February 12, 2010
Friday

In all the angst about Sarah Palin writing notes on her palm and President Barack Obama pronouncing corpsman as "corpse man," the American commentariat has paid scant attention to a hugely significant report, the one about Social Security's funding scare in 2009 and the red ink it will likely be bathed in this year and next.

Here it is, fellow Americans, a forerunner of what we will have -- big time -- starting in 2016, a harbinger of what could be the single most threatening domestic issue we face as a people, and this is what I would like to ask all those who have continuously told us not to worry about Social Security: Where's your trust fund now?

That's been the big lie, you know -- that all those surplus dollars we were bringing in from the payroll tax to finance Social Security were somehow being set aside as an asset that could be drawn on when current revenues were no longer sufficient to foot the bill. But those surplus dollars were actually spent on other programs. They are not there. The phony assumption was that they would at least keep down deficits so that massive borrowing would be short of ruinous in the future, but they haven't done that, either.

So along comes a recession and scads of early retirements. The payout last year was unexpectedly high, and will be high again this year and next at the same time revenues are lower because of high unemployment and slow wage growth. There's no way to finance this surprise except through larger deficits that are already as scary as can be or higher taxes that would hurt recovery

It's conceivable that revenues will be back on track by 2012, but the widespread expectation is that the true trauma starts coming our way four years later when baby boomer retirements and increased longevity tackle the program from behind. For every beneficiary, you will have just slightly over three workers paying the benefits (as opposed to more than 40 some 65 years ago), and especially when you add in other entitlement programs, things are just going to keep getting worse and worse to the point where something will have to give. Like the economy, for instance.

In his recent talk with the congressional Republican caucus, Obama said that while fixing Medicare and Medicaid were extremely difficult, fixing Social Security would not be.. Not true. It would have been simple if Congress had acted years ago, but no -- you take all the CEOs who played a role in creating the current recession, and their irresponsibility is not even a tiny fraction of the negligence exhibited in the House and Senate on this issue.

You can't do it through taxes because the amounts just keep rising and rising and far enough down the road would be exorbitant while Social Security would be swamping all other federal programs. And it's runaway spending that plagues us now and could kill our economy in the future. It has to stop.

Increase the retirement age? That would work for some people, but would be punishing for others in certain kinds of onerous jobs. It would stymie younger people in their hopes for advancement, would have a cost in the volunteer civic work that could otherwise be done, and could not take effect without years of warning time to those affected. Yes, maybe in some moderate way with exceptions for hardships, it should be done, but it's not the whole answer.

The best way out would be to change the formula for deciding initial Social Security payments. Right now, those payments go up every year as wages go up. You could keep increasing payments to reflect inflation, cause no additional pain to anyone and avoid crisis, although there would still be difficulties in the near term.

What is very, very important at the moment is for our elected representatives to wake up, look at what's happening right now and what is going to start happening in a few years. They must commit to action. Soon.

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