Just What Do We Owe To Our Grandchildren?

President Bush has made a point of repeatedly reminding us that we must reform Social Security so that our grandchildren will not be left unprotected when the program can no longer pay full benefits sometime after 2042. Just what do we owe our grandchildren?

During the Great Depression, under the leadership of Franklin Delano Roosevelt, this nation took on unprecedented debt as a result of public works and social spending deemed essential to maintaining our society. This great program of Keynesian economics may or may not have contributed to the ending of bad times, but it certainly worked as political tool in preserving our government and nation in its worst economic crisis.

Before we knew it, we were at war with forces of evil that exceed even those we face today since it was directed by nation states with the power to back it up with arms. Again that greatest generation did what it had to do to preserve protect and defend the nation against its enemies.

Frankly, these double barreled crises called for action without regard to what it might do to the children and grandchildren of the nation. In the first, our social fabric was at stake and in the second our very survival was in question. During the period between 1932 and 1945, we took on greater debt than could ever have been dreamed of just a decade earlier. There was no concern over how would repay this debt or its impact on future generations.

That debt has never been paid in full and is now commingled with debt that can be attributed to the Civil War and perhaps even earlier. Certainly dear reader, you don’t think that we compartmentalize our debts by year or event. You must know that debt loses its identity with the years and is rolled over – the new with the old – as new paper is issued and old retired by the Treasury.

President Bush says over and over again that he is intent on protecting our grandchildren from a crisis in Social Security funding. This is a problem not of his making, but it is one that he is bound and determined to bring to our attention. Rome is burning, and he is intent on solving a problem that can wait? Could it be that he is attempting to distract us? As I’ve written before, this is red herring designed to take our minds off of our real problems.

We are at war in Iraq. We overthrew a regime – admittedly hated and without morals – that was no threat to us or our allies. The two major charges against Saddam’s government: that they had weapons of mass destruction with which they threatened us and our allies; and that they were conspiring with al Qaeda in an effort to aid that evil institution – by making it possible for the terrorists to acquire WMDs. No such weapons were uncovered and no such conspiracy was proved.

As the president talked about a nation at war, he asked no sacrifice from us, the citizens of this generation. In fact he pushed through a major tax program that reduced our liability in funding our adventures. As an aside, this reduction was far greater for those with high income and wealth than on those of modest means, but that’s for another posting. The rationale for the cuts was clear and simple, we needed to stimulate the economy. Even giving on that point, the president now alleges that the economy is going great guns but we must extend the tax benefits – that still favor the rich over the middle class.

Social Security must be addressed, but is certainly not something that must be faced while we are at war and in budget crisis. Our people are living longer – and healthier – and there is no reason why over time we could not raise the age of retirement. Some of our people will make a lot more money than the amount taxed by Social Security. That doesn’t mean that a larger amount should not be taxed; it is after all an insurance program. I find it ludicrous that one of the selling points for the private accounts is that one can be left as part of an estate. To me SS is a term policy for those who live to collect and for the dependents of those who die or become disabled. Why you would divert a third of the self contribution and turn it into an inheritable asset while the fund continues to gallop its way to bankruptcy.

As many have noted, for years we have had retirement accounts but millions of our citizens, especially lower income people, do not participate in these programs. That has some bearing on why I would favor the government investing a portion of the fund in slightly higher yielding investments – with the obvious caveats about risk. Clearly the intent for me would be to extend the solvency period and not enrich the few lottery winners who invest very well over their careers. These winners have the talent and will have the resources to win without further government support.

The country is in the midst of a demographic revolution. Since readily available and reliable birth control measures became available in the sixties all elements of the society (not just the rich) have been able to reduce the number of children born per woman. Over time, we will have to adjust to that fact. Right now, however, we can tinker on the edges of our social system, Social Security, and demographic problems while observing how nations that are even more demographically challenged deal with the problem. Obviously, France, Germany, Italy, Japan and many others will show us the way.

Our SS fund is sufficient until about 2042. And contrary to what the president says it will not be bankrupt then. If we do nothing, benefits will have to be reduced substantially or retirement made even later. If we tinker modestly at this time, we can push that time frame out by many decades. Long before that time, many of the mature nations above will have solved the problem by hook, crook, or bankruptcy, and we will have the opportunity to pick the best models and courses.

I believe that it is for each generation to solve the problems it faces. I’m not saying we should intentionally ruin our grandchildren for our pleasure and comfort, but we don’t have to go out of or way to solve their problems. The greatest generation paid for Keynesian solutions to the Great Depression and created the greatest military machine in the history of warfare with borrowed dollars that we gladly pay for even today. Had they not saddled their grandchildren with this debt, there might well be no United States.

In the same vein, those of us who came of age in time to fight – if that’s the word for it – the Cold War created the great technology that underlies much of our success today. We defended the free world and saved Western Civilization once again. This too involved debt that is commingled with our present obligations to be paid much later.

Still the president, the protector of generations yet unborn, asks for no sacrifice from those of us alive and kicking. He wants to take on more debt for the future so that some child will have a chance at winning a stock lottery.

All this while, the president is calling for us to take on debt to solve the SS `crisis’ while carrying budget and trade deficits of record proportions. He has no trouble solving a problem of his choosing while ignoring one of his making.

I’m for working on the budget and tax problems of today and tomorrow and only playing with the edges of a problem that will become a crisis only after more than another generation comes and goes.

We are a nation with gigantic problems. The Iraq War is directly attributable to President Bush. The budget deficits are as much his as anyone’s, yet he insists on continuing his tax cuts and solving the problem with Social Security while our men and women fight and die in a cause that clearly does not in any way measure up to the one described in the run up to the conflict

We owe our grandchildren the inheritance of the best society and healthiest nation we can pass on. Beyond that, they we will have to solve their own problems

Blog on!

Wild Bill