Social Security scare campaign

Lending his voice to the privatization lobby, Alan Greenspan warns that the U.S. can no longer care for its elderly.

By James K. Galbraith

Aug. 31, 2004 | Will President Bush this week once again put Social Security privatization -- or something close to it -- into the headlines? Maybe he will; maybe he won't. But one doesn't have to read tea leaves to know it's on his agenda.

The ground has been carefully prepared. New books by Peter G. Peterson -- the relentless Cassandra whose Thirty Years' War against Social Security can wear down skepticism even at Salon -- and by Laurence Kotlikoff and Scott Burns are softening up opinion leaders. (See my not-very-favorable review in the Texas Observer.)

More important, Alan Greenspan is again neglecting his day job to lend respectability to a scare campaign. Speaking at the annual Federal Reserve retreat in Jackson Hole, Wyo., last weekend, Greenspan noted the "abrupt and painful" changes required to both Social Security and Medicare, arguing that the 77 million baby boomers set to retire will simply pose too great a burden otherwise.

Greenspan said, "If we have promised more than our economy has the ability to deliver, as I fear we may have, we must recalibrate our public programs so that pending retirees have time to adjust through other channels."

Friends and readers, look carefully at that sentence, and stop to think about it. First there is the conditional: "If we have promised more than our economy has the ability to deliver ..."

What have we promised? A life of luxury and decadence? That is not the case. Social Security offers a life of modest comfort to most -- not all -- elderly Americans, as well as a system of support for survivors and the disabled. Medicare offers the elderly access to decent medical care. That is all.

Can this truly be more than "our economy" has the ability to deliver?

Greenspan's position is that we as a country -- as an economy -- cannot physically afford to keep our growing elderly population out of poverty. It is that "we" cannot afford to let "them" see doctors when they are sick. Leaving aside the weasel words "as I fear we may have," that is what the man said. He did not say that "the government" can't afford to do this. He said that "the economy" can't afford it.

Mercifully, that is not true. In fact, it is complete nonsense. We are a rich country, and we can certainly find the food, the modest housing, the clothing and the doctors, nurses, and health aides required to keep our elderly out of poverty in the years ahead.

The only question is, do we want to do this or not?

Social Security and Medicare are not mainly about transferring resources from the young to the old. They are mainly about who among the elderly -- and who among the sick and the disabled and young survivors -- gets taken care of, and by whom. It is an issue of distribution and almost nothing else.

What does Greenspan think will happen to the 77 million baby boomers if Social Security and Medicare are scaled back? Does he think we will disappear? Well, we won't. We'll be around for a while. And those of us who have children will be a burden on them -- as our parents are for the most part not a burden on us, because they have Social Security and Medicare. Because they have it, we also have it. If we lose it, our children will pay not only for their own retirements but also for ours. You cannot imagine the cruelty of family life that is coming, in the day when Social Security and Medicare no longer take care of the old.

And what of the elderly who don't have children? Or those whose children are poor? Or those whose children have their own medical problems? Or those whose children just won't pony up? Social Security and Medicare take care of those elderly now, based on their histories of work. Under Greenspan's plan, they would be victims of a lottery based on fertility, psychology, sexual preference and family luck.

Next page: Compared with private insurance, Social Security and Medicare are bargains