Recent conversations with friends sound a familiar theme. A college administrator asks me if he can count on Social Security upon his retirement. An electrician told me he has no realistic hope of retiring and that he worked as much overtime as he could. Social Security is going bankrupt and he can't accumulate enough in his 401(k) to sustain any sort of retirement.
My friends' concerns about Social Security are less a reflection on the condition of the program than of a media obsessed with privatizing it and bashing the public sector. The circumstances of most of my neighbors would be better characterized in much different terms. Even many who do have health insurance experience gaping holes in the coverage. They live in leaky, energy-inefficient homes in a society that has too long deferred the maintenance of the critical supports of modern life.
That so much attention is focused on the relatively small and distant problem of Social Security speaks volumes about the biases of the corporate media. The country faces unfunded liabilities for which little or no provision has been made, but Social Security isn't one.
When the Social Security and Medicare trustees released their annual report at the end of March, the media duly chimed in with doomsday forecasts and chastised politicians for putting their heads in the sand. Nonetheless, as Dean Baker, economist and author of a careful study of Social Security points out, the overall health of Social Security has not deteriorated since the last annual report.
Baker has long reminded the media - unfortunately to no avail - that the Social Security system currently takes in far more in taxes than it pays out in benefits. Even with the impending retirement of the baby boomers, the system's total payouts will not exceed its accumulated revenues until 2041. Even if no modest changes were made in benefits, retirement ages or the payroll tax cap, it could continue to pay post-2041 beneficiaries three quarters of promised benefits.
I'll bet that most General Motors workers would be happy if GM had been able to keep three quarters of its promises to them. And will holders of 401(k) plans be assured that all their investments will pay off?
Social Security's modest gap - half a lifetime away - could be made up with a relatively small increase in taxes (an increase on the order of 1 percent) on the much higher real wages workers will enjoy two decades from now. After such a tax increase, our children and grandchildren would still enjoy far higher disposable incomes than our generation does.
How have media managed to leave so many of us worried about so little? They warn us that impending Medicare and Social Security expenses for the growing wave of retiring citizens will crush us. Yet this is like saying that Hank and Tommy Aaron are the greatest home-run hitting brothers of all time. True enough: Hank hit 755 and Tommy, 13.
Medicare funding is a serious problem. Lumping it with Social Security discredits that system. The deceptive addition of Social Security to an overwhelming current problem also stigmatizes analogous, universal approaches to health care. The best answer to Medicare's more pressing problems would be to give all citizens, (or at least starting with 60- to 65-year-olds and working down) the chance to enroll in the program. Such a step would improve its financial base and leave us with healthier citizens reaching Medicare age. (I was amazed when a tennis partner recently described the medical treatments he was postponing until he became eligible for Medicare.)
In addition to health care, our greatest unfunded liability is our public infrastructure. By most of the measures we use in everyday life to assess risk, our leaky homes, decaying roads and bridges and deteriorating wastewater treatment plants are a more dangerous problem than Social Security or Iraqi insurgents. In "The Edge of Disaster," Stephen Flynn points out that maintenance of our freight rail system will need nearly $200 billion over the next two decades. Without such an investment, our highways will be further overtaxed - already the cost of road congestion is $63 billion annually - and will simply deteriorate that much quicker.
Here in Maine we face $250 million in deferred replacement and overhaul of wastewater treatment plants. These systems were built in response to passage of the Clean Water Act with substantial support from the federal government. Now this aging overburdened infrastructure is leaving our beaches, clam flats and coastal waters at risk from E. coli and other contaminants.
Our great national infrastructure, its dams, roads, rails, levees, have immense spillover effects. Vast in costs and complex in interconnections, this infrastructure can only be sensibly maintained through some infusion of public funds and some public planning. The starvation and careless disregard of their spiraling deterioration is the 800-pound guerilla in the room. Without addressing this theme, no economic agenda will make us productive enough to support our progeny in retirement.