Alan Greenspan shocked
Washington, agreeing with both the Entitlements-for-All crowd and
the Starve the Beasters that you can't have rock-bottom tax rates
and Social Security forever.
Of course, Greenspan sided with the STBs, saying that the way to
deal with the coming fiscal train wreck is to cut benefits to future
retirees. There'll be no parting wealthy Americans from their tax
cuts, in Greenspan's world.
If you're my age, your grandparents will get their money --
actually, your money, because Social Security is a pay-as-you-go
proposition. Your boomer parents will get a check, too, though it
may be smaller than expected, and the government might have to
borrow from the milk money (education, national defense and such) to
cover the bills. But you and I shouldn't spend too much time staring
into the mailbox when our own retirement comes around.
The problem is, there aren't enough workers to pay the bills.
There were 46 million beneficiaries of Social Security in 2002. Soon
there will be 77 million. In 1950, there were 16 workers for every
retiree. Now there are 3.3. In 40 years, it will be two-to-one. And
because the AARP won't let politicians limit benefits to those in
financial need, two of those workers can look forward to one day
providing pocket money to Donald Trump.
As much fake outrage as it caused, what Greenspan said was
nothing new. Last March, the Social Security Board of Trustees said
almost the same thing in a report comfortingly titled: ``Social
Security Not Sustainable for the Long Term.''
The trust funds earn only about 6.4 percent interest a year, the
report said, which is why politicians such as President Bush want to
let younger workers play the stock market with part of the money.
But, should the federal government further enrich mutual-fund
managers whom many people no longer trust? What if some of them sink
the federal kitty into the next Enron? Could people plunder those
accounts to buy a home, pay for college or finance an emergency?
Call me cynical, but I'm skeptical that we average Americans can
e-trade our way out of this mess.
Then there's the actual source of Social Security funding: taxes
on worker earnings.
You know who is the largest employer in America? It used to be
General Motors, with the average worker earning $17.50 an hour, plus
benefits. Now it's $8-an-hour Wal-Mart. With both blue- and
white-collar workers competing with inexpensive foreign workers and
American students slated to compete with a generation of kids in
Asia who do complex calculus at age 12 and who will run the help
desk for a third of the cost, can we really expect to have enough of
an earnings base to sustain Social Security when I retire? I doubt
it.
Too many Americans have a Social ''False Sense of Security'' that
assumes that the government check alone will be enough to retire on.
But I've known seniors who tried it. It isn't pretty. The average
benefit is around $920 a month.
It was nice of Greenspan to admit that you can't cut taxes to the
bone and still pay for everybody's retirement. It would be nicer if
he and his politician friends would be as blunt with the senior
lobby about limiting benefits to those who need it. While they're at
it, they should use tax and other incentives to encourage Americans
to save more than 2 percent a year and stop goading people to spend
every dime of our paychecks, pile on credit-card debt and use our
homes as cash machines to prop up the economy. Sorry, rich people --
but those tax cuts, which if made permanent would cost $1 trillion
over 10 years (compared to the $3.5 trillion that the trustees said
it would take to keep Social Security solvent for the next 75 years)
should be on the table, too.
I don't mind working to give a decent retirement to the
generations before me. But the more I hear about Social Security the
less secure I feel.
Joy-Ann Reid is an online news editor and freelance writer.
