Michael Tanner, a senior fellow at the CATO institute, explains that the rate of return on social security will be much lower for todays youth.
Social Security has long been considered the “third rail” for American politicians, meaning it’s like the electrified third rail that powers a train and lies alongside the tracks: touch it, and you die.
Tuesday, Sen. Mark Pryor tiptoed toward it.
Pryor was speaking to the Little Rock Rotary Club when, according to a report by Arkansas News Bureau writer John Lyon, he said this: “We have to take a hard look at entitlement programs, including the sacred cows of Medicare and Social Security, and admit that we cannot bring our spending into balance without changes in these programs.”
He went on to say, “The (deficit) problem is real. The solution will be painful. There is no easy way out. Everything must be on the table.”
Thinking people in Washington, and I like to think that’s most of them, know that what Pryor said is true, but they also are afraid that telling that truth is the equivalent of stepping on that third rail. That’s because Medicare and Social Security are popular programs that directly benefit seniors, the age cohort that most often votes. And of course, most of the rest of us expect to be seniors someday.
But you can’t balance the budget without doing something about Social Security and Medicare because those programs are becoming so big and are growing so fast. Along with Medicaid, they already take up more than 40 percent of the federal budget. That percentage will grow much, much higher as the baby boomers age. According to the recently released report of the bipartisan National Commission on Fiscal Responsibility and Reform, by 2025 — that’s 15 years from now — projected government revenues will be sufficient only for Medicare, Social Security, Medicaid and interest payments on the national debt.
That means if we want to have a military, or a border patrol, or interstate highways, we’ll have to pay much higher taxes and continue borrowing, probably extensively from China…
Pryor knows he is fortunate not to have been on the ballot this year. Were that so, he might very well have lost despite his pragmatic record, general likability, and last name. And he knows that what he said to the Little Rock Rotary Club will be used against him when he runs for re-election in 2014.
I have already pointed out reasons that Pryor’s re-election bid may be in trouble:
1. He has been hypocritical about the appointment of Federal Judges.
2. Southern states have almost completely moved away from Democrats. (Jason Tolbert actually made this observation concerning a poll in Arkansas showing that voters for the first time in history were “inclined to vote for the Republican versus the Democrat in a race when considering only party identification.”)
4. Pryor has not listened to the people of Arkansas and the polls that indicate that they opposed Obamacare, and he teamed up with the liberal Democrats to force it through the Senate even after Scott Brown was elected.
Now Brawner praises Pryor for saying that Social Security is on the table. I am encouraged by that too. However, we must move to privatize Social Security or it will fail. There is no way around this economic reality. Thirty countries have moved in this direction and the results have been outstanding. Chile did this in 1980 and now they are reaping the benefits.
Will Mark Pryor get re-elected? I don’t think he will unless he thinks outside his Democratic box on issues like Social Security Reform. Brawner is right to bring up the issue of the baby boomers. The current system we have will only get worse as the baby boomers born in 1946 to 1964 continnue to apply for Social Security benefits.
It is ironic that Max Brantley and John Brummett think the reddening of Pryor is a bad thing (“The reddening of Mark Pryor,” Arkansas Times Blog, Nov 30, 2010), but I think it will be the only way he will save his job in a state like Arkansas.
The Daily Hatch 