- The Washington Times - Thursday, September 6, 2007

Courting seniors this week at the Alliance for Retired Americans, Sen. Hillary Clinton, New York Democrat, pledged that as president, she would not cut Social Security benefits, raise the retirement age or privatize the taxpayer-funded Social Security system. The seniors were no doubt very pleased. But let’s consider for a moment what keeping such a promise would require, since it happens to back the senator into an extremely irresponsible position on Social Security, where, unfortunately, she has a lot of company among the presidential hopefuls. Most importantly, keeping Hillary’s promise would guarantee a catastrophic multitrillion-dollar tax hike at some point in the coming decades, to be born by people other than the Alliance for Retired Americans.

Voters age 55 or younger, take note: Hillary has just promised away some large portion of your future financial security in a grab for the elderly vote. Voters under the age of 35 will be even more profoundly affected. Such shameless bartering of the interests of the many to entice a given class of voters argues strongly against her candidacy, and should not be forgotten by anyone who is not currently elderly.

In present dollars, Social Security’s projected unfunded obligations over a 75-year horizon are $4.7 trillion. Considering that the U.S. Treasury must find $2 trillion to redeem the bonds presently in the Social Security trust funds, the total unfunded obligation is actually $2 trillion higher than this for a total of $6.7 trillion. Over an infinite horizon, Social Security’s present-dollar unfunded obligation is projected to be $15.6 trillion. How are we to pay for this? Via Mrs. Clinton’s promise, most of the answers are off the table. For a period that matters crucially if the nation is to solve this crisis, there would be no chance of cuts in benefits, no possibility of asking seniors to extend their working years nor any prospect of introducing private accounts to replace the system’s present inefficient income transfers. Barring near-miraculous economic growth, that leaves one option: an enormous tax hike, be it under a Hillary Clinton administration or under a successor.

The amounts entailed in the Social Security crisis, of course, are trifling compared to the Medicare juggernaut staring down the future American taxpayer. For Part A alone, the 75-year unfunded liability is $11.6 trillion. In total, Medicare suffers from a 75-year present-value unfunded obligation of $33.9 trillion.It does not behoove a presidential aspirant to back herself, or himself, into a fiscal corner for a cheap rhetorical score among the elderly. Of course, this being politics, we can’t say we are surprised.

In fairness, Mrs. Clinton is just one of several hopefuls who warrant criticism for their unreality on the Social Security conundrum, and Republicans are generously represented. Former Massachusetts Gov. Mitt Romney and Sen. John McCain, Arizona Republican are two whom we’ve criticized for lacking realistic plans.



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