A note to Nicholas Kristof about Social Security
Carlton M. Caves
2005 February 5

To: Nicholas Kristof
Re: Your column "Social Security Poker: It's Time for Liberals to Ante Up" in the February 5 New York Times

I like your columns very much, because they often challenge my own assumptions in ways that can't be brushed aside.

I wonder, however, if you are confusing two different demographic problems faced by Social Security. The first is the population bulge of baby boomers, including myself, who on retirement will increase the ratio of pensioners to workers. This population bulge is a temporary condition, which has been anticipated by having the Social Security trust fund build up a nest egg through increased payroll taxes during the baby boomers' working years. The system has been accumulating a surplus for years, as a consequence of payroll tax increases begun in the early 80s. The money is there now in the $1.5 trillion Social Security trust fund, all in government bonds, which the government will have to redeem over the next 30 years or so. This surplus is why the system can continue to function long after it goes into the red on a current-accounts basis. The problem is that paying off the debt to the Social Security trust fund will someday require an increase in taxes, something the Bushies don't want to contemplate, so they try to deny the existence of this government obligation. What a bait and switch! My generation pays increased payroll taxes for years, only to be told the money's not there because of GW's tax cuts for the wealthy.

The second demographic problem is the continued increase in life expectancy. This is a systemic problem, which increases the ratio of pensioners to workers. If we ignore population bulges, the ratio of pensioners to workers is identical to the ratio of retirement years to working years. No retirement plan, private or public, can work if the ratio of the retirement years to working years gets much above a third. Increases in life expectancy will have to be dealt with by increasing the retirement age under any pension plan.

Your big mistake, however, has nothing to do with these technical issues. It lies in the idea that you and I can make sensible proposals to the Bush neocons---like your proposals to fund a Social Security reform through restoring the inheritance tax and/or reversing the Bush tax cuts for the rich---and that the neocons will listen and make sensible compromises. Forget it. GW's rhetoric suggests that he might be willing to listen to proposals from the other side, but the very first lesson in dealing with the neocons---this is absolutely essential---is that their rhetoric is always a smokescreen to hide their true intentions. GW and his conservative allies are pushing a conservative economic agenda that promotes the interests of their big-money backers and that will take the country back to the economy of the early 20th Century. A big part of their work has already been accomplished with the tax cuts of the first Bush term. They now want to finish that work. They're not going to listen to sensible proposals from you and me, and they're not going to compromise. They're going to run over us.

Make your sensible proposals---we need them---and push those ideas, but do so knowing that the only objective is to sweep the neocons out of power, not to work with them. If we don't succeed in this, we're going to find ourselves living in a very different country.

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