The congressional Democratic party’s “there is no social security crisis” belies both past rhetoric (see: Al Gore campaign, 2000) and objective analysis.

Will there be a major problem? The 2004 report of the Trustees (http://www.ssa.gov/OACT/TR/TR04/tr04.pdf) shows the pay-as-you-go plan currently takes in $632b (2003) from 154m working Americans and paid $471b to 47m retirees. That’s $4.1k collected per worker and $10k paid to each retiree, with 3.3 workers supporting each retiree. Thirty years from now it’s estimated (link) that 185m workers will support 89m beneficiaries, dropping the workers to beneficiaries ratio to 2.1. If you hold everything else constant, those 2.1 workers are only going to provide $8.6k for their ‘dependent,’ leaving them $1.4k per year worse off than a retiree today unless other action is taken.

But what’s really stunning is the raw cyncism of the “Problem? What problem?” ploy. In order to keep the system healthy over the long term, some oxes will be gored — benefits will be decreased (or at least their rate of growth will be slowed), eligibility will be limited (by increasing minimum age, for instance), and / or payroll taxes will be increased. But if you assume that some reform IS going to happen — because it has to — and someone is going to be p.o.’d about its impact on them — young workers or retirees, or maybe both — then the congressional Democrats have apparently decided that the ‘right’ political move is to let the Republicans take the hits for fixing the problem, and pick up the disaffected afterwards. There is really no political downside if things break the right way — the only constituency for reform may be actuaries and financial planners. You don’t get credit for saving the country from a projection.

But, oh, by the way, that would mean sacrificing the long term health of the country for political gain. Is this really where the Democratic party wants to make its first major stand after the 2004 election losses? If enough of the voting public has heard of something called the ‘baby boom,’ understand that they’re about to retire, and groks that a pay-as-you-go old age benefit could get expensive, then denying that there is a problem could create the same credibility problem in domestic policy as that which has plagued them in foreign affairs for a generation.

This entry was posted on Tuesday, January 18th, 2005 at 9:32 pm by A Senior Administration Official and is filed under Brilliant, but uncategorizable. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.