"The Social Security program plays an important part in providing for families, children, and older persons in times of stress. But it cannot remain static. Changes in our population, in our working habits, and in our standard of living require constant revision."
It is not surprising that President Obama addressed Social Security in his recent State of the Union address. But the above presidential quote was spoken 50 years ago by President John F. Kennedy.
Kennedy was certainly correct that demographic changes would require revising Social Security, but the revisions made over the past five decades have increased the generosity of benefits; moreover, the demographics we face are those of vastly longer payout periods for boomers living decades beyond their retirement while fewer workers from the "Baby Bust" cohort are funding the program.
Now comes President Obama, rolling up his sleeve, with this to say about the problem of Social Security:
"To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans' guaranteed retirement income to the whims of the stock market."
Like presidents of both parties before him, the president simultaneously acknowledges the problem without proposing to do anything specific about it; indeed, by advising against "slashing benefits for future generations," he preempts possible solutions.
TheAtlantic.com business blogger Megan McArdle compares the president's address to a CEO of a failing company on an earnings conference call. Says McArdle, who once worked at an investment bank: "Stating the obvious would make things worse, as customers and creditors decide that the end really is nigh, and it's time to get out while they still can."
The problem has been obvious for decades. My college political science professor explained it pretty clearly in the mid-'80s. I don't have my notes handy, but he said that our (then) current trajectory was leading us to a choice of either massive, painful cuts in benefits that could foment social unrest or massive, punitive tax hikes that would shut down economic growth.
