Alan Greenspan stirred up a lot of empty political talk Wednesday (Feb. 25) when he said Social Security benefits will have to be reduced to baby boomers, or the economy will collapse.
Unfortunately, the man knows what he’s talking about. He’s the only economic or political leader who actually put together a plan for Social Security that added years, if not decades, to its financial solvency.
That was in 1983, when Greenspan's bipartisan commission proposed Social Security benefit cuts and a payroll tax increase that Congress passed and President Reagan signed. Every Social Security commission since then has produced no reforms at all.
Throughout the 1990s, not one move was made to reform or save Social Security.
Perhaps benefit cuts aren’t the only necessary ingredient to save the program. Wealthier Americans might have to chip in more than they do, or payments might be means tested (based on wealth).
But let’s use real-world math for a change. Every penny that every active American worker has contributed to Social Security has been spent, either on someone else’s Social Security, or on any number of other federal programs.
There’s nothing there.
President Bush’s tax cut has little to do with the problem. In six of President Clinton’s eight years, the government spent all of the Social Security money, too. Only in 2000 was the Social Security fund untouched for non-Social Security programs, but as soon as the recession hit, that money was spent, too.
More of Bush’s tax cut should have been aimed at middle income Americans, but a tax cut nevertheless was needed to prime the economic pump. The $125 billion a year the tax cut has cost the federal government would hardly help a problem the size of Social Security anyway.
We’re talking trillions of dollars – I’m trying to track down how many trillion - and too many politicians are falsely implying the money is there when it isn’t. Some Americans are pretending their Social Security money is going to the relatively tiny tax cut or to the Iraq war.
The fact is, the Social Security money wasn’t there even before the Iraq war, which itself is not likely to cost much more than $200 billion, most of which is being borrowed.
And now, instead of asking constructive questions about the hard alternatives, many Americans are angry with Greenspan for even bringing up the Social Security crisis.
Keep your cool. Urge your congressman or woman to reform Social Security now. Make it a real "system," one that actually can pay for itself for the long run of 75 or 100 years. Then we will have saved that important program.
But don’t join the dopes who get all steamed up because they can't accept that $7 trillion minus $7 trillion equals zero.