Do we really care about children?

by Walter E. Williams (Townhall.com)

I cringe with disgust when I hear politicians say, "We're
doing it for the children." What's worse is so many
Americans mindlessly fall hook, line and sinker for the
hype. Judging by our actions, Americans could not care less
for future generations, and future generations will curse
us for it. Let's look at it.

According to several respected authorities, including the
Concord Coalition (co-chaired by former Sens. Warren Rudman
and Robert Kerrey), the Congressional Budget Office, U.S.
Treasury Secretary John Snow, and the Social Security
Administration, the estimated present value of the unfunded
liability of Social Security and Medicare ranges between
$61 trillion and $75 trillion dollars.

"Williams," you ask, "what's this present value business?"
Simply put, between $61 trillion and $75 trillion dollars
is the money that would have to be put aside right now, at
current interest rates, in order to meet future obligations
of Social Security and Medicare. To put an astronomical sum
like $61 trillion or $75 trillion in a bit of perspective:
The value of our entire national output of goods and
services (GDP) in 2004 was only $12 trillion.

Congress can't put aside $75 trillion as reserves against
future liabilities of Social Security and Medicare.
Therefore, according to the Dallas, Texas-based National
Center for Policy Analysis (NCPA), the annual rate of Social
Security unfunded liabilities is growing at a $667 billion
clip and Medicare's at $4 trillion.

What does all this mean? It means little in pocketbook terms
to today's Americans who are 65 years or older. They will
collect their Social Security checks and their promised
Medicare benefits, but not so for future generations. Here's
that future according to House Ways and Means Committee
testimony, given by Dr. John Goodman, president of the NCPA
(May 2005). "In 2020, combined Social Security and Medicare
deficits will equal almost 29 percent of federal income
taxes. At that point the federal government will have to
stop doing almost a third of what it does today. By 2030,
about the midpoint of the baby boomer retirement years,
federal guarantees to Social Security and Medicare will
require one in every two income tax dollars. By 2050, they
will require three in every four." And by 2070, Social
Security and Medicare will consume all federal revenues.

There are some "optimists" who seek to minimize the pending
disaster that will be caused by these and other federal
unfunded liabilities. They argue that the federal government
can always meet its obligations through its power to tax.
According to some estimates, by 2030, Social Security and
Medicare obligations alone will require a 50 percent
increase in payroll taxes. If tax increases are off the
table, 2030 will see a 30 percent reduction in promised
Social Security benefits and stringent rationing of health
care services promised by Medicare. There's another
"solution." Even though Congress can't increase our life-
expectancy, they can raise the age of Social Security and
Medicare eligibility. Were Congress to make 80 as the age
for Social Security and Medicare eligibility, they'd solve
the problem because most of us would be dead.

Let's look at the raw politics of the Social
Security/Medicare situation. Few, if any, of our 535
congressmen will be around in 2030 and later when the
real crunch comes, but they are subject to today's, not
tomorrow's, political pressures. Similarly, few of today's
Americans 65 years of age and older will be around. Other
than mouthing a concern for future generations, both have
little economic incentive to be concerned about what happens
in 2030. After all, what do they have at stake?

In 2030, will young people in the labor force be willing to
see themselves taxed at Social Security rates of 20, 30 and
40 percent to take care of some old people? I don't think
that will politically fly, and they might begin to get
ideas about euthanasia. In addition to economic strife,
Social Security and Medicare are laying the groundwork for
intergenerational conflict. Unfortunately, the politics of
today don't give us room to prevent these twin disasters.