Joel Blau
David B. Shemano wrote:
Ellen Frank writes:I have written a lot on SS, some of which is in my new
book, The Raw Deal. SS is best thought of as an inter-
generational transfer program. We care for the elderly
with the understanding that the next generation will care
for us when we are old. It is not possible for SS to go
broke because it is not a financial/savings program.
To be accurate, aren't you really saying that SS can't go broke because it is a government obligation like any other obligation (e.g. Treasury bonds) and the government can always raise taxes or borrow money to pay the obligation?
I agree that SS is an inter-generational transfer program. Current workers are taxed to pay for disbursements to the currently retired, and at the same time the government is incurring a contingent liability to the current workers which will become due when they retire, which will then necessitate taxing the then current workers at that time.
I would suggest that this is problematic, because while it would be democratic for current workers to agree to tax themselves to transfer assets to the currently retired, it is anti-democratic to bind future generations to tax themselves to transfer funds to the current workers when the current workers retire. Among other things, current workers (and current retire es) have no incentive to take into consideration the effect of present decisions on future generations. SS payments (and similar transfers like Medicare) continue to incease as a percentage of the budget each year, which means the budget options for future generations will be severely restricted.
David Shemano
