The looming crisis with Social Security
Wednesday, Jan. 2, 2008.In an address last week to Northern Nevada Development Authority members in Minden, U.S. Bancorp Chief Economist John W. Mitchell noted the significance of that date, which signals the beginning of a tidal wave of change in our country.
On that day, the first baby boomer – those people born between 1946 and 1964 – will start collecting their full Social Security.
Looking out on the horizon several years, Mitchell offered a fairly optimistic economic forecast for Nevada and the nation.
However, he tempered that forecast with a few caveats, including a looming and currently unresolved Social Security funding crisis, the inevitable arrival of the baby boomer generation at the doorstep of retirement age, a growing national deficit and the now-accepted possibility of another major terrorist attack.
Clearly, though, issues surrounding our aging population represent a major challenge our government must eventually confront to avoid major economic upheaval.
Within a few decades, Mitchell said, we will be “living in a retirement community.” A big one.
“Think of the U.S. as a large Florida.”
Calling them “the moral issue of our time,” the banking executive said Social Security and national deficit problems have been pushed aside as ones to solve on “the next person’s watch.”
“Well,” Mitchell said, “we just elected the next guy.”
The pressure on our health-care system and Social Security will continue to mount and ultimately create a crushing force on the economy.
The government, Mitchell said, will be forced to address Social Security through higher taxes, eligibility requirement changes (raising the retirement age) and more means testing for those reaching retirement age. Funding Medicare and prescription benefit costs will become increasingly key issues in the mix.
In 2030, Mitchell noted, there will be only two workers in America per person eligible for Social Security and medical benefits.
“Think about the implicit tax liability there – it’s not going to happen,” he said.
We hope Mitchell is correct on that thought, along with his warning that we can’t wait for the “next watch” to address Social Security.
Ready or not, in less than 1,140 days we’ll begin to find out.