“We can no longer afford this system”

Robert Samuelson has long been been a Cassandra on crushing burden of entitlement spending, but you have to applaud his tenacity. Americans don’t want to hear their benefits need to be cut, so they ignore him. Politicians don’t want to pass unpopular reforms, so they dismiss him. But he gets right back up again! Good for him.

Anyway, Samuelson writes today that the only possible way to fiscal sanity is to raise the eligibility age for Social Security and Medicare in “Retirement at 70.”

By 2030 spending on Social Security, Medicare and Medicaid (which provides nursing home care) is projected to almost double as a share of national income (gross domestic product). Holding federal spending constant -- again as a share of GDP -- would mean eliminating almost 50 percent of the remaining spending on non-retirement programs. If we paid for higher retirement spending with taxes, we'd have to raise taxes at least 30 percent and, including today's deficits, as much as 50 percent. To me, neither outcome is desirable. If you agree, then the only alternative is to cut retirement benefits. Baby boomers can't be excluded, because they're the people getting older. We need to prod them to work longer -- and to mix work and retirement -- by reducing the subsidies that encourage earlier retirement.

More:

These proposals will be seen as harsh, even cruel. They aren't. People who reach 62 or 65 or 70 have no automatic claim on their juniors. Why should a couple in their thirties with two children, car payments and a mortgage subsidize the retirement of a couple in their mid-sixties with no mortgage, whose children are long gone, who could still work and who have had a lifetime to save for retirement? The only answer is that older couples expect to be subsidized (in part because they've spent their lives subsidizing their elders) and will be furious if they aren't. But that is a political explanation and not a moral or social justification.

By advocating personal accounts, President Bush is trying to break this cycle of dependency which cannot be sustained because of the demographic shift that will occur when the entire country has a worker-to-retiree ratio similar to Florida’s.

Extra: Scott from Election Projection adds “Raise the Retirement Age.”