Beyond Social Security
IF THIS country had top-notch political leadership, we would not be looking at months of petty, partisan warfare over a puny topic like Social Security.
Instead we would be discussing something much bigger -- aging itself, its problems, opportunities, and costs. And that discussion would be taking place in the proper context -- of national priorities and mature relations among the generations.
Instead, the country faces the ugly prospect of a ''debate" about an ideological gimmick -- investment accounts -- that its proponents have finally acknowledged has no relation whatsoever to the long-range problems of the social insurance system it irresponsibly tinkers with.
And on the other side, there is nothing in prospect but the favorite sport among progressives these days -- Bush-bashing. It gets headlines but has yet to solve a single national problem.
Context helps frame the disgust that many Americans suspect they really feel when faced with this latest example of how gridlocked, partisan politics operates.
Consider: In the year 2033, using Social Security projections, expenditures on benefits will exceed payroll tax revenues by a bit more than $300 billion, or by a bit more than $400 billion if something like the Bush investment account were in place. In that same year, nearly $380 billion in income tax revenues will not be collected if the tax cuts enacted in 2001 and 2003 are permanently in place.
According to the Center on Budget and Policy Priorities -- a progressive research organization that has been telling tough truths about fiscal matters since it first unmasked David Stockman's fuzzy math on Ronald Reagan's behalf 24 years ago -- the Social Security projections over the next 75 years, assuming very modest economic growth, show an operating gap of $3.7 trillion, or about two-thirds of one percent of domestic economic output.
By comparison, the income tax cuts during the president's first term amount to more than 1.9 percent of output, or more than $11.5 trillion. And the controversial prescription drug benefit that takes effect next year would cost 1.4 percent of output, or more than $8 trillion.
Using a different, and also credible way of looking at Social Security, the Congressional Budget Office says the 75-year gap is worth a bit more than one-third of one percent of the economy's production. If that were true, the income tax cuts and the prescription drug benefit would together be 10 times as large.
To provide still more context, it's worth thinking about another big economic issue that stems from aging -- the federal tax on estates. Bush wants to eliminate it entirely, forever, as part of his campaign to make all enacted tax cuts (which were passed as part of a budget gimmick to expire at the end of this decade) permanent. If instead, there was an estate tax only on assets exceeding $7 million and affecting less than 1 percent of the population, half the Social Security gap over time would vanish. Continued...