Bush on the “Outdated” Social Security system
In President Bush’s surprise news conference, he was testy about fielding questions as to what his Social Security deform proposals would look like. But he did explain WHY we needed to have Social Security deform:
There’s more we must do to keep this economy flexible, innovative and competitive in the world. In a time of change we must reform systems that were created to meet the needs of another era…to fix the Social Security system for our children and our grandchildren.
Yes, the GOP line is that this system must be radically changed as it is somehow broken, bankrupt, or otherwise outdated. Of course, it is neither broken nor bankrupt (unless it is supposed to bail out that General Fund that is massively in rapidly growing debt).
But let’s compare our current situation to the situation say in 1948. People are living longer so if we expect to retire at age 65, we need to accumulate more retirement savings or perhaps defer the retirement date. Of course, real GDP (2000$) is about 6.6 times what it was in 1948 whereas the adult population is only 2.2 times what it was in 1948. In other words, we have enjoyed a substantial increase in output per person over the past 56 years. OK, the Social Security system is funding more real benefits for retirees today as it did back in 1948. And under the current benefit formulae, promised real benefits may be higher in 2060 than they are today. But that presumes continued productivity increases over the next 56 years.
So why can’t we simply find some means for simply paying for these benefits?. After all, projections have the Social Security Trust Fund reaching a reserve near $8 trillion by 2020 – a reserve that will last until 2052. So what is the fiscal crisis? Oh yea – I forget the fourth difference between our current situation versus where we were in 1948 – back then both political parties believed in fiscal responsibility when it came to the General Fund. I guess President Bush is right – we do need to find some means of protecting our retirements from the fiscal recklessness of the Bush Administration.