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2:28 am
Wed October 30, 2013

Arguments Over Social Security Pit Old Vs. Young

Originally published on Thu October 31, 2013 3:24 am

Congress has until Jan. 15 to come up with another spending plan. As they negotiate, one thing you'll hear a lot about is overhauling entitlement programs — particularly Social Security.

The program accounts for about 20 percent of federal spending. One argument in favor of cuts is that Social Security amounts to a huge transfer of wealth from the young to the old.

One person making that argument is Stanley Druckenmiller, a retired hedge fund manager. He's been touring college campuses, hoping to rile up the young folks about Social Security the way he and his peers were riled up during the war in Vietnam.

"I watched the young people at that time bring down a president and change the whole political spectrum and end that horrible war," he told an audience at New York University.

Using a lot of charts and graphs, Druckenmiller argued that with the retirement of the baby boomers, spending on Social Security will rise so much there will be no federal dollars left over for things that young people care about and that the country needs: education, the environment, infrastructure, medical research and so on.

"This is all current seniors just feeding at the trough, stealing from future seniors," Druckenmiller said.

If "stealing" sounds like a harsh term, how about "war"?

"Older Americans, their lobbies and the politicians who do what they ask are actually waging war on young people," says Jonathan Cowan, the president of Third Way, a centrist Democratic think tank. Young people, he says, "aren't doing much of anything" about the problem.

Cowan has been concerned about the growth of Social Security spending since the 1990s, when he co-founded an organization called Lead or Leave. That group tried to worry young people that Social Security's reserve fund would run dry before it was their chance to collect.

In fact, if nothing is done, it actually will run dry in about 20 years. Cowan blames the lack of action in large part on the major lobby for seniors, the AARP.

"The AARP has stood in the way of virtually every serious entitlement reform that's come along for quite a long time," Cowan says.

That statement just makes AARP President Rob Romasco laugh. "We seem to get painted with that brush on everything," Romasco says.

Romasco says his organization isn't necessarily against changes to Social Security. He just doesn't think those should be part of the budget process, because the program doesn't contribute to the deficit. It's self-funded through the payroll tax.

"It should be part of a separate conversation to deal with retirement," says Romasco, because of vanishing pensions, declining 401(k)s and the difficulty that older people have finding work.

As for stealing from the young to give to the old, Isabel Sawhill, a senior fellow at the Brookings Institution, says Social Security's design has always included a transfer of wealth between generations, but it's temporary.

"We're all old at one point in our lives and we're all young at one point in our lives," Sawhill says. "So when we talk about the elderly stealing from the kids, it's a bit misleading because it can all even out over time."

Nancy Altman, the co-director of Social Security Works, says Social Security isn't just about older Americans.

"It's the largest children's program," Altman says. "Eight percent of the nation's children receive benefits, either directly, because they've lost a parent or their parent has become disabled and can no longer work, or they're being reared by their grandparents and Social Security [is] a primary part of the family's income."

The AARP's Romasco says there are a dozen things that Congress could do to keep Social Security from running out of money or overwhelming the budget.

"Let's ask the American people what they want to do, what they're willing to pay for," he says.

Actually, a number of pollsters have asked the American people about that. They've found that Social Security remains extremely popular and substantial majorities say they'd prefer raising taxes to reducing benefits. This tends to cut across party lines and age groups, something members of Congress will hear plenty about from voters when they talk about overhauling entitlement programs.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

STEVE INSKEEP, HOST:

Looming over all budget negotiations in recent years is the question of whether to change the very largest federal programs. The cost of Social Security is rising, as Americans live longer. It already accounts for about 20 percent of federal money. Social Security is also supported by a specific payroll tax, which means it has plenty of money now, but long-term projections suggest it will eventually run short without some change. The program under which current workers support retirees prompts some of the people we're about to meet to complain of a transfer of wealth from the young to the old. NPR's Ina Jaffe reports.

INA JAFFE, BYLINE: Where's the outrage? That's what Stanley Druckenmiller wants to know. He's a retired hedge fund manager who's been touring college campuses, hoping to rile up the young folks about Social Security the way he and his peers were riled up during the war in Vietnam.

(SOUNDBITE OF YOUTUBE VIDEO)

STANLEY DRUCKENMILLER: And I watched the young people at that time bring down a president and change the whole political spectrum and end that horrible war.

JAFFE: That was Druckenmiller at NYU last month, video courtesy of YouTube. Using lots of charts and graphs, Druckenmiller argued that with the retirements of the baby boomers, spending on Social Security will rise so much, there will be no federal dollars left over for things that young people care about and that the country needs, like education, the environment and medical research.

(SOUNDBITE OF YOUTUBE VIDEO)

DRUCKENMILLER: This is all current seniors just feeding into troughs, stealing from future seniors.

JAFFE: If stealing sounds like a harsh term, how about war?

JONATHAN COWAN: Older Americans, their lobbies and the politicians who do what they ask are actually waging war on young people. Young people aren't doing much of anything.

JAFFE: That's Jonathan Cowan, the president of Third Way, a centrist Democratic think-tank. He's been concerned about the growth of Social Security spending since the 1990s, when he co-founded an organization called Lead or Leave. That group tried to worry young people that Social Security's reserve fund would run dry before it was there chance to collect. And if nothing is done, it will, in about 20 years. [POST-BROADCAST CLARIFICATION: This is accurate, but it does not mean Social Security benefits would stop. Because of the payroll tax, the Social Security Administration predicts that Social Security would still be able to pay about 75 percent of scheduled benefits.] Cowan blames the lack of action in large part on the major lobby for seniors, the AARP.

COWAN: The AARP has stood in the way of virtually every serious entitlement reform that's come along for quite a long time.

ROB ROMASCO: We seem to get painted with that brush on everything.

JAFFE: That's Rob Romasco, president of the AARP. He says his organization isn't necessarily against changes to Social Security. He just doesn't think those should be part of the budget process, because the program doesn't contribute to the deficit. It's self-funded through the payroll tax.

ROMASCO: Yet some people want to use it to solve the budget problem, when it should be part of a separate conversation to deal with retirement.

JAFFE: Retirement deserves its own conversation, says Romasco, because of vanishing pensions, declining 401ks and the difficulty that older people have finding work. As for stealing from the young to give to the old, Isabel Sawhill, a senior fellow at the Brookings Institution, says Social Security's design has always included a transfer of wealth between generations, but it's temporary.

ISABEL SAWHILL: We're all old at one point in our lives, and we're all young at one point in our lives. So when we talk about the elderly stealing from the kids, it's a bit misleading, because it can all even out over time.

JAFFE: Anyway, Social Security isn't just about older Americans, says Nancy Altman. She's the co-director of Social Security Works.

NANCY ALTMAN: It's the largest children's program. Eight percent of the nation's children receive benefits, either directly, because they've lost a parent or their parent has become disabled and can no longer work, or they're being reared by their grandparents, and Social Security's a primary part of the family's income.

JAFFE: The AARP's Rob Romasco says there are a dozen things that Congress could do to keep Social Security from running out of money or overwhelming the budget.

ROMASCO: And let's ask the American people what they want to do, what they're willing to pay for.

JAFFE: Actually, a number of pollsters have asked the American people about that. They've found that Social Security remains extremely popular, and substantial majorities say they'd prefer raising taxes to reducing benefits. This tends to cut across party lines and age groups, something members of Congress will hear plenty about from voters when they talk about entitlement reform. Ina Jaffe, NPR News. Transcript provided by NPR, Copyright NPR.

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