The third "component" is actually taking place - and it should, in order to reflect the longer life expectancies. The second one is a threat to older people - a few years of moderate inflation may make benefits almost meaningless.
The one that pisses me off is the one about means testing. 1) that wasn't the deal when they collected from people serious money, for decades, and the future benefits were clearly spelled out. Not nice to change rules late in the game. 2) means-testing will change SS into a form of welfare. As sh*tty as its design is*, it was conceived not as welfare, and not as insurance, but as a pension plan administered by the government.
*Pay as you go was a terrible idea. A large part of the funds should have been invested in the individual payers name, in an "index of indexes" - which would include equities, bonds, real estate, etc., with its composition not subject to change.
That said, the government should have stayed out of the pension business altogether. Let people save and prepare for old age. Those who fail to do so would have to rely on welfare. That would be better than to have people rely on a pension, only to change it along the way into a form of welfare.
Changing the retirement age totally makes sense, because people live longer today than they did last year. The dirty secret is that actuaries really don't have a good handle on the rates of change in life expectancy. Since 1935, average life expectancy has increased by some 17 years -- usually by about 1.6 years every 10 years or so, with the notable exceptions of 1940-1950 (5.3 years) and 1970-1980 (2.9 years). I guess no one ever considered it might be a huge problem some day.
Today, with the body of medical knowledge increasing at faster rates than ever -- and substantially larger portions of the world contributing to it -- there is every reason to anticipate substantially faster increases in the rate of change going forward. Over the next 100 years we (well, not you and me) could well see lives routinely extending to 120 years or more. Ray Kurzweil, no idiot, has taken it a step further to suggest that much longer lives are within reach sooner, rather than later. At any rate, it is difficult to imagine systems such as SS and Medicare, even if patched, staying together for the entire life span an average child being born today.
The other two points are totally predictable responses to a failing system -- change the terms for contributions or payments, or in this case, both.
I may have mentioned this before, but back around 1981 the NY CPA Journal ran an article written by a former chief actuary for Social Security. In it, he predicted that by 2040 to merely sustain Social Security the payroll tax would have to be 20%. He discussed the fact that this ends one way: Tax revolt. No one knew, of course, that Medicare would become the bigger problem in the mean time.
Now, they're abandoning the concept of the payroll tax to fund these things. The Democrats have made great progress with this by conflating the income tax with the payroll tax over the last few years. "Why should my secretary pay more taxes than I, the CEO, pay?" Well, because that was the bargain that was struck when you set up these horrible programs that take money from future generations and give it to the NOW crowd.
The Left are now demanding the wealthy give up their money. Sounds like the onset of tax revolt to me. |
