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by JoeTheEconomist August 31, 2011 16:45 PM

WHY DO WE SAY SOCIAL SECURITY IS BROKEN

Today more than 80% of Americans believe that Social Security is heading for crisis if we do not implement a major reform.  Where is the 'security' in that?  learn more

WHY SOCIAL SECURITY IS IMPORTANT

The FAA can close and no one will notice.  Social Security serves a group of people who do not adapt well to change.  The core audience is the elderly and the disabled.  If we have a crisis in Social Security, it will affect those most who can adapt the least.    

WHY WASHINGTON CAN’T MANAGE SOCIAL SECURITY

Washington lives on 2 year election cycles.  The short-term mindset in Washington is completely incompatible with the long-term nature Social Security.  The focus on short-term objectives will at some point create a long-term crisis in Social Security.

WHY WASHINGTON’S SOLUTION WILL MAKE THE SYSTEM WORSE – MUCH WORSE

Specifically, Washington believes that more taxes and lower benefits are the answer.  The problem in Social Security is what you get for what you give.  You can’t fix that problem with higher taxes or lower benefits.  You will make the problem worse.  At some point, a generation will say no. 

WHY WASHINGTON IS WRONG

The experts think that the problem is demographic – ohhhh  we have too many retirees.  The problem is economic.  It is jobs, wages, and savings.  Demographics are a 2030 problem.  Jobs are a problem today. 

THE DEFICIT IS BIGGEST THREAT TO THE SYSTEM

I am a boomer, and we have left our children a staggering debt.  You can’t be surprised if our children resent the obligation to take care of our debts and us as well.  As the cost of the deficit increases, it will push us closer to the day when the working generation will have to choose between supporting the deficit and supporting the retirees.

As the cost of finance the deficit grows, America will be able to spend less on everything else – including Social Security. 

INNOVATION IS THE ANSWER

When business is in trouble, it innovates, making new products and existing ones better.  When government is in trouble it raises the price and shrinks the box.  We need to fix a broken system rather than pay for one.learn more

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