Do we really care about children?

Jewish World Review ^ | 11/2/05 | Walter Williams

[qam1]

I cringe with disgust when I hear politicians say, "We're doing it for the children." What's worse is so many Americans mindlessly fall hook, line and sinker for the hype. Judging by our actions, Americans could not care less for future generations, and future generations will curse us for it. Let's look at it.

According to several respected authorities, including the Concord Coalition (co-chaired by former Sens. Warren Rudman and Robert Kerrey), the Congressional Budget Office, U.S. Treasury Secretary John Snow, and the Social Security Administration, the estimated present value of the unfunded liability of Social Security and Medicare ranges between $61 trillion and $75 trillion dollars..................

{snip}

In 2030, will young people in the labor force be willing to see themselves taxed at Social Security rates of 20, 30 and 40 percent to take care of some old people? I don't think that will politically fly, and they might begin to get ideas about euthanasia. In addition to economic strife, Social Security and Medicare are laying the groundwork for intergenerational conflict. Unfortunately, the politics of today don't give us room to prevent these twin disasters.

[qam1]

Xer Ping

Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations (i.e. The Baby Boomers) are doing that Gen-X and Y will end up paying for.

Freep mail me to be added or dropped. See my home page for details and previous articles.  

[camle]

you heard them wrong. what the libs are really saying is "we're doing it TO the children". when you look at the taxes our children are gonna be paying, how can one say otherwise?

economic slavery is no better than chattel slavery.

[PeterFinn]

When the kids get taxed at 50% to support old people then the politicians will still tell them it's "for the children".

[R. Scott]

How I hate that phrase!
If something is labeled as “For the Children”, anyone against the proposal must hate children.

[xrp]

What am I doing? Saving a crapton of wealth now and preparing to flee sometime around 2020 to another country.

[goldstategop]

A $75 trillion dollar unfunded IOU in Social Security and Medicare. That's how much we would have to set aside in cash to fully fund those benefits. But as Walter Williams points out the total value of this country's good and services in 2004 was only $12 trillion dollars! So here, we have a gap of $63 trillion between future commitments and what's on hand to pay for them. (I have what's coming to me and my kids be screwed.) None of the politicians want to fix the problem because the voters of this generation don't care about what happens 30 years from now. If you're dead, its someone else's problem. The way to solve the problem would be to raise the retirement age to 80, but by then most of us would be dead. The average male life expectancy is 73 for most females its 77. You can pretty much figure out none of our children will ever receive a dime in those Social Security and Medicare benefits, if nothing is changed. Whatever's being done in Washington right now, its certainly not being done for the children.

("Denny Crane: Gun Control? For Communists. She's a liberal. Can't hunt.")

[writer33]

Help me! My back hurts from carrying grandpa!

[Mercat]

My liberal office mate got back from an estate planning seminar yesterday and told me that if you have $2M in your retirement account and die, income and estate taxes will reduce it by 3/4ths. He was upset. I told him he was thinking like a Republican. hehe.

[SquirrelKing]

Won't somebody please think of the children?!

[thulldud]

Whatever's being done in Washington right now, its certainly not being done for the children.

Children don't vote.

[goldstategop]

My estate is worth less than a million dollars so the federal death tax doesn't hit me with a 55% penalty. If I was worth more than that... ouch! Liberals who support the death tax aren't depriving the super-wealthy of anything; they're just penalizing middle class heirs who want to join the wealthy and be able to live a decent life.

("Denny Crane: Gun Control? For Communists. She's a liberal. Can't hunt.")

[goldstategop]

Right. Geezers worry about whether they'll eat dog food. They don't stop to consider if the government gives them everything they want, there will be nothing left over for the kids. Far from enabling altruism and ensuring a concern for others, liberalism institutionalizes selfishness and an attitude of indifference to the common good. Ayn Rand and her Objectivists were right but about the wrong party.

("Denny Crane: Gun Control? For Communists. She's a liberal. Can't hunt.")

[thulldud]

"liberalism institutionalizes selfishness and an attitude of indifference to the common good."

Indifference to the "common good" is not the real problem. It's indifference to the people we know and meet daily (family, neighbors) that constitutes the real sting of collectivism. As each individual is gradually cut off from his natural ties to those for whom he has real responsibility, it becomes easier for demagogues to gather him with other such rootless atoms into artificially-constructed "identity groups" which provide the constituency for even more government power.

Positive feedback loop.

[netmilsmom]

>>The way to solve the problem would be to raise the retirement age to 80, but by then most of us would be dead. The average male life expectancy is 73 for most females its 77.<<

I agree and I am closer to that age than you.
My hubby who comes from a $$$$ family was lamenting that he could never retire because we have no "nest egg". I looked at him in awe.
I had never planned to retire. My dad died at 52, my mom at 61. If I make it to retirement age, I want to be happy, healthy and working!!!! Why not? Quit to live on a fixed income? Unlike his family, if we tried to live on the little $$ we have, we would be eating Mighty Dog. Not me, man.
I want to be an annoying greater at Walmart!
I'm willing to croak at work, too.

[GOP_1900AD]

The best way to avert the inevitable intergenerational conflict is the following prescription:
1. Tighten credit now.
2. Commence the phase out of Social Security now.
3. Vastly incent people to have kids.
4. Undertake a grass roots effort to politically and culturally begin the roll back of hypermodernity and nihilism. Push back the forces of secular humanism and globalist utopianism. Etc. A nationwide revival, of sorts.
5. Stop treating corporations that are only false fronts in the US, with most of their actual activity being overseas, as being domestic. Treat them as the foreign corporations they really are.

Do these things, the future generations will be forever in our debt.

[remember]

I cringe with disgust when I hear politicians say, "We're doing it for the children." What's worse is so many Americans mindlessly fall hook, line and sinker for the hype. Judging by our actions, Americans could not care less for future generations, and future generations will curse us for it. Let's look at it.

According to several respected authorities, including the Concord Coalition (co-chaired by former Sens. Warren Rudman and Robert Kerrey), the Congressional Budget Office, U.S. Treasury Secretary John Snow, and the Social Security Administration, the estimated present value of the unfunded liability of Social Security and Medicare ranges between $61 trillion and $75 trillion dollars.

This $61 trillion to $75 trillion figure appears to be the unfunded liability of Social Security and Medicare through the "infinite horizon". Prior to the 2003, the Trustees reports only calculated the unfunded liability over the next 75 years. Starting in that year, however, they added the calculation for the infinite future as well. In any case, following, are the calculations from the 2005 Trustees reports:

Unfunded Obligations through the Infinite Horizon

                                             Present         % of
                                              Value   % of  taxable
Program                                      ($tril)   GDP  payroll
--------------------------------------------  -----   ----  -------
Social Security (OASDI) Unfunded obligations   11.1    1.2    3.5
Medicare Part A (HI)    Unfunded obligations   24.1    2.5    5.8
Medicare Part B (SMI)   General revenues       25.8    2.7
Medicare Part D (drug)  General revenues       18.2    1.9
--------------------------------------------  -----  -----
TOTAL                                          79.2    8.3

Unfunded Obligations from Program Inception through 2079

                                             Present         % of
                                              Value   % of  taxable
Program                                      ($tril)   GDP  payroll
--------------------------------------------  -----   ----  -------
Social Security (OASDI) Unfunded obligations    4.0    0.6    1.8 
Medicare Part A (HI)    Unfunded obligations    8.6    1.4    3.0
Medicare Part B (SMI)   General revenues       12.4    2.0
Medicare Part D (drug)  General revenues        8.7    1.4
--------------------------------------------  -----  -----
TOTAL                                          33.7    8.2

Source: 2005 OASDI Trustees Report, Table IV.B6.
        2005 Medicare Trustees Report, Tables III.B10, III.C15 and III.C21

Many have questioned the usefulness of the infinite horizon calculations. For example, following is an excerpt from an article at FactCheck.org:

Contrary to the technical panel’s endorsement, the American Academy of Actuaries, a nonpartisan organization that sets standards of practice for actuaries in the US , disputes the value of the infinite horizon projection. In fact, they said it probably would mislead anyone lacking technical expertise and that it provides “little if any useful information” about the system’s long-term finances. In a December 2003 letter states: to the Social Security Advisory Board, the Academy wrote:

American Academy of Actuaries: …The new measures of the unfunded obligations included in the 2003 report provide little if any useful information about the program’s long-range finances and indeed are likely to mislead anyone lacking technical expertise in the demographic, economic, and actuarial aspects of the program’s finances into believing that the program is in far worse financial condition than is actually indicated.

Williams goes on to state:

Congress can't put aside $75 trillion as reserves against future liabilities of Social Security and Medicare. Therefore, according to the Dallas, Texas-based National Center for Policy Analysis (NCPA), the annual rate of Social Security unfunded liabilities is growing at a $667 billion clip and Medicare's at $4 trillion.

Congress doesn't need to put aside the money needed to pay all Social Security and Medicare benefits forever. It makes much more sense to look at the liability as a percent of GDP or taxable revenues. As can be seen from the table above, the total liability is about 8.3 percent of GDP. Current federal tax revenues from individual and corporate income taxes is about 9 percent of GDP so this is a serious liability that needs to be addressed. However, it's not the immediately crushing liability suggested by Williams.

In addition, the annual $667 billion increase in Social Security's liabilities mentioned by Williams is highly misleading. It's chiefly due to the simple fact that the dollar is losing its value to inflation. An article from the Center on Budget and Policy Priorities states:

Each year, the size of the Social Security shortfall, when measured in present-value dollar terms, can appear to grow simply because it is being expressed in dollars that are less valuable and not because the size of the shortfall has grown in reality. For instance, a dollar in the 2004 measurement of the Social Security shortfall is worth less than a dollar in the 2003 measurement. As a result, the Social Security gap expressed in 2004 dollars would be a larger number than the same gap expressed in 2003 dollars; the gap, as measured over an “infinite horizon,” would be about $600 billion larger even if the gap had not actually changed in dimension.

This is where the Administration gets its $600 billion figure. The increase that the Administration cites is due to the change in the value of the dollar, not to any deterioration in the program’s finances.

Williams concludes:

In 2030, will young people in the labor force be willing to see themselves taxed at Social Security rates of 20, 30 and 40 percent to take care of some old people? I don't think that will politically fly, and they might begin to get ideas about euthanasia. In addition to economic strife, Social Security and Medicare are laying the groundwork for intergenerational conflict. Unfortunately, the politics of today don't give us room to prevent these twin disasters.

It's hard to figure out where Williams got his "20, 30 and 40 percent" figure for 2030. According to the above table, the unfunded liability for the next 75 years for those programs being funded by the payroll tax (Social Security and Medicare Part A) is 4.8 percent of taxable payroll. Added to the current 15.3 percent for both the employee and employer share of Social Security and Medicare gives about 20 percent, Williams lowest estimate for 2030, just 25 years from now. Hence, the real question might be "Does Williams Really Care About The Facts?".

The lastest version of this reply can be found at http://home.att.net/~rdavis2/walter1.html.