Business Week continues to be one of the least business-friendly publications in America. This week’s evidence comes in the form of an editorial (which we won’t even dignify with a link) on Social Security entitled, “The Pros and Cons of Private Accounts”. The title’s a bit misleading because there are a lot of cons in their analysis and not a lot of pros.
“The Bush Administration says that there is a crisis in the Social Security system”, they write, “and that private accounts can help solve the problem. The first statement”, they say — incredibly — “is false.” They go on to say that “‘Crisis’ implies immediacy and there is nothing in the years or even decades ahead that suggests any crisis.”
Derrick Max, of the Alliance for Worker Security, weighed in with a response, but Business Week’s ostrich-like ignorance of the facts is astounding. We are paying the price for years of overpromising, accompanied by years of underfunding.
At the moment, the unfunded liability in Social Security is a whopping $10.5 trillion. Yup, you read that right — trillion. To make matters worse, the demographics are all militating against Social Security’s continued viability. In l950, less than 20 years after its inception, there were 16 active workers for every retiree. Today, there are a little over three workers for every retiree. By the time today’s forty year-old reaches 65, there will be only two workers for every retiree. In the absence of any real reform, the FICA tax would have to be increased nearly 80% — from the current 10.5% to almost 18%.
We arrived here because for too long the facts have been ignored by folks living from election to election. “We don’t inherit the world from our ancestors”, goes an old Native American saying, “we borrow it from our children.” The President deserves great credit for tackling this issue head on not for his time, but for those who will come after us. What a concept.
Let’s take the long view and get this thing fixed.
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