January 30, 1999
President Clinton's recent proposal to save the financially endangered Social Security program using funds from projected budget surpluses has touched off a flurry of debate, with Democrats, Republicans, and Alan Greenspan all weighing in on the merits of Clinton's plan. This is a debate that The Atlantic Monthly has actively encouraged in recent years.
Three years ago The Atlantic's editors issued an appeal for serious discussion of this most sacred entitlement program. In "How to Save Social Security: A Presidential Speech We'd Like to Hear" (June, 1995), the editors pointed out that most retirees go through the money that they contributed to Social Security during their working lives within two to three years of retirement; the money they receive thereafter comes from young workers, who pay FICA taxes every week. The editors wrote, "The problem is that fifty years ago there were forty-two workers for every beneficiary, whereas now there are only 3.2 workers for every beneficiary. By the year 2013 Social Security will be paying out more than it takes." The editors' hypothetical President proposed two solutions: raise the minimum age for receiving benefits from sixty-five to seventy, and gently slow the growth in Social Security payments. The reason for the first solution is demographic: when Social Security was enacted, life expectancy in this country was 61.7 years; in 1995 it was 76.3 years. As for slowing growth in benefits, the editors were quick to point out that this was not the same as cutting payments.
The following year brought the 1996 presidential campaign, and the debate over Social Security's future came to the fore. In May, The Atlantic published the cover story "Will America Grow Up Before It Grows Old?", by Peter G. Peterson, a New York investment banker and a founding president of the Concord Coalition, a group dedicated to sweeping reform of the Social Security system. Peterson warned that the impending retirement of the Baby Boom generation could lead to an "all-engulfing economic crisis -- unless we balance the budget, rein in senior entitlements, raise retirement ages, and boost individual and pension savings." Peterson gave a taste of what's to come if Social Security is not significantly changed, and soon: "In 2030, when all the Boomers will have reached sixty-five, Social Security alone will be running an annual cash deficit of $766 billion. By 2040 the deficit will probably hit $3.2 trillion, and by 2050, $5.7 trillion." Peterson concluded that Americans must focus on "saving rather than consumption, prudence rather than desire, and collective restraint rather than individual satisfaction."
Copyright © 1999 by The Atlantic Monthly Company. All rights reserved.