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Last Updated: Tuesday, 8 February, 2005, 19:53 GMT
Letter: America's pensions crisis
Robert Hodierne
By Robert Hodierne
Senior managing editor of the Military Times

US President George Bush says the country's Social Security system is crisis. In less than 40 years, he told the nation this week, the entire system will be "exhausted and bankrupt" unless drastic measures are taken.

Robert Hodierne, a senior American journalist in Washington, suggests that the White House is set for a battle if it starts tinkering with a system which has existed for 70 years.

President George W Bush
Bush says private accounts will help save Social Security
I just turned 60. Yes, I know, I don't look it. Thank you very much.

It's silly, I know, this thinking that birthdays that end in zero are somehow special. Ten and 20, I barely remember those as special.

Thirty - that was the age at which I became untrustworthy to young hippies and so I guess that was some sort of a marker, a passage to the real responsibilities of adulthood.

I remember a friend saying, when he turned 40, that he realized he was no longer a young man on his way up.

Fifty amused me - I could remember so clearly when 50 seemed really old. What a joke.

Path to pensioner

I'm not finding much funny about 60. It's not that I'm old and feeble. I feel great.

Sure I'm a bit thicker, my hair - what's left of it is - is silver. OK, grey. Silver just sounds better.

But all in all, I have no complaints. Well almost no complaints.

There's all this talk here in America about making changes to Social Security, the government pension programme. I'm simply not ready to think about this.

It's complicated. It makes my eyes hurt.

But in six years I could start collecting. Six years and I'm a pensioner.

Will be paying out more than it's taking in. By 2042, the entire system would be exhausted and bankrupt
President Bush
I used to think of myself as kind of a cool guy. A rebel.

I dropped out of college to go be a freelance photographer in Vietnam.

In the 1980s I dropped out of work and spent a couple of years sailing a 32-foot boat through the Pacific.

But now, to my disappointment, I find I've become an archetype. A cliché.

I'm a 60-year-old guy who, like millions of other Americans, has changed jobs often.

There were newspapers, TV stations. Even a stint at a dot com. You know how that worked out.

I, like millions of my other baby boom pals, will rely in our dotage on a patchwork of small company pensions and largely inadequate personal savings.

We will depend in good measure on our monthly Social Security cheques.

Bush's crisis

But hang on - President Bush says Social Security is in crisis.

The White House tells us the system faces a $10 trillion shortfall. Yes, trillion.

In his State of the Union address Wednesday night, President Bush warned that by 2018 the system "will be paying out more than it's taking in."

"By 2042," he said, "the entire system would be exhausted and bankrupt."

Present Bush sketched some parts of his proposed solution.

Allow people to divert some of their salary that now goes into the government-run Social Security system, and instead let individual citizens invest that money in stocks and bonds.

Pro-Bush plan advertisement
The number of pensioners per worker is rising
The Democrats in Congress had described the proposal as going from a guaranteed benefit to a guaranteed gamble.

Social Security is a big deal in this country.

About 47 million Americans get Social Security cheques each month. That's one in six Americans.

The total payments run to half a trillion dollars a year.

The Social Security programme was founded 70 years ago during the Depression. It keeps a lot of old people from a life of poverty.

Today the average 65-year-old gets a monthly check of about $1,200 (£630).

But Social Security was never meant to be the only support for old people. About half of the retired Americans also get private pensions.

But there, there is a crisis, both real and immediate.

Private pensions

Long gone are the days of signing up for a lifetime job with some big corporation and then retiring with a satisfactory pension. Pensions generally get bigger the longer you work someplace.

But with bankruptcies and restructuring and buyouts and mergers, the days of lifelong employment have vanished.

And for many of those who did manage to hold onto a job with one company for decades, their long awaited pensions have also vanished.

One pension plan after another has failed in this country - Worldcom, US Airways, Bethlehem Steel, Consolidated Freightways - all the victims of bankruptcies and restructuring and buyouts and mergers.

With 36 million members over age 50, this is a group to be reckoned with and they are deeply opposed to the sorts of changes the Bush administration has in mind
Those private pensions are supposed to be protected by government insurance.

When a company pension plan collapses, the federal government is supposed to step in and pay up.

But it rarely covers the full cost. And that federal insurance programme is in deep trouble.

Its deficit doubled in the last year, to $23 billion.

Interestingly, you don't hear a great deal from the Bush administration about the failure of private pension plans, a crisis facing many workers in the present tense - not in some indefinite future tense.

Critics of the Bush administration - and there are plenty of them on this topic - say the Social Security crisis that the White House describes is just like the Weapons of Mass Destruction that the White House used to justify the war in Iraq.

It doesn't exist.

Money men

The crisis, the critics say, has been exaggerated, even fabricated.

Their theory is changes in the Social Security programme are being made to suit the conservative ideologues and the money men on Wall Street.

But of this I think you can be certain: the issue won't be decided on the facts.

It will be decided by pure political muscle.

Lined up against any change is one of America's most potent political forces: old folks.

There are a lot of them, or should I say - us.

We vote in great numbers and we're organized. The lobbying group for old folks is AARP.

The only thing worse in my mind than the thought of him moving away is the thought of him not moving away
With 36 million members over age 50, this is a group to be reckoned with and they are deeply opposed to the sorts of changes the Bush administration has in mind.

Lined up on the other side are the people who would benefit most from having billions of new dollars flow into the stock market from privatised retirement accounts: Wall Street financiers.

The amount of money the brokers would make from increased commissions is estimated to be in the billions of dollars.

But it is more than simply a money grab.

'Battle royal'

For many who favour changing the Social Security system, it is a matter of basic philosophy.

Conservatives in this country have always thought the system smacked a little too much of socialism - of the State calling the shots.

Whether you agree with Bush on the need for fundamental changes in Social Security or not, you have to give him credit for political courage here.

Conventional wisdom is that Social Security is like the electrified third rail of the subway: touch it and you die.

In any event, this is shaping up to be a battle royale, and if I didn't have a stake in this fight it would be amusing to watch.

A woman protesting over pensions
Hot topic: Pensions are a growing issue
And then there's this - just when we old folks need all the young folks to go out and work and make lots of money to pay into the Social Security system to support us old folks - well, the young folks are refusing to grow up.

That's what we read in magazine and newspapers over here.

Young people are simply refusing to grow up.

The Wall Street Journal called it a "crisis of coddling." (You can't have a good media trend without a catchy title.)

These coddled young people won't even move out of their parents' homes.

Eighteen million people between 18 and 35 still live at home in this country.

USA Today reports that 57% of last year's college graduates planned to move back in with their parents.

Half the 2003 graduates are still living at home.

I never thought I'd begin a sentence this way but - when I was young I loved my parents. They loved me.

We lived in middle class bliss in a small town in America's heartland.

Our family portrait could have been painted by Norman Rockwell.

I couldn't wait to get out. And neither could my friends.

We finished high school at 18, moved away to college, graduated and got jobs as far from home as possible.


I have a son who's a senior in high school.

The only thing worse in my mind than the thought of him moving away is the thought of him not moving away.

It's the natural order of things.

But in fact in much of the world living at home into your 30s is becoming a commonplace pattern. And not just in underdeveloped countries.

In much of Canada, Europe and Japan young people stay at home well into their 20s and 30s.

The media there have cute names for those kids, too.

In Italy the word is Mammone. In Italian everything always sounds better. Mammone. It means mama's boy.

Checkout worker ringin up sale with fistful of American dollars
Democrats argue the plan will require yet more borrowing
The analytical articles about the American version of this phenomenon offer up all kinds of explanations - rising housing costs, shortage of good jobs, big debts running up paying for college, blah blah blah.

My son expresses misgivings about going away to college.

He knows a good deal when he sees one: dirty clothes left on the floor miraculously reappear clean and folded.

Car gas tanks never seem to empty. He has only the roughest idea what happens inside a supermarket.

Many of his friends express similar misgivings. Mammone.

But maybe this is a good thing. Maybe he's my old age security.

He can stay at home and take care of me when I'm old and feeble. Wipe the drool from my chin. Feed me puréed prunes.

Or perhaps I should join AARP and fight to protect Social Security just the way it is.

After all, I'm not getting any younger.


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The difficulties of being mixed race in South Africa
Class divisions
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Radical rethink
Energetic UK and sluggish Germany are defying stereotypes
Battle lines drawn
US old folk will fight pension reform, writes Robert Hodierne









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