Recently, while avoiding some homework, I came across a video of a presentation given at Bowdoin College. I was cautious, at first, about clicking "play" because the video runs about an hour and a half long. But I wasn't particularly keen on getting back to my centripetal force calculations, so I started the video. And I'm glad that I did. The presentation is by Stanley Druckenmiller and Geoffrey Canada, entitled, "Generational Theft: How Entitlement Spending is Stealing Opportunity from America's Youth."
Druckenmiller and Canada discuss the long-term financial impossibility of maintaining Social Security in its current state, though "impossibility" doesn't seem like a strong enough word in light of the data they present. Most fundamentally, the population of the United States has shifted in both age distribution and birth rate. Due to a life expectancy that has risen significantly since Social Security's 1935 passage, the program has to pay for an average of thirteen years more benefits than it was originally designed to. Unfortunately, with a decline in birth rate per mother, current projections state that the ratio of young working people to elderly individuals will be halved in 30 years, leaving a GDP per capita growing far more slowly than the amount of benefits going to each elderly person. It's wonderful that the elderly are enjoying longer and more prosperous lives, but it comes at a price. While the poverty rate for children has only declined about 5%, over the past 50 years, and has been rising since 2000, the poverty rate for the elderly has declined 24%, and has been slowly decreasing since 2000. Thus, not only is Social Security unaffordable in its present state, but it is also harming those whose paychecks could go towards baby boomer retirement.
Nervously, I consulted Google for more information. The Congressional Budget Office, the bipartisan and objective organization responsible for analyzing economic matters, issued a report on the subject in 2012. They project that Social Security outlays will be greater than tax income by an ever-growing margin. The office predicts that spending at current rates will be impossible under current government restraints after 20 years.
When I was about seven, one of my absolute favorite musical was Cinderella -- I knew all of the songs by heart. In one of those songs, "Impossible," Cinderella's Fairy God Mother claims that, "The world is full of zanies and fools, who don't believe in sensible rules, and won't believe what sensible people say, and because these daft and dewy-eyed dopes keep building up impossible hopes, impossible things are happening every day!" There certainly must be a few dewy-eyed dopes not listening to what sensible people say for our government to turn a blind eye to this problem. So maybe we can follow Cinderella's route, and maybe our debt will turn into dollars like her pumpkin turned into a carriage. But I'd rather not bet my generation's future on the appearance of America's fairy godmother.