Magazine article Newsweek

We Cannot Be 'Reassured': Most Workers Will Soon Receive Social Security Benefit Statements. A Good Idea? Maybe Not

Magazine article Newsweek

We Cannot Be 'Reassured': Most Workers Will Soon Receive Social Security Benefit Statements. A Good Idea? Maybe Not

Article excerpt

The social security debate is about to take a big step backward. Starting this week, the Social Security Administration launches what it calls "the largest customized mailing ever undertaken by a federal agency." About 125 million workers over 25 will receive annual estimates of their future Social Security benefits. This seems like a good idea, but it isn't. It will unavoidably create much misinformation--many people will receive unrealistically low estimates of their benefits--and will probably harden popular resistance to overhauling Social Security and Medicare.

Let's imagine the public reaction to these benefit statements. Well, some people won't react at all. They'll discard the envelopes as junk mail. But among the rest, not many are likely to think: "Uncle Sam is being too generous." Some will conclude that their benefits are too low and should be raised. Others will see the benefits as untouchable--a guaranteed form of property right. None of this will help us prepare for the aging of the baby-boom generation.

Recall that, by 2030, the projected ratio of workers to Social Security beneficiaries will drop from today's roughly 3-1 to about 2-1. Plausible budget projections indicate that, as now constituted, Social Security, Medicare and other retirement programs will rise to two thirds of federal spending, even if nonretirement programs are cut sharply. If they aren't, taxes or budget deficits will rise. The pressing need is a gradual and partial reduction in retirement spending through some higher eligibility ages or lower benefits. More "means testing," for example, would cut benefits for wealthier retirees.

We ought to be debating these issues, but we aren't. The debate, to the extent that it exists, concerns "saving Social Security" and "saving Medicare"--code words popularized by President Clinton for preserving all benefits, or even increasing them. We ought to move in the opposite direction, though not to punish future retirees (born in 1945, I will--with luck--become a baby-boom retiree). The reason is to avoid the adverse effects of excessive retirement spending. It threatens to overburden tomorrow's workers--our children--with taxes. Or it may squeeze other important national needs, from defense to education to research.

There is a genuine dilemma here: what seems good for us as individuals (higher retirement benefits) may harm us as a country. But the "collective good" does not vote; individuals do. Only political leaders can disarm the dilemma by framing the larger national interest in terms that connect with individual voters. President Clinton refuses to do this. The real issue is not "saving" Social Security or Medicare but balancing the interests of younger and older Americans. The debate should involve, if you're searching for a slogan, generational justice.

Given Clinton's record, no one could be blamed for seeing Social Security's mail campaign as an election-year device to remind voters that Democrats protect retirement benefits. It isn't that, though the mailings may have the same effect. The program is the brainchild of one of our more thoughtful legislators, Sen. …

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