The Social Security Crisis -- and the Do-Nothing Democrats

Earlier today, the Lord of Truth sent me Thomas Saving's editorial in today's Wall Street Journal regarding the unfunded liabilities in both Social Security and Medicare, and whether the critics who claim that there's no crisis are denying reality. There's plenty to discuss, but here's the bottom line...

What does it mean to have a $74 trillion revenue shortfall? It means that in order to pay benefits to current and future generations without using general revenues or cutting benefits, we need $74 trillion on hand right now, invested at the government's borrowing rate. Because we don't have $74 trillion invested today, next year the liability will be even larger. The year after that it will be larger still.

The underlying cause of our financial problems is that our elderly entitlement programs are essentially based on pay-as-you-go financing. Every dollar of payroll taxes we collect, we spend either on benefit payments to retirees or other programs when there are surplus funds. There is no saving and no investment. As a result, each generation pays taxes, not to fund its own benefits, but to finance the benefits of the previous generation. When today's workers retire, they will have to depend on future workers' willingness to pay much higher taxes if their benefits are to be paid. The alternative to a pay-as-you-go system is a funded system. Ultimately, if benefits are funded, each generation will pay its own way.

Now, there are those who disagree with the assessment that the system is in crisis. I acknowledge the need to debate them -- but it would be nice if they actually engaged the debate. Josh Marshall, a star of the left-wing blogosphere, states that "the deceptive budgetary calculations and arguments Saving advances are about on the caliber you might expect from a third-rate talk radio yakker." He then proceeds to rip Saving for being a trustee of the program, yet supposedly taking a partisan stance regarding the program. Apparently being a non-partisan would involve taping your mouth shut if you thought the program was in crisis. But one thing Marshall doesn't do is explain why Saving is wrong. And in case you're wondering, Atrios, whom Marshall used as his source, simply calls Saving an "idiot."

Look, I'm certain that other lefty bloggers have discussed their own theories about why the system is not in crisis, and have advanced responses to the positions put forth by Saving. But linking to his article and simply declaring it false doesn't do much for the argument. Unless, of course, Marshall and Co. don't want to argue the points because they can't.

My own analogy for the situation is to think of Social Security as a home, built by an esteemed architect, erected despite serious opposition from some local community leaders. The home is now 70 years old, and it's been re-furbished once or twice, but never has it undergone a major renovation, partly because no one wants to mess with the vision of the esteemed architect.

There is a serious dispute as to whether the foundation of the home is solid or not -- several contractors and local community leaders have commented that the foundation and the interior structure can't handle the number of people now living in the home, and that the house needs to be thoroughly renovated. Some people even believe the house is actually on the verge of a collapse. These people suggest any number of renovation plans.

Other people disagree, mainly citing the facts that (a) the house hasn't collapsed yet, (b) that the contractors in question are all descendants of the local community leaders who didn't want the house built anyway, and (c) God forbid we mess with the architect's vision. These people refuse to consider any of the renovation plans.

Now, who's being the unreasonable group here? And ask yourself one more question -- who wants to stay in the house?