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Will Social Security explode?

Chris Farrell Oct 18, 2007

Will Social Security explode?

Chris Farrell Oct 18, 2007


Scott Jagow: Here’s a good “Wait, Wait, Don’t Tell Me” question. Who is Kathleen Casey-Kirschling? She was in the news this week. She was born January 1st, 1946, just a tad after midnight.

Kathleen is the first baby boomer to get her Social Security benefits. Social Security folks held a news conference this week to announce it. But they predict this is the beginning of an avalanche of baby boomers who will bury Social Security.

Our economics correspondent Chris Farrell joins us. Chris, I know you don’t buy that. Why not?

Chris Farrell: First of all, Social Security probably merges about 2044. That’s a long period of time. Secondly, whether or not Social Security in 2044 is in trouble really doesn’t depend on demographics. It depends on the productivity, the wealth creation of this economy. Let’s stop the hand-wringing.

There’s a very good reason why Social Security does face some financing issues, I’m not totally dismissing it: We’re living longer. We’re healthier. This is a good thing, this is something to celebrate. Stop the hairshirt economics and stop pretending that you’re fiscally responsible by raising the Social Security issue. It’s a non-issue.

Jagow: But Chris, there are a lot of baby boomers. There are 76 million baby boomers. They’re gonna take a lot of benefits. You don’t think that’s going to push the Social Security system on the verge of bankruptcy?

Farrell: Absolutely not. And the real issue is Medicare and Medicaid. And it is the aging of the baby boom generation, and it is this crazy quilt, out-of-control health financing system that we have, that is a train wreck, guaranteed to happen, over the next several decades. But that’s a different issue, that’s an issue of health care. I have no idea whether we’ll still have a Medicare and Medicaid system in 10 years. Maybe it’ll be reformed. But you want to worry about something, you want to focus on something, it’s health care all the time. Forget Social Security — it’s a non-issue.

Jagow: Are you suggesting that the presidential candidates shouldn’t even address Social Security?

Farrell: They should address health care. That’s what matters. Social Security, when we get a new administration, you sit down with some of the people who are willing to do some bipartisan compromise, you look at some of the research that’s been done, you get some smart people in a room, you cut a deal, it’s over with, it’s done. OK, maybe you have to bring Greenspan out of retirement — remember 1983? He did a deal that, you know, made the system solvent for a long period of time.

So we’ll prop him up and say, “OK, here’s our figurehead.” And then we go ahead and move on. The real issue, and the issue that is coming up in the presidential debate — and I’m hoping becomes more a part of the presidential debate — is health care. That’s something to worry about. Social Security is just a smokescreen.

Jagow: All right. Chris Farrell, our economics correspondent. Thanks for joining us.

Farrell: Thank you.

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