Social Security shows what can happen when government addresses a problem: It ends up causing a different problem.
First, the good news.
Social Security has helped to redefine old age. Just a few decades ago, a hiccup in the scope of human history, most people worked until they died. For those who lived into what we would consider “old age,” doing so generally meant to be poor and dependent.
“Children, friends and relatives have borne and still carry the major cost of supporting the aged,” a federal committee reported in 1935. “Several of the state surveys have disclosed that 30 to 50 percent of people over 65 years of age were being supported in this way.”
For example, when my great-grandfather died in the 1950s, his wife went to live with her daughter’s family, and spent the rest of her life there. That sort of thing seldom needs to happen anymore, even though people are living longer than ever. Average life expectancy at birth soared to 78 in the year 2008, up from 47 in the year 1900.
These days, older people tend to be the wealthiest cohort, and they’re getting richer. “The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35,” an Associated Press story reported in 2011. “This wealth gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation.”
Meanwhile, things aren’t so rosy at the other end of the age spectrum.
More than 13 percent of Americans aged 20-24 are unemployed. That’s more than 10 million people who aren’t getting started down the path to success. We used to call that “failure to launch” and make comedies about it. Today, our president just assumes that 25-year-olds are helpless. He goes around the country bragging that people can now stay on their parent’s insurance until they’re 26. It’s about the only feature of Obamacare that seems to have arrived on time.
Ah, but at the same time, the White House realizes Obamacare relies on these same young people coughing up money they don’t have. The administration will “need to entice a sufficient number of young and healthy adults into the new insurance marketplaces that open Oct. 1,” note Ezra Klein and Sarah Kliff in The Washington Post. “This, then, is the crux of Obamacare’s challenge: Can the federal government persuade young, healthy people to buy health insurance?”
The White House is, predictably, treating this is if it were a political campaign, complete with in-depth polls, messaging and “micro-targeting.” And perhaps a few good ads and cool presidential speeches will convince people in their 20s to spend hundreds of dollars per month that they can’t afford. Maybe they can just roll it into their student loan debt?
Still, if young people don’t participate, “…the new insurance marketplaces – the absolute core of Obamacare – will be filled with older, sicker people, and premiums will skyrocket. And if that happens, the law will fail,” Klein and Kliff conclude.
Obamacare’s not alone; Social Security also relies on that same pool of young people.
It’s been sold to Americans as an insurance program, so people tend to assume that the money they’re paying in is being saved for them somehow, somewhere. Instead, the money collected today is being spent on today’s retirees. There’s nothing in the “trust fund” except IOUs.
Now that Social Security is paying out more than it takes in each year, it will need a growing supply of younger workers to pay older retirees their benefits. It would help if those younger people could get actual paying jobs.
Things could be worse, and are elsewhere in the Western world. “Why would you have a kid in Portugal?” Mark Steyn wonders. “The country’s youth-unemployment rate is over 40 percent. In Spain, it’s 57 percent and in Greece just shy of 63 percent.” At least Americans are replacing ourselves, so there’s a potential that we’ll have a solid economic future.
But our country’s future depends on getting people back to work. Obamacare was a big step in the wrong direction, having given companies incentives not to hire new employees. Hence, the administration’s constitutionally questionable decision to suspend the employer mandate.
It will have to do more than that to create opportunities for younger Americans. That will require removing Obamacare, reducing regulations and finding ways to slash student debt (such as with inexpensive college degree programs).
Our future depends on young people. Government should get out of the way and give them the ability to build that future.