Yesterday Richard W. Fisher, the president and CEO of the
Federal Reserve Bank of Dallas, gave a speech concerning America’s entitlement
programs at the Commonwealth Club of California. He gave a run through of the
numbers that the future tax payers of America were going to have to deal with,
absolutely mind blowing numbers.
They were extremely sobering and inspired me
to write a series of articles about it, this will be the first article, covering Social Security.
America’s Entitlement Programs Must End: Social Security
The first issue, of course, is Social Security. It’s a hot-button
issue that everyone knows about, one everyone talks about; well, everyone aside
from most politicians, they don’t want to lose votes by stating the unpopular
facts behind the issue.
The amount of money necessary to keep our Social Security
system running as it is now is absolutely staggering. To simply cover all of
the unfunded liabilities of our Social Security system from now on would cost
the American tax payers an astonishing 13.6 trillion Dollars. Yes, that is an
amount nearly equal to an entire year of our nation’s Gross Domestic Product;
for those of you that don’t know, that is the yearly amount of all of the goods and
services produced in our country. This is well known of course, but seeing the
number represented in Dollars really hits home.
The problem is that there simply aren’t enough new workers
to take care of the aging baby boomers of our country. You see, our Social
Security system was not very well conceived, little foresight was used and little
consideration was given to future generations.
The issue now is that people are living for a much longer
period of time, yet they still retire and begin to receive their entitlements
at the very same age that they did during Social Security’s inception. So while in 1940 only 53.9 percent of American Males and only
60.6 percent of American Females survived from their adulthood all the way to
their retirement; in 1990 those numbers jumped to 72.3 percent for Males and 83.6
percent for Females. While that is undoubtedly a good thing, it is one of many
things that have put tremendous strain on our entitlement programs.
Not only are people living even longer thanks to our medical
technology; but thanks as well to the post-war baby-boom, the number of American
citizens aged 65 or older has more than quintupled since the inception of our
Social Security program. That number is huge on its own, but it is only half
the story, many baby boomers are still working and will reach their retirement in the coming years.
The population of the United States aged 65 and older is
also expected to double in size within the next 20 years. By the year 2030 it is
estimated that nearly 1-out-of-5 Americans, as many as 72 million people, will
be 65 years of age or older. The 85 and older age group is currently one of the
fastest growing segments of the population.
The fact is that there simply aren’t
enough workers to pay for that many retirees. The birth rate has decreased dramatically as well, for various reasons. All of these factors combined have led us to our current predicament. Something has to be done about this, we cannot continue passing our debt on to future generations.
Social Security is not the only entitlement issue: In my next
article I’ll discuss Medicare, as well as my views on how to fix the problem.