John Buell

Our Unfunded Liabilities

Recent conversations with friends sound a familiar theme. A college administrator asks me if he will be able to count on Social Security upon his retirement. An electrician told me he and his wife have no realistic hope of retiring and that he worked as much overtime as he could. Social Security is going bankrupt and he can’t accumulate enough in his 401(k) to sustain any sort of retirement.

My friends’ concerns about Social Security are less a reflection on the condition of the program than of a media obsessed with dismantling or privatizing it and bashing the public sector. The circumstances of most of my neighbors would be better characterized in much different terms. Even many who do have health insurance now experience gaping holes in the coverage. They live in leaky, energy inefficient homes in a society that has too long deferred the maintenance of the critical supports of modern life.

That so much attention during this campaign is focused on the relatively small and distant problem of Social Security speaks volumes about the biases of the mainstream media. The country faces unfunded liabilities for which little or no provision has been made, but Social Security isn’t one.

When the Social Security and Medicare trustees released their annual report at the end of March, the media duly chimed in with inflated doomsday stories and chastised politicians for putting their heads in the sand. Nonetheless, as Dean Baker, economist and author of a careful study of Social Security points out, the overall health of Social Security has not deteriorated since the last annual report.

Baker has long reminded mainstream media—unfortunately to no avail—that the Social Security system currently takes in far more in taxes than it pays out in benefits. Even with the impending retirement of the baby boomers, the system’s total payouts will not exceed its accumulated revenues until 2041.

Even if no modest changes were made in benefits, retirement ages, or the payroll taxes, it could continue to pay post-2041 beneficiaries three-quarters of promised benefits. I’ll bet that most General Motors workers would be happy if GM had been able to keep three quarters of its promises to them.

And will holders of 401(k) plans be assured that all their investments will work out for them? Social Security’s modest gap—half a life time away—could be made up with a relatively small increase in taxes (an increase on the order of 1%) on the much higher real wages workers will enjoy two decades from now. After such a tax increases, our children and grandchildren would still enjoy far higher disposable incomes than our generation does.

How have media and the Social Security haters managed to leave so many of us worried about so little? Dean Baker has also exposed a kind of bait and switch. The media warn us that impending Medicare and Social Security expenses for the growing wave of retiring citizens will crush us. Yet this is like saying that Hank and Tommy Aaron are the greatest pair of home run hitting brothers of all time. True enough, Hank hit 755 and Tommy about 10.

Medicare funding is a far more serious and immediate problem than SS. Throwing the latter in only discredits Social Security. The deceptive addition of Social Security to an overwhelming current problem also stigmatizes analogous, universal approaches to health care needed if we are ever to get a handle on health spending. Paradoxically, the best answer to Medicare’s more real and pressing problems would be to give all citizens (or at least starting with 60-65 year olds and working down) the chance to enroll in the program. Such a step would improve its financial base and leave us with healthier citizens reaching Medicare age. (I was amazed when a tennis partner recently described all the medical treatments he was postponing until he became eligible for Medicare.)

In addition to healthcare, our greatest unfunded liability is our public infrastructure. By most of the measures we use in everyday life to assess risk, our leaky homes, decaying roads and bridges, and deteriorating wastewater treatment plants are a more substantial and immediate problem than Social Security or Iraqi insurgents. In The Edge of Disaster, Stephen Flynn points out that maintenance of our freight rail system will need nearly $200 billion over the next two decades. Without such an investment, our highways will be further overtaxed—already the cost of road congestion is $63 billion annually—and will simply deteriorate that much quicker.

Here in my home state of Maine we face $250 million in deferred replacement and overhaul of wastewater treatment plants. These systems were built in response to passage of the Clean Water Act with substantial support from the federal government. Now this aging overburdened infrastructure is leaving our beaches, clam flats, and coastal waters at risk from e-coli and other contaminants.

Along the Ohio River system, there are some 50 locks and dams built in the 1920s. The federal government has cut back on maintenance to such an extent that 50% of the locks are now functionally obsolete. Should just one part of the Ohio River system, the McAlpine Locks, be closed, it would take one truck moving down an interstate every 15 seconds, 24 hours a day, 365 days a year to equal the cargo that flows through the McAlpine system annually.

Our great national infrastructure, its dams, roads, rails, levees, have immense spillover effects for our whole society. Vast in their costs and complex in their interconnections, this infrastructure can only be sensibly maintained through some infusion of public funds and some public planning. The starvation and careless disregard of their spiraling deterioration is the 800-pound guerilla in the room. Without addressing this theme, no economic agenda will make us productive enough to support our progeny in retirement.

John Buell lives in Southwest Harbor, Maine, and writes regularly on labor and environmental issues. Email

From The Progressive Populist, May 1, 2008

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