The Buie Knife

Number of Senior Citizens, Hispanics in U.S. Will Double. New Immigrants Will Pay For Our Retirement

The most startling demographic projection as America moves from a population of 300 million in 2006 to a population of 400 million in the years 2040-50, is that the country will be made up of OLD PEOPLE, to a much greater degree. Think of the whole country as like Florida today. In 2006, about 6% of the U.S. population is over 75 (compared to 3% in 1967). By 2040, about 11.6% of the population will be over 75 (Source.) The 65-and-over population will leap from 10 percent of the U.S. population in 2006, to almost 72 million, or 20 percent of the total population by 2030 (Source).

The country NEEDS a large level of immigration -- young, new immigrants who can pay into social security to finance the twilight years of elders. We're all in this together.

The second most startling demographic projection is that the Hispanic population is almost certain to almost DOUBLE, from 44.2 million (14.8% of the overall population) to at least 24%, due in large part to immigration, legal or otherwise. Economic and immigration policies can have SOME impact, but there's no turning back on this BASIC trend. We'd better get sed to it, see the positive impact and build on it, rather than try to push back the sea with an angry, nativist reactionary approach than cannot succeed. The 2,000-mile U.S. border with Mexico simply cannot be completely protected and sealed off amid desert, sand dunes and places where locals don't even know precisely where the border is.

Robert Samualson argues convincingly that since Americans are living longer, healthier lives, they need to work longer, and the retirement age should be raised to 70. If most of us are going to live to well past 80, and to healthy well into our seventies, why should we be able to access full retirement benefits at 65? Some people on good pensions are retiring in their forties or fifties, yet they may live for another 30 or 40 years, meaning they would have worked less than a third of their lives. Is that fair to the younger generation that will pay through much higher taxes for their elders' indolence?

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Two Cheers for President Bush on Social Security Reform

President Bush showed honesty and courage and scored points recently on social security reform -- he proposed a plan that is PROGRESSIVE. He endorsed the principle of income redistribution.

As Michael Kinsley writes: [Under the Bush plan] "Benefits for low-income workers would keep rising with average wages, as now, but benefits for middle- and high-income people would be geared more toward merely keeping up with inflation. This allows Bush to say that no one's benefits would be cut, although some people would be getting up to 40% less than they are currently promised."

That WAS courageous, wasn't it? Now the question is whether he can get his fellow Republicans to agree. What's the chance of that?

Insights into Social Security Reform

In a post on this blog, Dan Loomis makes an insightful proposal on social security reform: 

"How about this? Let's rollback the clock and reinstate this entitlement program as it was per FDR's vision. That means *limited* benefits and payroll deductions, and for a 21st century twist lets have the government incentivize individuals invest in their own future.

"My 30-something generation (hopefully) does not rely on SS as a retirement vehicle, nor should they. The problem with that is people simply find it "uncomfortable" to live the frugal, sustainable lifestyle required to sock away 10-15% for the future. People, like the government, can't stand surpluses, and piss it all away on the latest iPod, plasma TV, McMansion, or the government's case, spending program. It's quite sad, actually."

True. People under the age of 55 or so are foolish to depend on social security as anything more than a stipend that might help pay groceries. And as baby boomers retire, social security must be reformed before the system goes bankrupt.  I agree with Dan that younger folks must be encouraged if not required by government mandate to save for their retirement.

One proposal that makes sense to me is to raise the retirement age. Healthy life expectancy is now well into the late seventies. It was never the intention of social security's designers to subsidize the leisure of retirees for 20 or 30 years. Talk about welfare! I definitely intend to work until at least 70, if not longer, as long as my health and mental faculties hold out. 

Bush to the Unhealthy: Suck It Up

"The president defends his [Social Security privatization] plan by saying it will generate higher investment returns, which is probably true. But it conveniently ignores the benefits of a collective system, which would be lost.

"For example, because contributions to Social Security are largely proportionate to income but benefits are much less so, Social Security transfers money from the rich to the poor. Any system of private accounts is bound to be less progressive.

"More important, the collective system essentially represents a subsidy from those who die early to those who live longer than average. Such transfers are an essential part of any insurance scheme -- what is fire insurance but a transfer of money from those who don't have fires to the unlucky few who do? But that aspect of Social Security would be lost if the money set aside by people who die early is passed on as untaxed inheritance rather than put back into Social Security to pay benefits to those who live into their 90s....

"{With Bush's social security privatization proposal] we would abandon the principle that those lucky enough to be healthy should help out those who are not. Rather the Bush-Cheney attitude toward the unhealthy can be summed up in three words: "Suck it up."  -- Steven Pearlstein in a Washington Post column, "Pulled Down By Our Own Bootstraps"