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Social
Security:
Don't
Just Fix the Symptom, Solve the Problem
By
Pat Conover, Policy Advocate, United Church of Christ, Office
for Church in Society and Chair, Interreligious Social Security
Task Force [conoverp@ucc.org]
The 1998 Report
of the Social Security Trustees predicts a long-range financial
problem for Social Security. There have been two primary policy
proposals which respond to the problem as posed by the Trustees.
Those favoring individual private accounts are intent on taking
advantage of a perceived vulnerability in Social Security to
alter the basic purpose and funding mechanisms. Criticisms
of this hostile response to Social Security can be found in
other places. President Clinton's plan directly addresses the
symptom of a predicted long-range financial problem by investing
much more money in the Old-Age, Survivors and Disability Insurance
Trust Funds. The President's plan defends the basic purposes
of Social Security and deserves to be passed. But the President's
plan does not address the problem that leads the Trustees to
predict the long-range financial problem.
The usual
understanding of the predicted long-range financial problem
is that there will be a lot more benefits to pay when the Baby
Boomer's begins to retire and that retirees are living a lot
longer and will receive more benefits per person. This is an
accurate, but significantly inadequate, understanding of the
problem named by the Trustees.
The big
problem identified by the Trustees is their prediction that
the economy is going to grow about half as fast in the next
75 years as it has in the past 75 years. If that happens, it
will mess up the stock market, the revenues for general government
operations, the lifestyle of every generation and Social Security.
Because Social Security is such a big program, it is going
to be hard to fix without fixing the whole economy.
Why do the
Trustees think the economy will slow down? The core of their
answer is that they are predicting a VERY slow growing work
force. Such a slow growing work force would cause a slow growing
economy, which would cause more unemployment and lower pay,
which would cause less payroll tax revenue to support Social
Security. The slow growth of the work force will become very
noticeable, they predict, when the Baby Boomers are retiring
from the work force and comparatively few new workers are entering
the work force. Fewer new workers will be entering the work
force because the birth rate in the United States has been
low for a long time, and they predict it will stay low.
The Trustees
have also offered a more optimistic (low cost) prediction about
the financial future of Social Security, a prediction of no
problem at all. For the key birth rate variable, the difference
is between 1.9 versus 2.2 children born per woman age 15 to
45. This is not a huge problem to overcome. Social investments
to improve the work force can make up this difference. The
106th Congress needs to devote more attention and resources
to education and training, to helping people move from welfare
to work, to overcoming disability, to encouraging older workers
who are able to stay in the work force, to ending discrimination
against various categories of workers, to increasing the minimum
wage and to strengthening child care and health care benefits.
In addition, new attention needs to be paid to welcoming immigrants
to the United States and helping them integrate into the work
force.
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