Why "Conservative" Entitlement Reforms Are Coming, like It or Not
Zinsmeister, Karl, The American Enterprise
With even our Democratic president proclaiming that "the era of big government is over," it's obvious Washington is in the midst of a long-term shift toward more conservative politics and economics. The daily media usually point to today's new cast of politicians or the power of fresh ideas cooked up by conservative intellectuals over the last two decades as the sources of this rightward shift.
Actually, there are more fundamental forces pushing us toward "conservative" government reforms. The most basic of these are demographic. Lower birthrates are producing fewer future workers and taxpayers. Meanwhile, retirees are living longer, and consuming at higher levels. As a result, the favorite liberal formula of repeatedly cranking up government benefits--because the Costs can be quietly spread over successively larger generations of taxpayers--suddenly no longer works. Most dramatically, demographic change is now breaking down our huge middle-class entitlement programs, to the point where they will have to be either discarded, downsized, or drastically reformed. The best example of this is Social Security.
Contrary to popular opinion, the Social Security taxes withheld from your paycheck are not invested in your name in some trust fund so as to be available when you retire. Those annual thousands of dollars go right back out the door shortly after arriving at the U.S. Treasury--in the form of checks made out to today's old folks.
Where, then, are the funds for your retirement going to come from? From your children. Under Social Security's current structure, your children will pay for your benefits, just as you are now paying for your parents'. What you "put into the system" to provide for your own retirement is not money, but kids.
But Baby boomers have chosen to produce only about half as many children as their parents did. That means that when it comes time to retire, there will be a relatively thin rank of young workers around to make good on the boomers' Social Security checks. Back in 1959 when I was born, there were six workers paying into Social Security for every one retiree drawing out. By the time I retire, there will be less than two workers for each dependent.
That fundamental demographic shift has huge implications--for the Social Security program and for American politics. …