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Democrats: Don’t let my retirement savings get flushed

Observer Viewpoint | Tuesday, February 22, 2005

I’ve had the random thought lately, regularly accommodated by my Attention Deficit Disorder, that there are a great many things taken for granted in everyday life. Modern plumbing and standards of hygiene are very simple examples of this. Simple things from household cleaners to common household appliances are all examples of generations of innovation to the changing variables of human need. The modern toilet is the perfect example of an everyday thing that none of us could live without, which has evolved from a hole in the ground to an elaborate system of modern plumbing and multimillion-dollar treatment plants.

The same cycles can be seen in the constantly fluid medium of governmental institutions. Through revolutions in philosophy over time, human beings have evolved government to meet their own needs. Apologizing in advance for my recent habit of using crude analogies in my columns, the evolution of governmental institutions should not be looked at any differently than the various innovations that have brought us the common and practical toilet.

During the years of the Great Depression, a widespread problem was met with a single common solution we now know as Social Security. This plan was a noble promise that any American that invested the best years of his life in his career would be ensured a stable retirement. Unfortunately, the program as it is seems unsustainable in the near future due to the simple problem of demographics. A Jan. 13 editorial in the Wall Street Journal clarifies this point, which has been made by many advocates of partial privatization. “The truth is that AARP might be able to ignore, but it can’t repeal, the laws of demographics,” The editorial read. “And there is simply no way the current pay-as-you-go retirement system, with two workers supporting each retiree in 2030, is not going to require a crushing tax burden compared with a system that had 16 workers per retiree in 1950 and 3.3 today.”

As has been with the case of many inventions, the needs have begun to outweigh the original design. The fundamental problem with Medicare and Social Security has become the classic one of “bait and switch.” Democrats promise the world with these programs, but they are still operating on a basic pay-as-you-go system model. The success of this system operates on a simple assumption that more money will be coming in than going out. A combination of false political promises and the mentioned demographical constraints make this an exercise in futility without benefit cuts or tax hikes.

Just how bad is the broader problem? “National Center for Policy Analysis” Brief No. 490 laid out this phenomenon quite clearly. As a result of lower birthrates and longer lifespan, the fundamental problem will only seem to get worse. If politicians decide to try and preserve the status quo of these programs, they will increasingly need to borrow funds from the federal income tax, as Medicare had to do in 2004. In 2004, that number is only 3.6 percent of total income taxes. However, in 10-year increments beginning in 2020, the numbers become 52.7, 66.4 and 76.1 percent of federal spending.

I recommend that anybody who wishes to gain an accurate understanding of private accounts should read Peter Ferrara’s “A Progressive Plan for Social Security,” available online at the Institute for Policy Innovation Web site. It is our generation that should be doing the research on this and becoming active in the public policy debate. Having had almost constant part-time jobs since I was 16, I want to keep tabs on exactly how the government is handling that little chunk of my paychecks it has been taking out in the FICA column of the taxes.

Without bullying through an uncompromising plan, Republicans should offer a progressive private account plan that guarantees current rates of return to address the concerns of Democrats. As well as the Peter Ferrara piece, I also recommend the Cato Institute’s project on Social Security reform.

Getting back to the toilet example of innovation, as Republicans we do not seek to reinvent Social Security, because it was probably the best idea Democrats have come up with. Consider it more like those new low water usage toilets that give you more flush for your water. In the same good spirit President Franklin D. Roosevelt had for the greatest generation of our grandparents, we just want to make sure our generation gets more bang for our hard-earned buck, and that the baby boom population spike doesn’t flush our hard-earned future incomes down the drain.

Tom Rippinger is a senior political science major. He is the co-president of the Notre Dame College Republicans. He can be contacted at trippin@nd.edu.

The views expressed in this column are those of the author and not necessarily those of The Observer.