Thursday, November 03, 2005

Walter Williams: Do we really care about children?

Before reading read With recent bankruptcies that are driven in whole or in part by the burden of delivering on promised employee beneftis (Delphi, Delta, Northwest Airlines, United Airlines), we are seeing played out in microcosm the future for our federal system of Medicare and Social Security commitments.

As a fellow steward of our future you're encouraged to read Michael Barone's Future Shock and the recently publisehd Do we really care about children?, by Walter Williams, which provocatively starts with (emphais and links added):
I cringe with disgust when I hear politicians say, "We're doing it for the children." What's worse is so many Americans mindlessly fall hook, line and sinker for the hype. Judging by our actions, Americans could not care less for future generations, and future generations will curse us for it. Let's look at it.

According to several respected authorities, including the Concord Coalition (co-chaired by former Sens. Warren Rudman and Robert Kerrey), the Congressional Budget Office, U.S. Treasury Secretary John Snow, and the Social Security Administration, the estimated present value of the unfunded liability of Social Security and Medicare ranges between $61 trillion and $75 trillion dollars.

"Williams," you ask, "what's this present value business?" Simply put, between $61 trillion and $75 trillion dollars is the money that would have to be put aside right now, at current interest rates, in order to meet future obligations of Social Security and Medicare. To put an astronomical sum like $61 trillion or $75 trillion in a bit of perspective: The value of our entire national output of goods and services (GDP) in 2004 was only $12 trillion.

Congress can't put aside $75 trillion as reserves against future liabilities of Social Security and Medicare. Therefore, according to the Dallas, Texas-based National Center for Policy Analysis (NCPA), the annual rate of Social Security unfunded liabilities is growing at a $667 billion clip and Medicare's at $4 trillion...
We can't even deal with Social Security and Medicare is roughly 4 times the problem that Social Security is going to be.

Which leads Williams to wonder if the following will be a future sentiment of today's children for tomorrow's elders:

...In 2030, will young people in the labor force be willing to see themselves taxed at Social Security rates of 20, 30 and 40 percent to take care of some old people? I don't think that will politically fly, and they might begin to get ideas about euthanasia...
Obviously it won't come to that...but the die is cast for the mother of all intergenerational squabbles. And today's children will have every right to say, "you didn't care about us back when you had a chance and now it's our turn to return the favor."


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