If Social Security reform is to become a reality it will require
strong support from today’s younger workers. According to an op-ed
in USA Today, by Richard Thau, executive director of Third
Millenium, a youth advocacy group, and economic consultant Jeremy
Hildreth, the youth of America are ready to take on that challenge.
Hundreds of our Generation X peers died Sept. 11,
and thousands more are risking their lives in the war
on terrorism. But once America's agenda returns to
domestic issues, President Bush should ask Gen
Xers to make another disproportionate, if far less
severe, sacrifice: Assume the generational burdens
necessary to reform Social Security before the baby
boomers retire. Doing so would be politically shrewd --
and painless.
To people in their 20s and 30s, Social Security has
always seemed like a hopelessly bad deal that
swallows one-eighth of our earnings while promising
little, if any, long-term payoff. Our skepticism is rooted
in experience.
In 1982-83, while we were mere adolescents and
teens, the Greenspan Commission had to save Social
Security from immediate collapse. This rescue
substantially increased FICA taxes just before Gen
Xers entered the workforce, then pushed back our
benefits eligibility age from 65 to 67.
Ever since, the program's anticipated insolvency date
never seems to budge from the general period when
we Xers expect to retire. Now, the forthcoming final
report from the latest commission undoubtedly will
reconfirm our worst suspicions: Our generation will
foot boomers' massive bills.
We've had scant input into proposals to fix the system. Only 2 of the 61 seats on the three most
recent major Social Security commissions were filled
by a GenXer.
No worries for Granny
Put simply, except for a handful of young activists,
Generation X has gone AWOL on Social Security.
Most Xers fail to participate at the ballot box or at
town hall meetings, preferring to let older age groups
set the agenda for us. Perhaps we should be
embarrassed about not defending our generational
self-interest as fiercely as the AARP crowd.
Regardless, Bush and Congress should be
emboldened by our abdication. For them, putting the
onus on Xers is all gain and no pain. Neither
Grandma nor her political support is in jeopardy, for
we whippersnappers will pay up with nary a whimper.
But before politicians embrace the no-risk strategy of
balancing Social Security's budget on our backs, we
beg one favor: Give us the option to invest some of
our FICA money in the financial markets. Restructure
the system so that our generation and the ones that
follow have the chance to create real wealth while
Social Security redistributes most of our payroll tax up
the generational chain.
Time on their side
Our relative youthfulness gives us plenty of time to
take advantage of the surprisingly stable -- and
agreeably high -- long-term rates of return that
diversified equity investment has historically offered.
Data from Wharton professor Jeremy Siegel, long-term
investment's guru, show that since 1801, owning
stocks for a 35-year period gave an average after-inflation
annual return of 6.8%. Even the worst 35-
year spell returned an average 3.4% per year. This is
two to four times what many Xers can expect to see
from Social Security.
So, here are the terms of our conditional surrender:
As long as we Gen Xers can build wealth in personal Social Security accounts, we won't hassle our elected
leaders or complain about having to clean up
whatever financial debris the rest of the program
generates. And if the boomers help us now, we'll try to
remember their kindness when they are old and
dependent, and we Xers hold Social Security's purse
strings.
No matter how much goodwill we Generation Xers
engender for our recent heroics, boomers inevitably
will dump a toxic Social Security system in our
backyards. Evidently, that's OK with us. But, man,
those individual accounts sure would sweeten the
smell.
