Myths About Social Security

WHEN it comes to Social Security, Robert Bixby of the Concord Coalition sees too little choice between do-nothing Democrats and free-lunch Republicans. Bixby has a point: If all the future taxpayer-financed benefits promised to millions of aging baby boomers could actually be paid for with impunity, as some Republicans suggest, then do-nothing Democrats could point to such claims to suggest that there are no problems worth fixing. But there are, in fact, big problems with Social Security, and the media continue to misrepresent them.

The unfixable part of the problem is demographic. The population aged 65 or older will increase from 37 million today to 75 million in 2035, when their average life expectancy will be 85. Because future beneficiaries will live longer, they will receive more benefits over their lifetimes. Meanwhile, the number of younger workers who pay for these retirees will barely rise. Economists Jagadeesh Gokhale and Kent Smetters note that today, “there are almost five people of working age (between 20 and 64) for each retiree age 65 and over. By 2030, the number of working-age people per retiree will decline to less than three; by 2080, the ratio will decline to about two.” Any burden shared by half as many taxpayers must, as a matter of simple arithmetic, become twice as heavy.

About the Author

Alan Reynolds

Alan Reynolds, National Review’s economics editor from 1972 to 1976, is a senior fellow at the Cato Institute and the author of Income and Wealth.

Featured Tags

WHEN it comes to Social Security, Robert Bixby of the Concord Coalition sees too little choice between do-nothing Democrats and free-lunch Republicans. Bixby has a point: If all the future taxpayer-financed benefits promised to millions of aging baby boomers could actually be paid for with impunity, as some Republicans suggest, then do-nothing Democrats could point to such claims to suggest that there are no problems worth fixing. But there are, in fact, big problems with Social Security, and the media continue to misrepresent them.

The unfixable part of the problem is demographic. The population aged 65 or older will increase from 37 million today to 75 million in 2035, when their average life expectancy will be 85. Because future beneficiaries will live longer, they will receive more benefits over their lifetimes. Meanwhile, the number of younger workers who pay for these retirees will barely rise. Economists Jagadeesh Gokhale and Kent Smetters note that today, “there are almost five people of working age (between 20 and 64) for each retiree age 65 and over. By 2030, the number of working-age people per retiree will decline to less than three; by 2080, the ratio will decline to about two.” Any burden shared by half as many taxpayers must, as a matter of simple arithmetic, become twice as heavy.