The whole Social Security reform issue is:
a) confusing, so I tune it out
b) political, so I tune it out
c) someone else’s problem
d) all of the above
e) there’s a problem?
At times, I’m afraid, we all feel like selecting any one of these options. Huge numbers, varying doomsday predictions and just plain apathy keep our heads befuddled when it comes to the debate. And the rhetoric is just starting.
Countdown. The Social Security Administration projected last week that its trust fund will be exhausted in 2041, one year sooner than last year’s projection.
The point when tax revenues fall below program costs comes in 2017, also one year earlier than the administration projected last year.
The trustees reported that over a 75-year, long-range planning period, the trust funds will need additional revenue to the tune of $4 trillion (in today’s dollars) to pay benefits. “This unfunded obligation is $300 billion higher than the amount estimated last year.”
Trillions. The shear immensity of those figures is mind-boggling. $4 trillion – in additional income.
Still can’t fathom it? It would take a military jet flying at the speed of sound, reeling out a roll of dollar bills behind it, 14 years before it reeled out 1 trillion dollar bills.
Don’t look to Chile. When I traveled to Chile in 1997 through Ohio’s Leadership Education and Development, or LEAD, program, our group learned about that country’s private pension savings system from its head honcho.
Yesterday, I dug out the article I wrote about Chile’s pension system, which is now being heralded as an example for a U.S. system. No doubt, some things have changed in the last eight years, or I would have reprinted it today.
But some online digging uncovered this: One of the individuals now pushing the U.S. privatization programs was a mastermind of Chile’s reform – under dictator Augusto Pinochet. Jose Pinera now co-chairs the Washington-based Cato Institute’s Project on Social Security Choice.
Granted, he holds a Ph.D. in economics from Harvard, but I have a problem taking advice from someone who was secretary of labor under a dictator whose regime executed approximately 3,000 people and imprisoned or tortured 27,000 more Chileans.
Back to Social Security. I’m not convinced Social Security reform that includes privatized accounts works for everyone. When an issue is complicated or huge, people tune it out, opt out or just want someone else to make the decisions for them.
Even an educated or “intelligent” consumer is not always savvy enough to invest personal retirement funds wisely, so the education factor is huge. What will that cost? Who will remind me that I shouldn’t have all my retirement eggs in the stock market when I’m 64?
And how do we create a program that withstands the whimsies of politics and personalities and the cycles of economic markets?
I’m not saying the system may not need an overhaul, but the engine they’re looking at to drop in, may not provide the best performance.
(Editor Susan Crowell can be reached at 1-800-837-3419 or at firstname.lastname@example.org.)