One of the Trustees of the Social Security program is warning that the nation’s retirement system is on the cusp of becoming impossible to rescue because of a failure of leadership during the past few years to fix what ails it.
Social Security Trustee Charles Blahous, in an article published today in the economics journal e21, implicitly lays a portion of the blame directly at the door of President Obama, who has not even proposed major entitlement program reforms. Blahous writes that there has been “a failure of national policy leadership” during the past few years. While he notes that it is Congress that has not enacted a legislative fix, it is clear the leadership on such a controversial issue can only come from the White House.
Blahous, who as a Trustee is one of six officials tasked with overseeing the program, is also a former adviser on Social Security issues to George W. Bush. But the article is not partisan in tone and mostly urges action rather than any specific cure.
Blahous’s main goal is to ring the alarm:
Social Security’s future, at least in the form it has existed dating back to FDR, is now greatly imperiled. The last few years of legislative neglect — due to a failure of national policy leadership coming just as the baby boomers have begun to retire — have drastically harmed the program’s future financial prospects.
Individuals now planning their financial futures, whether as taxpayers or as beneficiaries, should be pricing in a substantial risk that the federal government will not be able to maintain Social Security as a self-financing, stand-alone program over the long term. If Social Security financing corrections are not enacted in 2013, or at the very latest by 2015, it becomes fairly likely that they will not be enacted at all.
Blahous notes that arguments for delay, which have often been trumpeted by Democrats, are misleading. While Social Security is not officially “scheduled” to go bankrupt until 2033, the issue is nevertheless extremely urgent.
That’s because no Congress wants to touch the benefits of current or near-retirees, and the number of baby boomers retiring is expanding exponentially. This means that every year the cost of fixing the problem vastly increases and must be borne by a smaller number of workers relative to the entire population.
There is a huge disparity between the problem’s urgency and the rhetoric applied to it by substantial factions of the body politic. Even as time is running out for a workable compromise, some continue to play a high-stakes gamble: that if the urgency is downplayed and action delayed past the next few elections, it can be dealt with when the political alignment may be more advantageous to one side.
This gambit has now been extended to the point of imperiling Social Security’s long-term outlook. Too many key players, however, do not yet realize this.
What’s more, there has never had to be a political compromise on cuts of the magnitude now required. The last time one party controlled Congress and the White House was during the first two years of Obama’s administration, and he and the Democrats did nothing.
Today’s long-term problem, according to Blahous, is much worse than in 1983, when a bipartisan compromise was just barely achieved to rescue the program. Compromise in today’s polarized climate will be even tougher.