Opinion
Social Security initiatives hampered by past errors
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In these last days of George W. Bush’s presidency, much will be made of what the administration did over the past eight years — as well as the manner in which it was done. While Iraq, No Child Left Behind and the Patriot Act are all important, but deserving of equal consideration are the things Bush II failed to do. By failing to address the issues with Social Security and neglecting the fiscal conservatism that was supposed to be a hallmark of his party, GW has left his successor with a laundry list of soiled domestic (as well as foreign) garments that will require some serious detergent.
Under President Bush, the country slipped from a budget surplus back into deficit. In the last half century, only Bush II and Nixon have the dubious distinction of presiding over such a transition. The national debt has risen by 4.35 billion dollars in the last eight years — that is an increase of over 75 percent in only eight years.
Mirroring the current plight of our treasury is the social security system. As Social Security becomes decreasingly solvent, further strain will be placed on the already ballooning national debt. Despite a notable effort at the start of his second term, the social safety net remains headed in the same direction as it was before Bush took over: bankruptcy.
The scale of the problem is undeniably large. During the 1950s, about 16 workers paid into the system to support one retiree. Now one retiree is supported by about three workers. As baby boomers begin to retire, Social Security will begin paying out more than it takes in. In addition to no longer contributing its former $100 billion surplus to the budget, it will begin to require federal funds, besides the payroll tax, to survive. Those numbers are staggering to be sure, but their magnitude should have only served to provide imperative, not excuse.
For all the time and political capital Bush attempted to spend, he failed to rally moderate support even within his own party. Although some would claim his plan was torpedoed by politics as usual, Bush was instead a victim of his own policy. Previous suspect decisions left the latter years of the Bush presidency battered and bruised, limping, rather than cruising through legislative sessions.
In a recent interview Bush mentioned his failed Social Security initiative as an item that the he feels he should receive more credit for. I was disappointed when his interviewer failed to point out that in order to get credit, one should actually accomplish something. Although his partisans may insist his efforts have paved the way for future discussion on Social Security reform (a talk we will need to have sooner rather than later), the same can be said of his predecessor. Furthermore, issues as important as this do not need to have the way paved for them — they need to be solved.
History cannot be viewed in a vacuum, and even though Bush’s legacy will be judged upon its own merit, it will also be viewed in the context of his successor’s administration as well. So while Bush failed to tackle issues like debt and Social Security, or even address problems like healthcare, he may yet receive some credit if parts of his proposals are revived in the incoming president’s legislation. However, until that happens, these failures will continue to mar any historical analysis of the Bush II era. And no, he will not get points for trying.
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The US Social Security system started with very modest intentions, to provide a supplimental income to children without fathers and widows with minimal other means of support. http://en.wikipedia.org/wiki/SocialSecurity(United_States) It was drafted by the Roosevelt (D)administration and enacted by the democrats in control of congress in 1935.
At its inception, there were more than 20 people paying into the system for each person withdrawing from the system. The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92. As long as there were substantially more people paying into the system than withdrawing, such largesse could be sustained.
Seventy years later, that is no longer true. The program has been expanded to provide benefits to many others deemed ‘needy’ by well intentioned politicians over the ensuing decades. Over those same decades the ratio of people paying ‘in’ to people ‘withdrawing’ has declined. Today we have essentially a one to one ratio. The number of individuals paying into the system through payroll withholding is the same as the number of people withdrawing money from the system. As the US birth rate continues to decline, there are fewer young workers paying in to support the social security payments to more older retirees. This is unsustainable, unless the fewer younger workers pay in a lot more, the older retirees have their benefits cut substantially, or some combination of both is arranged.
In essence, Social Security has turned out to be a giant Ponzi scheme. http://en.wikipedia.org/wiki/Ponzi_scheme We have arrived at the point where the payments into the system are less than the payments out….. and the Ponzi scheme collapses. Yes, it was well intentioned and, yes, there are needy people. But the system is unsustainable and on the verge of collapse. That is what the Bush administration was warning about and trying to find a solution for.
Similarly, the ‘good intentions’ of democrats led to deregulating what had been a secure and viable home mortgage lending system (see 1977 Carter Administration, Community Re-Investment Act http://en.wikipedia.org/wiki/CommunityReinvestmentAct ), all in the name of ‘helping every person achieve the american dream of homeownership’. Attempts to rein in the increasing financial risks to Fannie Mae, Freddy Mac, and our banks were dismissed by democrats in the ensuing decades. The Bush administration pushed for tighter lending requirements and greater constraints on Fannie and Freddy. (http://www.washingtonpost.com/wp-dyn/articles/A41165-2004Sep22.html ) Legislation to do that was brought before Congress. A Democrat controlled Congress denied there were any financial risks and refused to support the needed legislation. The home mortgage finance system collapsed, leading us to the economic morass we face today.
Social Security will be no different. The democrats will continue to deny that there is any looming risk and conservatives will continue trying to warn of the impending disaster while searching for solutions that are derisively dismissed. The older retirees today are going to get cheated by having their benefits cut, after paying in to the system for their entire working careers. The younger workers are going to get cheated by forced higer taxes to a system they will never get a payment from. You can thank a democrat for the fundamentally flawed Ponzi scheme known as Social Security. It is the next disaster looming on the democrat denialist horizon.
Invictus Maneo