Also, the formula used to calculate the Social Security cost-of-living-adjustment (COLA) is wrong: it actually over estimates the rise in cost of living thus causing benefits to rise faster than inflation. Finally, and worst of all, the Social Security trust fund is largely an accounting gimmick. Much of it has already been spent on other items. The Social Security "surplus" then consists of the various other parts of government "owing" the Social Security Administration money, which as a matter of accounting the SSA counts as an asset. The problem is, of course, that the non-Social Security spending and the Social Security spending all come from the same source: you and me. We will have to be taxed into oblivion to keep up with the increase in benefits. This is why we are heading for disaster regarding Social Security and every knows it, or should.
This is also why Barack Obama is so irresponsible (and characteristically so) with his latest attack on John McCain, claiming McCain will cut benefits on seniors. The practitioner of the "new politics" goes to the old playbook. Rather than leading on Social Security, Obama chooses to demagogue on it, scaring seniors in order to gain votes while offering no solutions to a serious problem. One common sense solution is to raise the retirement age. But Obama is against that. Another is to recalculate the COLA so it is more accurate. But Obama is against that. Famously George Bush advocated moving to private accounts. But Obama is against that. In short Obama is for nothing but against everything. This is the smart political move. To advocate any change would cause some persons pain and that might cost Obama votes. So it looks like the practitioner of the "politics of change" actually just wants the status quo as long as it gets him votes. And we can let our children and grandchildren fend for themselves. This is similar to the Democrats' policy on energy: beat up on the oil companies and give more money for ethanol because while neither of those policies increase supply or reduce demand or does anything to move toward energy independence, they do get votes and that is what is important.
While Obama sometimes does not know what city he is in, as of January he will probably be pretty sure of his address: 1600 Pennsylvania Ave. Let us hope that he governs better than he campaigns. His so-called new politics really is the old. Make a bunch of promises you can't keep and offer no solution to any thorny problem because you don't want to lose any votes. It's irresponsible, but it is probably a winning strategy.
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