John Kerry is set to unload on President Bush?s proposal for Social Security accounts. He?ll say it?s a gift to Wall Street suspender-wearers and will cut benefits to our destitute seniors, etc. He?s tried everything else, and at least the old Social Security/Mediscare tactic has the virtue of having worked for Democrats (and even some Republicans in primaries) in the past.
For the necessary correctives, a good place to start would be Thomas Saving?s piece in the Wall Street Journal today that explains the financial straits of Social Security and Medicare clearly and matter-of-factly. The best thing he does is point out that the two programs together are already running cash deficits, which get significantly worse within the next 15 years (in part thanks to Bush’s prescription-drug mistake). The 2003 transfer of general revenues to the two programs comes to 3.6 percent of income taxes. By 2020, this rises to 29 percent, to 53 percent by 2030, and to 102 percent (!) by 2070.
No bogus trust-fund accounting can disguise these facts, which amount to an unfunded liability over 75 years of $5.2 trillion for Social Security and a whopping $28 trillion for Medicaire. A simple thought experiment helps to clarify this matter: imagine that you wrote yourself a $1 million IOU. Have you just gotten $1 million richer? Only if you have the power to tax $1 million out of the pockets of others, which exposes the fact that Social Security trust funds are not alternatives to raising future taxes to pay benefits. They are promises to raise future taxes to pay benefits.
