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Jewish World Review March 4, 2004 / 11 Adar, 5764

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Entitlement of Silence | American politics may have had stupider, more undignified moments than this. It is impossible to imagine Dwight Eisenhower, Jack Kennedy or Ronald Reagan doing anything like John Kerry leading a crowd chanting "Send Bush to Mars!" Has any candidate ever gone further on anything dumber than John Edwards's three-hanky tear-jerker speech about a father losing a job? Most of the approximately 1 million small businesses started each year fail — send for more hankies — within a decade, so it is unsurprising that 10 percent of manufacturing jobs, and an even higher percentage of service jobs, are normally eliminated every year.

All this was a feast of reason compared with the Kerry and Edwards responses — approximately, "Shut up!" — to Alan Greenspan's restatement of this problem: There is a mismatch between the Social Security and Medicare promises we have made to ourselves — calls on the nation's future economic product — and the ability of the economy to fund those promises when the 77 million baby boomers retire.

According to Laurence J. Kotlikoff of Boston University, the present value of the gap between promised outlays and projected revenue is $51 trillion — more than four times the nation's annual GDP. Today the household wealth of Americans — the value of their houses, 401(k)s, cars, refrigerators, toasters, socks, everything — is about $42 trillion. In impeccable Greenspan-speak, the government's truth-teller said that "significant structural adjustments" will be necessary.

This much is widely understood: Raising the retirement age and some other benefit reductions (including taking the exaggeration of inflation out of cost-of-living computations) will be necessary because tax increases to fund current benefit schedules would cripple the economy.

It is axiomatic — meaning, true outside of Washington — that everyone is entitled to his own opinion but not his own facts. Here are some facts, many of them gleaned from a new book from the MIT press, "The Coming Generational Storm," by Kotlikoff and Scott Burns of the Dallas Morning News.

By 2030 the boomers, who begin retiring in 2008, will have made America's population older than Florida's is today. America's population will have increased perhaps as much as 18 percent, its retirees 100 percent. Already the fastest rate of growth of any age cohort is of Americans over 85.

Today life expectancy at birth is 76, which is troublesome enough, but additional expectancy at 65 is 17 years — and growing. For about 150 years the longest life expectancies have advanced about 2.5 years per decade. Most people start collecting Social Security at 62, so the year 2019 will be especially challenging, because more American babies were born in 1957 — 4.3 million in a population of 172 million — than in any other year in American history.

Today there are more than 100 million additional Americans, but there were fewer than 4 million newborns per year throughout the 1990s. In the 1950s the median age for women's first marriages was 20.3. By 2000 it was 25.1. This has meant a decline in fecundity, which affects the wager we have made on Social Security as an intergenerational compact — children being able and willing to support the elderly.

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On Jan. 31, 1940, a check, number 00-000-001, for $22.54 was issued to Ida May Fuller of Ludlow, Vt., making her the first recipient of recurring monthly Social Security payments. Then, in an act of dubious citizenship, she lived to 100, dying in January 1975, having received $22,000 in benefits. That did not matter because in 1940 there were 42 workers for every retiree. Today there are 3.2 to 1. In 2030 there will be 2.2 to 1. Nowadays parents have fewer children than they used to, the children are geographically more dispersed, and their sense of obligation is attenuated by distance and divorce.

Since 1963, medical costs have grown faster than the economy. And given the dynamism of medical science that is multiplying expensive diagnostic and therapeutic technologies — pharmacological and others — medical costs are likely to grow even faster relative to the economy.

Kerry and Edwards simply recoil from contemplating the consequences of these facts, hoping, like Dickens's Mr. Micawber, that something will turn up. The Bush administration has a plan (individual accounts investing a portion of Social Security taxes) for coping with the facts, but no discernible plan — certainly none it will discuss — for economies that will make possible paying the transition costs. All of which suggests that entitlement reform remains one of those contentious issues that cannot be debated in an election year or the year before one. Meaning: ever.

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