Two wrongs don't make a right. The buck stops here. And so on. The adults have always told us that we must act responsibly and not make ourselves a nuisance to others. They also told us to tell the truth. It seems that they have been lying this whole time and do not really believe any of the above things.
Much talk has been made about the new proposed prescription drug benefit being given to seniors at the cost of $400 billion over the next decade. We keep hearing that number: $400 billion. What we do not hear mentioned very often is that this benefit is expected to cost $1 trillion the decade after this one.
With Social Security being a pay-as-you-go system, current benefits are paid by current taxes. When we graduate and enter the workforce, 6.2 percent of our earnings (up to $87,900) are taxed to pay for retirees. In addition, our employer pays another 6.2 percent. Of course, employers are not usually as generous as some might think; this tax they must pay is passed on to workers in the form of lower compensation. In other words, about one eighth of your income, up to $87,900, will be taken to subsidize the elderly. This is even before income and Medicare taxes.
The big problem facing Social Security is the impending retirement of our parents, the Baby Boom generation. There is a reason they have this name: their numbers are much larger than preceding generations and those after it. But doesn't this mean that there will be more people claiming social security and Medicare benefits than before? Doesn't it also mean that there will be a lower ratio of workers to retirees? The answer to both questions is yes. When the system was conceived in 1940, there were 40 workers paying to support one retiree. Today, that ratio has dropped to 3.4 workers. Now, take a look around your classroom. In 20 years, you and the person behind you working so hard on today's crossword puzzle will have to support one worker. It just doesn't add up.
Those of us who remember the 2000 presidential debates can recall that Al Gore campaigned to use our budget surpluses of the late 1990s to prop up Social Security and Medicare. If that sounds a little fuzzy, maybe the words "lock box" bring back some memories. Regardless of whether this was a good plan or a fiscal train wreck, the option is not even on the table anymore, as our federal government now runs deficits instead of surpluses.
The total federal tax collection over the last 10 years stands at nearly 19 percent of total U.S. economic production. In 40 years, Social Security and Medicare alone will consume this same share of the U.S. economy if benefits stay at the same level. Therefore, our options are limited. We could privatize some or all of Social Security. Under this plan, there would be a cost of $2 trillion to finance the transition period. But there remains too much political opposition, chiefly from the Democrats, to this chance. We could eliminate all other government spending, but that doesn't seem likely. We could cut benefits to these programs, but that is politically dangerous for any elected person who wants to stay in office.
The only other "solution" is to raise taxes.
According to Laurence J. Kotlikoff, chairperson of the economics d epartment at Boston University, "Given the demographics, paying the elderly their Social Security and medical benefits will effectively bankrupt the next generation and gravely damage the economy."
For a slightly sunnier prognosis, Victor Fuchs, emeritus professor of economics at Stanford University says, "Young people will not be willing or able to stand the tax load." He then adds that the resulting conflict between generations "could get really horrendous."
Why then do politicians not care what college students and others of our generation think about paying for this? As Robert Blendon of the Harvard School of Public Health points out, "Older voters are the ones who care about Medicare, and that's why politicians pay attention to them." Older voters are also the same people who receive Social Security benefits, and these subsidies are probably more important on the elderly's political radar.
The worst part of this whole "debate" is that the people who are going to be paying for all of this -- our generation -- are regarded as inconsequential. I personally do not wish to continue this system, but I'm sure some young people feel otherwise. Because we are seen as not caring enough about politics and because our voter turnout is low, the repercussions for a politician passing these bills onto us are nonexistent.
The common complaint of the Baby Boom generation whenever benefit cuts arise is that it would be unfair that they had to pay Social Security taxes their whole lives and then not be able to collect the benefits.
Yet, instead of fixing the problem, they are merely passing it along to us. What will we do? We will either have to solve it or pass it along to our children's generation.
As college students, we can't really claim "taxation without representation." We have the right to vote, but we must let it be known if we really want to co-sign for this bill. Otherwise, we will be left with the check and this problem will only get tougher to solve as we get older.
