Our current system of Social Security is unsustainable, given the number of people retiring relative the number of people entering the workforce. I am surprised that the presidential candidates don’t talk about this issue more.
Carl Tannenbaum is a widely respected economist who was in town earlier this week. He recently left LaSalle Bank in Chicago, where he had been chief economist; he can often be seen on the cable news networks offering commentary. The question of Social Security came up during a presentation he made Tuesday. Here are excerpts from his comments:
“Folks, our liability for Social Security and Medicare is about $95 trillion carried out over time. That is about $300,000 per person.
"Make no mistake. None of us has our own individual account in Social Security. It is basically a system where the young pay benefits for the old. We are in a numbers game and in summary you have about 80 million [retirees] versus about 55 or 60 million [in the workforce]. The imbalance just means the contribution from my kids to my generation will be pretty large. The tax rate will be very high and it will be painful.”
Someone asked Tannenbaum if he thinks the problem is fixable. “Absolutely,” he said. “As many of you know, we have already saved Social Security twice when it looked like it was going to run out of money. You can raise the retirement age or change the indexing formulas.”
Tannenbaum noted many people who collect Social Security don’t need the money. “The fact is, Social Security was founded not as an entitlement but as a baseline so we wouldn’t have people impoverished in retirement. Since then, somehow it has gotten to be this birthright that people look at.”
Tannenbaum also would like to see the presidential candidates talk about the solvency of Social Security. "I hope that one of the candidates has some good ideas to try to bring this under control," he said. "I hope all of us are realistic about the hard work it is going to take to fix this."
tMichaelB is the web site for Tom Bengtson, who writes about business, religion, family and politics.
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