In 1970 there were 3.7 workers per U.S. retiree. Today it is 3.3 and projected to be 2.1 in 2040. Our situation is not as bad as Europe’s, especially Germany and France, because of our higher reproduction rate and lower age of the now over 50 million U.S. Hispanics. Even with curtailed immigration, demographers project over 100 million U.S. Latinos in the 2040’s: one out of every four Americans. That is just 35 years away. However, because of the current lower educational achievement of Latinos, we need to plan for this, by concentrating on educating all our future workers who will sustain future retirees.
I believe that five years from now (2015) the retirement age should be increased six months and continue to be increased six months every five years thereafter. By 2030 the retirement age would be capped at 67. Economists, demographers and actuarial studies must keep constant guard on the cash flow and needs of our Social Security and Medicare/Medicaid systems. We need to be pragmatic with the country’s needs: studied, transparent, no surprises.
I also believe that society should not carry the burden of equal retirement payments for those that reach retirement age and are financially solvent and have the ability to care for their needs. The philosophy of progressive taxation was well established by both Presidents Roosevelt and has been part of U.S. government public policy for close to a century.
The capping of benefits falls in the same public policy area. Just as the European model of capitation for all medical procedures and services works efficiently (as per the medical indices and empirical results) and costs are 75% less than in the U.S., similarly capping benefits in a fair, progressive and equitable way may be needed, gradually, over the next 30 year period.
The main reason why Social Security and Medicare are in trouble is that the number of retirees’ is growing faster than the number of workers. During WWII there were 40 people working for every retiree. By 1960 that number was down to 5.1 and is now 3.3 to 1 today. By 2050 it is projected to be 2 to 1. The reason is that Americans are living longer, better and healthier lives and our fertility is down to 2.07. The minimum to replace population 1 to 1 is a 2.1 fertility rate. So we are not so poorly off. What will make the BIG DIFFERENCE between the US and Europe is immigration (The Fertility Rate in Europe is at 1.4, Germany at 1.33, and Italy at 1.2.)
The U.S. needs to make sure that future immigrants and their offspring are properly educated to add to the US quality of life, like past immigrants did. The average age of the US Latino population is less than half of the non-Hispanic white population; their fertility rate is nearly double. With or without new immigration, the demographics of the U.S. are changing rapidly and this is affecting elections in the U.S.
In the interim, we need to extend the retirement age slowly, we need to slowly cap benefits and pay out retirement benefits proportionately according to the needs of the individual after retirement.
Then there is the important issue to how do we pay for the services Americans demand.
The U.S., state and local governments now fail to provide adequate funds for basic public services, such as transportation, commuter rail, fast rail, improved waste water treatment, water, broadband and other infrastructure needs, decent schools, healthcare service, renewable energy, on and on. China moves ahead and we stumble (this year, in less than a decade, China passes France’s 1700 miles of high speed rail, electricity from wind mills, etc).
Furthermore, on the tax side of the solution, it is important to point out that of the top 20, industrialized first world countries, the U.S. is number 17. Our total taxation is 29.6% of GDP. Of the “big” countries, only Japan is less, with taxes at 27.1% of GDP. Switzerland is at 35.7%, Germany at 37.9% and France at 45.3%. UK, our closest ally, is at 37.4%; New Zealand, Australia and Canada are all at the 35% + taxation level. The US tax level is low as compared to all other industrialized countries.
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3 Responses
I am currently reviewing information regarding each democratic candidate running in the primary. I am leaning towards Mr. Ferre, however, the position he takes regarding this statement ” also believe that society should not carry the burden of equal retirement payments for those that reach retirement age and are financially solvent and have the ability to care for their needs. The philosophy of progressive taxation was well established by both Presidents Roosevelt and has been part of U.S. government public policy for close to a century.” is alarming.
It I am a lifetime working American citizen paying into S.S. why would I be limited to an un-equal distribution dictated by my solvency. This would only benifit those that do not work or choose not to accel in life. This would be considered disriminatory in my eyes. Remember, this money is my hard earned money, I am equally entitled to individuals that have paid into S.S.. Perhaps a similar approach would be that S.S. is available in tiers and you are entitled to benifits that are increased with the amount paid into the program. Remember middle America pay in the most to S.S., not the rich, in essence, you are saying that benifits would be reduced to middle America and increased for low income America. Not on my watch
You want to raise taxes (on middle and upper income families because lower income people are paying a negligible part of taxes) substantially based on an apples to oranges comparison.
1. Are those tax rates just for Fed taxes? Don’t US citizens pay much more in the host of other taxes, e.g. sales tax, property tax and on and on?
2. Don’t those European tax dollars deliver substantial items such as free health care and higher education which in the US are paid for in addition to taxes?
I agree with many of your other positions and appreciate that you provide far more detail and specifics than any other candidate, but this one seems ill-conceived.
Your Comments
I agree with the 2 comments above and also believe that we should work on immigration and how employed Amercan’s tax dollars are being distributed to non-citizens.