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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Mary Cluney who wrote (113114)	5/9/2005 9:56:02 AM
From: kech	Read Replies (1) \| Respond to of 793958

Ah, I see now that you don't understand a critical part of the problem. Social Security is a consumption loan problem and it works fine if the population is the same size or growing over time and if life expectancy is the same across generations and if interest rates are stable. You should now realize that at least two of these are not true: 1) The baby boom generation is much bigger than the subsequent generation. I.e. more people demanding benefits than will be currently paying in, particularly in the next generation. There will be a huge deficit in the next generation from this point alone. 2) The life expectancy is growing rapidly. A mean life expectancy of 69 means that people are only receiving benefits for 4 years. A mean life expectancy of 82 means that people will be receiving benefits for 17 years. Thus the obligations of the system just on this point alone have quadrupled since the system was founded. Add to this the fact that in some glad happy days, someone decided to escalate benefits with wage productivity rather than with inflation. This further adds to the problem.