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January 13, 2005

Interesting perspective on Social Security

You'll be hearing a lot about this in days to come, but this article caught my attention, particularly the sections I highlighted:

Right-wingers endlessly repeat the mantra that when Social Security began, there were 42 people paying into the system for every person receiving benefits and that by 2040 that ratio will fall to 2 working people for every retiree. The logical conclusion is obvious: we can no longer guarantee retirees the level of benefits that they currently receive. The elderly will have to tighten their belts and rely more on their own private savings.

Think, however, of the deep pessimism that lies behind this argument. It is like saying that in 1900, there was one farmer or farm worker for every seven Americans, but because that ratio has fallen to one farmer for every 83 people, we should all tighten our belts and eat less food. Rising agricultural productivity has made it possible for fewer people to provide all the food that we need. In the same way, if we can grow our economy and increase productivity over the next forty years, each working person should have no difficulty producing enough extra wealth to provide support for half of a retired person.

Providing economic security to the aged is just a question of how we divide the pie. Today, social security outlays represent 4.5% of our total economic output. If the economy grows strongly over the next forty years, we can support the elderly as generously as we do now with only 5% of the total pie even with further gains in life expectancy. In short, strong economic growth is the key to solving the long-term financing problems of Social Security.

And there is a proven way to grow the economy over the next half century. It is to invest in education and basic research. If we invest in our young people–from early childhood through higher education–we can create a more skilled and productive labor force. And if we also invest more in long term research, we can create the new industries that will employ those highly skilled workers. This is precisely what other nations are doing in their efforts to surpass us as the world’s strongest economic power.

Here’s the problem: the strand of conservatism that currently dominates the Republican Party doesn’t believe in increasing any kind of civilian government spending. They don’t want money going to the elderly and they don’t want spending for young people; all they want to do is reduce taxes and shrink government. As Grover Norquist, one of the most influential conservatives in Washington has said, “I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”

Posted by Mike at January 13, 2005 03:59 PM

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