The Speech No One Wants to Give

 

“To attain any success, it is quite clear that the Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it. The political processes of our country are such that if a rule of reason is not applied in this effort, we will lose everything — even to a possible and drastic change in the Constitution. This is what I mean by my constant insistence upon “moderation” in government.

        Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things…. a few other Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible, and they are stupid.”

        Sound a bit like AOC speaking?  Perhaps a Socialist candidate? Hardly. This is an excerpt from a letter written by Republican Dwight D. Eisenhower, then POTUS, to his brother Edgar. The gap is where he named several names of those he considered “stupid.” The second paragraph reveals how far the modern Republican party has strayed from Ike’s precepts, having become markedly anti-union, and progressive labor legislation, and threatening Social Security. Of course, since many modern Republicans reap the windfall from farm subsidies, they have actually increased (read RED states).

        However, the title of this essay reflects my belief that we should consider and honor the scientific process, by which I mean mathematics, statistics, and demographics. One of the aspects of science which some political conservatives and an even greater percentage of conservative religionists deny, is that as conditions change (read climate change, here, as one example) so should our expectations and actions.

        One such Conservative objection to some change is the fear that doing the right thing isn’t the “right thing’ if it affects business’s bottom line or electability of partisan hacks. Another thread is voiced by those who are stuck with a creation “story” which is increasingly revealed as creation “myth” by science. The tragedy here is that as we are seeing as I write, the right salesman with the proper snake oil can, seemingly against all odds, unite these seemingly disparate forces.  

        First off we have the claims that Congress is “pilfering the Social Security Trust Fund.  Social Security sometimes collects more money than what is paid out. Between 1937-2009 the Social Security Administration (SSA) received $13.8 trillion in income, but expended $11.3 trillion in benefits, according to the agency. However, for the past 13 years, the retirement program hasn’t taken in enough FICA taxes to pay current year benefits and that's where the Trust Fund, comes into play.

Every year, excess money, if any, is held in the "Social Security Trust Fund" which get invested into Treasury bonds and securities that make a lot of interest. In the Fiscal Year 2018 those investments racked up $3 billion alone, adding to a total of $2.895 trillion then `````currently in the fund. So any money taken in from Social Security isn't being divvied up among Congress, that money is being invested in the most secure way--with U.S. bonds.

"No, [Congress] did not take any funds from SS," Dean Baker, senior economist at Center for Economic and Policy Research, said. "SS funds are credited to its trust fund. Unless Congress changes the law (and it hasn't), any money dedicated to the trust fund is in the trust fund.”

        Having said that, it must be noted that one consistent bugaboo, addressed with varying amounts of arm waving and hot air, to some degree by both parties, has been the continually burgeoning federal budget cost share of social welfare programs, especially Medicare, Medicaid and Social Security programs. Much has been written, some of it mine, regarding health care costs and the significant responsibility for their escalation borne (or which should be borne) by outlandish and extortionary drug pricing by Major Pharma corporations. This isn’t a “fix”, but it would be a hell of a start if Congress had the guts to put lobbyist influence aside and repeal Medicare part D’s prohibition on negotiating drug prices like every private health insurer can and does. That simple action would reduce government drug spending by about $133 billion annually! For comparison, that savings would defray about 30% of the 2020 interest on the national debt. (prior to whatever effects we saw from Covid-19)

        On the other hand, and more directly related to my topic is a set of demographics which requires nothing more than literacy and common sense to interpret. The implications are plain and the “fix” apparent, if unpopular.

Obviously, we live longer, and not just a little longer, but almost 15 years longer. Actually, in 1935 when Social Security was incepted, the average life span was 60.7 years of age. This meant that, as the creators of the concept enacted it, the odds were that the average worker wouldn’t live to collect a dime!

        Looking at the table yields some fairly simple conclusions, but the “big” one is harder to see.  First: in 1940, Ida May Fuller, became Social Security's first beneficiary. She was exceptional because she had lived longer than the average of her peers.  By 1945, at full wartime productivity, for each SS beneficiary, there were 41.9 workers paying into the system (actually building for a while, an excess, the illusory “trust fund”.) Today’s workers, on the other hand, are paying today’s recipients. Yes, they are.

Since this point, the Social Security Board of Trustees has released an annual report detailing the financial health of the program. This includes taking a closer look at the income and outlays for Social Security each year, as well as forecasting the future solvency of America's leading retirement program. In each of the last 40 reports, the Trustees have warned of a long-term funding obligation shortfall. In other words, the Trustees forecast cumulative income received in the 75 years following the release of a report and determined that, inclusive of cost-of-living adjustments (COLAs), outlays would handily outpace income. In the 2024 Trustees Report, Social Security's long-term cash shortfall was estimated at $23.2 trillion through 2098. This was up $800 billion from the projected 75-year funding obligation shortfall listed in the 2023 Trustees Report.

         By 1975, because of the increase in recipients and a 7-year increase in longevity, the “workers to recipients” ratio was down to less than 1/3 of the 1945 figure. Meanwhile, the birth rate in the USA had decreased by about a third. The number of retirees reaching eligibility age was still increasing, primarily due to longer life expectancy. As seen in the table, the Social Security share of the federal budget was blossoming as well. At this point, another factor came into play, that being the numbers of persons receiving disability or survivor’s benefits from the same pot of cash. Surviving spouse with minor children coverage was part of the 1935 law, but disability wasn’t covered until 1956. This may seem cynical, but it seems to me that the availability of SS disability has in many cases created a cottage industry for lawyers willing to “arrange” it for a slight fee.

        The monster lurking under the bed, however, was the post war “Baby Boom”. From 1945 to 1961, the birth rate in the USA was higher than ever before or since, creating a “bubble” in the progression of population growth. The effects of this bubble have been felt by every industry in America from home building to children’s clothing to insurance to health care, and the list is practically endless. Take a child born to Mr. and Mrs. Howard Cunningham in 1948, after Howard returned from his army duties and they settled down. Their son, call him Richie, born in 1948, hit Social Security full retirement age of 67 in 2015, and he’ll draw Social security, assuming he’s got good genes, for at least another 11 or 12 years. 

        Because the baby boom continued into the early 1960s, and because the birth rate dropped to about half of that of the boom’s peak years, there are now even fewer workers contributing to the payments made to the steadily increasing numbers of boomer retirees planning, like me, to live a lot longer than average.  I’m barely a “pre-boomer, born in 1942. The boomer class of 1955 -1960, when the birth rate per 100 thousand was still over 20, is yet to come. The ‘55s hit in 2022, more to follow.

        So, what? The first observation, admittedly in hindsight, is that this issue was completely predictable and avoidable. It was obvious by the numbers between 1945 and 1955. Disability compounded the issue, accounting. now, for about 20% of the Social Security payout. What to do?  Let’s first reflect on what could have been done. This demographic trend was obvious at least 70 years ago (1950) and at that time, considering the increased lifespan, a forward-thinking Congress (yeah, I’m aware that’s an oxymoron) might have passed legislation raising the full retirement eligibility age by a year each of the following three or four decades. At most, that would now have full retirement at age 69. An accompanying increase for the early retirement age would have also been appropriate. Passing this legislation in 1950 to go into effect in 1960 would have “grandfathered” every worker within ten years of retirement. Had this been done, recognizing that the changes occurring were predictable and irreversible, Social Security would be well and good. As it stands, more than a third of retirees take early Social Security benefits, in many cases because they have prepared for retirement in other ways. In other words, foresight could have “fixed” the problem by 1990. Unfortunately, only a smattering of that philosophy was applied, and that was too late.

         What might be done now? This is the part that no politician wishes to address, because any real fix will be unpopular with some. First, recognize that any change that doesn’t grandfather persons with current retirement plans is blatantly unfair, so: pick a time certain, say, at least 5 years from the enacting of legislation, which raises the full eligibility age to 68. Also, raise the early retirement age to 63 in, perhaps, just three or 4 years. Additionally, decrease the initial amount of early retirement to encourage individuals to wait. In another five years plan for another bump to age 69 for full retirement, while leaving early retirement at 63. Increase the reward for waiting. In a “worst-case” scenario, also require employers to include disability insurance equivalent to Social Security disability as a perk. Also enact realistic legislation defining “disability” in meaningful terms. I’m reminded of the Louisiana mother of four sons, all supposedly mentally unable to hold jobs, yet all of whom had cars, but when their disability status was questioned, her rationale was that “Every young man needs a car.” The literature is rife with tens of thousands of well documented cases of SS disability and Medicare/Medicaid fraud as well as simple benefit fraud, such as cashing checks of long dead parents.

        Explain, in simple English, that by probably 2035 the problem will begin to moderate on its own, as the “Bulge” of the baby boomers pass through the system and on to whatever cosmic Karma waits for them. The birthrate began to decrease after a plateau at 1955-57. The class of 1957 would be 81 by that time and total numbers of beneficiaries would be decreasing steadily.

         Do not, however, like former Senator Alan Simpson or ex-Congressman Paul Ryan (himself the beneficiary of Social Security survivor’s benefits), address this issue as if the people who depend on it are “greedy” and are the ones at fault. “Recipient shaming”, when the current issues are the fault of decades of Congressional heads in the sand (or up their keisters), is a sleazy cop-out by those who had the data to see this demographic shift coming sixty years ago yet took no action. 

Yeah, it would have been the speech no one, presidents included, wanted to give but had that happened, with appropriate “grandfathering,” this essay wouldn’t have been written.  Too often this one- dimensional approach, usually including the use of the word “entitlement” somewhere, seems to blame currently eligible recipients rather than address the issue of Congressional unwillingness to tackle unpopular issues squarely.