John Q. Public wrote:
I'm just going by what they themselves say, not by any slant the media has put on it. They want to cut Social Security but not their Social Security. They want to cut Medicare but not their Medicare. They want to cut taxes but they think the amount they pay is fair. They think that politicians are all crooks but their guy is alright. They hate "Obamacare" but surveys have shown that they actually support it. They want clean air and water but oppose restrictions on polluters. Name any issue and I bet they'll contradict themselves on it.
I beg to differ JQP. The Tea Party is a loose coalition of people whose single premise is that the federal government is spending too much money. By definition it does not extend to clean air. While certain "Tea Partiers" may have their own views about "their guy", clean air or Obamacare, the movement itself is about out-of-control spending. The influence of the movement certainly affected the 2010 elections, and as you know the old guard Republicans were caught by surprise as well as the Dems. For some reason many of the Republicans and nearly all Democrats label the Tea Party movement as extreme. Why is it that wanting to balance the budget is extreme? Only in an environment where excessive debt is the order of the day would a movement based upon saving money be labeled extreme. That is truly where we are however.
I have not heard anything to suggest that some people believe that "their" Social Security is ok but "yours" is not. The plain fact is that the government made financial "promises" (political promises, not contractual) to people that cannot be met. Can you point to a reference where someone made such a comment? I am not calling you out, I would be interested in reading that argument.
When Social Security was enacted, the average life expentancy was about 60 years or so. It was meant to be old age insurance, since it kicked in at the age where few people could be expected to work any longer and many would have already passed. As the average life expentancy is now closer to 80, Social Security has become de facto more of a retirement plan than insurance against an inability to work. By offering a fixed payment every month, Social Security is a defined benefit plan. As private (corporate) defined benefit pension plans evolved from roughly the 50s/60s up until the 90s, there began to be problems in the way they were administered. These plans were funded/calculated based upon assumptions of life expectancy and rate of return on investment of the funding for the plan, usually in too optimistic fashion, and early on in their history the liability for the future promises was not even recorded on the books (just like Social Security!).
As people lived longer many of these plans melted down (that is, the funding was insufficient due to increasing length of life and lower than predicted investment returns), and as a result few if any corporations now offer defined benefit plans. With 80 million baby boomers reaching retirement age, Social Security and Medicare will melt down as well unless altered. Estimates of the long term liablity are north of $100 trillion. Even if they are less than that, the obligation is overwhelming. No amount of tax increase is going to save them without reducing benefits somehow.
There is nothing new in this scenario either, as the problem has been out for discussion for 10-20 years. However it was always easier for politicians to only worry about the next election, instead of the next generation (Bush hinted at Social Security reform but got shot down). You could say too that voters were equally weak. Now, like him or not, Paul Ryan is the first politician to put a possible solution on the table, and he has verbally acknowledged that doing so might be political suicide. Do you all agree or disagree with his proposal? If you disagree, what do you propose as a realistic alternative?
We currently have $14.3 trillion in debt or 100% of GDP. Deficits of $1.5-$2 trillion per year will get us to 150-160% debt to GDP in 3-5 years, roughly the level of Greece. Remember they had rioting in the streets over possible cuts to their social benefits. Hopefully we will be able to look at our situation in a more mature way but I am not sure why to expect that. In any event we face a big problem. If we don't get serious about restructuring now there will be hell to pay, like an extra $1 trillion a year or so in interest on the debt. If anyone will lend it to us.