Minnesotans For Sustainability©

 

Home ] Up ] Feedback Please ] Table of Contents ] Search MFS ] MFS News ]

Sustainable Society:  A society that balances the environment, other life forms, and human interactions over an indefinite time period.

 

 

 

 

 

 

Social Security:

Q & A*
October 1998

 

Q:  What is Social Security?

A:  Social Security most commonly refers to four programs financed through Social Security (FICA) payroll taxes: retirement pensions (frequently called old-age insurance), survivors insurance, disability insurance, and Medicare for the aged and disabled.


Q:
  Why is Social Security so important to Americans?

A:  As the single largest source of income for the elderly, accounting for two of every five dollars older Americans receive, Social Security has been extraordinarily successful in reducing poverty among America's 65 plus population. Likewise, Medicare has been instrumental in making health care available to all elderly Americans, as well as preventing high medical bills from depleting their lifetime savings.


Q: 
What does population have to do with the Social Security dilemma?

A:  As a pay-as-you-go system, the solvency of Social Security is directly tied to the ratio of workers to those receiving benefits. The rapid population growth of the post-World War II "baby boom" created a huge generation - some 77 million strong - which now, as active workers, pays far more in taxes than the benefits paid out to retirees from previous generations. However, after 2010 this huge population bulge of boomers will begin to retire and the taxes from the workers available to support them will be increasingly unable to fully pay their Social Security benefits.


Q: 
Why is there so much concern over the future of the Social Security system?

A:  Since its inception, taxes from current workers have exceeded the benefits paid out to retired and disabled workers, as well as their survivors and eligible dependents. However, by 2013, benefits paid out are projected to begin exceeding Social Security tax income, with the balance made up from the federal government's general budget (as it begins paying back money borrowed from the Social Security trust fund during the many years that it ran a surplus). By 2032, the trust fund surplus is expected to be exhausted as the deficit between taxes paid and benefit costs reaches its peak.


Q:
  Why is this projected funding shortfall creating such a dilemma?

A:  By 2030, the Social Security entitlement shortfall is projected to reach massive proportions as retirement benefits increase from 4 to a whopping 6 percent of the gross domestic product (GDP) and Medicare costs increase from less than 3 to 6 percent of the GDP. As the benefit shortfall increases after 2013, politicians will be faced with the difficult choice of raising taxes, increasing deficit spending, cutting non-Social Security expenses and programs, and/or cutting Social Security benefits.


Q:
  Why is Social Security solvency an issue now?

A:  Although the U.S. has continued to steadily grow since the baby boom generation, three factors have combined to create Social Security's future dilemma. First, the cost of Social Security benefits has continued to rise due to cost-of-living adjustments, the skyrocketing costs of medical care and the fact that Americans are living longer. Second, as the baby boomers entered the work force in the 1970s they had fewer babies (future workers) in what some called the "baby bust."

The third factor involves the changing source of growth, as high immigration replaced native-born births as the driving force behind U.S. population growth. In general, new immigrants have less education, lower skills, a higher tendency to avoid taxes, and overall lower earnings with consequently lower Social Security tax contributions.


Q:  What does population have to do with the long-term solvency of Social Security?

A:  Insuring the long-term solvency of Social Security, as well as our nation's broader social safety net, requires the kind of solid foundation provided by a stable population with an evenly balanced age-structure.

Getting off the population growth treadmill and beginning the necessary and gradual transition to a smaller, optimal population is essential to this long-term sustainability. Such an optimum population would feature an even distribution among all age groups with a solid ratio of working Americans (aged 18-64) to both the young and old. Our rapid population growth has played a major part in creating the Social Security dilemma, it is now time to recognize that continued growth is part of the problem, not the solution.


Q:
  Why more population growth and high immigration won't solve the dilemma?

A:  More population growth, especially through high immigration, would be an illusory approach that will only pass the problem along to future generations. More workers today will inevitably result in more retirees tomorrow, thus requiring the addition of ever more new workers to support them. Realistically, increasing the ratio of workers to retirees could only be done through massive increases in our already historically high immigration levels. This perpetual growth treadmill would create many more additional costs that would far out weigh any benefits to Social Security.


Q:  What meaningful steps are necessary to fully take advantages of the challenges presented by the aging of America?

A:  Guaranteeing the long-term solvency of Social Security as part of a broader commitment to the financial and medical well being of America's elderly is absolutely crucial to any transition to a smaller, optimum population. Any society that seeks to stabilize its population size must go through a period where a larger group of elderly move through retirement. Taking the steps necessary to stop our current population growth —like an all-inclusive cap on immigration at 100,000 per year— will help insure that any measures to protect Social Security really do bring about long-term solvency. By working together to save Social Security and stop population growth, we can make sure that the aging of America in the next century will be the welcome beginning of a necessary transition to a smaller, more sustainable America.
_____
Used with permission of NPG.
* Negative Population Growth
October 1998

 

Home ] Up ]

Please send mail to webmaster@mnforsustain.org with questions or comments about this web site. Minnesotans For Sustainability (MFS) is not affiliated with any government body, private, or corporate entity. Copyright © 2002 Minnesotans For Sustainability