Social Security Trustee Meetings

I wrote yesterday in anticipation of going to the Spring Trustee meeting of the Social Security System. I promised a little more commentary today, after the meeting.

We met in the Secretary of Treasury’s conference room. The meeting did not include the public trustees, because the appointments expired and none have been confirmed yet.

Once again, we listened to reports from the actuaries and administrators of the Social Security Trust Funds. I will link to the materials that were released.

The bottom line is that the system is not sustainable and has the potential to become an increasingly large (prosperity altering) problem for our country. The Medicare Trust Fund is broke in the first few weeks of 2019. That is almost a year sooner than last year’s forecast.

I will confess to frustration over the fact that the repeated warnings and Trustee reports seem to have no impact on Congress. I agree with so many others who have said this is the biggest long term threat to our national prosperity. I am disappointed entitlement solvency has not become a matter of discussion in the Presidential campaign.

I decided while sitting at the table that I want my strongest and clearest expressions of concern to be recorded for history. I formally asked the Chairman to leave the record of the meeting open so I can prepare a piece containing my thoughts and recommendations. It will take a couple of months to complete, but I’ll put it on my blog upon sending it to the Secretary of Treasury as part of the record of the meeting.

Comments

How about some help with this looming problem of sparse Social Security liquidity?

We do that by returning to the basics of sustainability. The goal is to encourage each and every individual to develop an age-old trait: resilience. It's the ability to sail through rapidly changing, often adverse conditions, with the minimum of physical and emotional cost.

Step 1. Encourage a mentality of responsibility among present and future social welfare recipients. The reality is, SS was never meant to guarantee full retirement benefits - it was a safety net for the needy and for widows and children as well as the elderly who lacked family support (~25% of women were employed when SS system was implemented).

Responsible citizens do their share of planning and preventive actions to maximize savings and personal health. They practice prudent budgeting and avoid excess debt, maintain a healthy weight by eating quality foods, through daily exercise and mindful relaxation, and by getting sufficient sleep to re-energize their bodies and minds.

They don't rely on drugs, alcohol or caffeine, or tobacco as a coping mechanism. They embrace and practice spirituality daily. They are socially active and ethically proactive to maintain and strengthen bonds within family, community and church/synagogue/mosque. They understand that using their voice and vote as a citizen, avoiding apathy, is the only means by which we have a functional democracy.

They recognize that by investing attention, time and effort into community, family, self and to government - by doing the age-old 'right stuff' - they receive back something that cannot be bought or provided by others: contentment and a modicum of happiness. The positive feelings afford us the fullness of health throughout our years.

The fundamental truth that we have lost is this: by actively working to maximize individual productivity through healthy living habits, we minimize individual social cost burden in both the immediate and long-term future.

These are positive daily habits that we do primarily for ourselves but also because they promote social good health. These are sound practices that regulate mental, spiritual, physical and social (community) health and welfare. They build tolerance, a stress buffer against the drain of drought, flood, fire, storm, disease and lean fiscal times that have been part of the human experience for tens of thousands of years.

These positive personal habits strengthen the moral fabric of society and reduce the risks of crime, lessen poverty, and prevent social isolation and ethnic disharmony.

This is a duty that every citizen must be taught, reminded, and if need be, goaded to follow.

2. Return the to the basics of responsible fiscal management. That practice must come from the top - government - and must be met in equal kind by each and every person. We are so used to looking for the next 'hot market' for high yield, risky investment, that we have all but forgotten the value of simple savings as a buffer against lean times.

We are in lean times. Now we should look to our Federal Reserve and Banking Systems to rebuild trust and confidence, by restoring the returns on personal savings. Protect this money against taxes, preserve interest accrued, and promote an ethic of keeping a sufficient quantity to buffer for a minimum of one year. The flip-side of the coin in how we approach fiscal health to resolve present economic problems is no different than how we approach physical and emotional health. Luring those overspent into acquiring more debt is not the answer to buoying a sagging economy.

You needn't look far to find ample evidence that emotional and physical health is strongly affected by fiscal wellness. Depression, and drug- and alcohol-related illness rates in the population are directly proportional to economic health and wellbeing, when trends are examined over the last 40 years. You cannot be free of daily burden of stress if you are deeply in debt - or, if your country is deeply in debt.

The health of the individual and of the nation march in lockstep. If you want to to 'fix' the looming problem of massive health care costs, if you want to address the rising costs of the retirement system, if you want to effectively address the hidden costs of poverty, homelessness and chronic disease that is crippling our ability to function effectively as a democratic society, then you must drive this single notion home.

We are all in this present reality together. We either act together to pull ourselves up and out of the mire of apathy, anxiousness and anger.

Or we all go down with the ship.

A simple reduction in health care services demand by improved lifestyle habits can, in a very short time period, reverse much of the cost burden. We can no longer afford to avoid disease through pharmaceutical and surgical interventions that offset years of personal neglect. If we do this one thing, stepwise progressive improvement of personal health habits, we can (believe it or not), squeeze through the next decade of record retirements.

Restore individual drive to practice personal and governmental integrity and ethical responsibility. From this great social rock - the fundament built by our forefathers - comes sensible practice of social values, physical and emotional resilience and spiritual sustainability against a very rocky future.

Posted by: An Oracle | March 27, 2008 at 12:52 AM

Refreshing comments

Posted by: Robert Adams | March 27, 2008 at 08:47 AM

As a former investment advisor that specialized in retirement planning I preached constantly that you have to plan your retirement as if SS might not exist. If it does great if not at least you are prepared. Congress must change SS but to really fix it would cause either reduction of benefits or raising taxes. Or a third option which would allow us to have a personal account were the money deducted from our checks were put into our own account with several investment options available from conservative to say moderate growth. This option would be the best because you let the growth on the investments fund the shortfalls that will occur but this will take a lot of education and I'm sorry to say isn't likely given the current make up of Congress.

Posted by: chad | March 28, 2008 at 03:00 PM

Great job writing this blog, keep up the good work.

Posted by: Joe | March 29, 2008 at 03:50 PM

As a Canadian following economic trends in the USA, I have heard about problems with SS before. But I didn't know it was in this much trouble. Interesting read and great comments by those above me.

Posted by: Mortgage Calgary | March 29, 2008 at 07:45 PM

Very appropriate discussion again. Agree with An Oracle. I would like to add this - the study of humankind has showed us that only those organisms and ideas that evolve over time survive through the ages. Why do we expect a program designed several generations ago to be appropriate for the next few generations? During your several interactions with the Treasury, dear Secretary, have you ever inquired how this mid-east war affects the financial dynamics of funding the entitlement programs?

Posted by: A Cavale | March 30, 2008 at 08:45 AM

I am glad to read how seriously you take the problems of escalating healthcare costs. That is the first step in controlling the problem.

However, I am concerned that corrective actions are unlikely as long as those who take the problem seriously disagree so strongly regarding remedies. Some caring individuals conclude that we need to socialize the system while other thoughtful people believe that the biggest problem is that we have not yet allowed the free market to act appropriately. Others well intentioned people conclude that the secret lies in just adopting new information technology.

In addition, some of the biggest problems that have had clear consensus for solutions have not been fixed due to their political ramifications. For example , for at least the past 10 years, I think everyone agrees that more primary care is needed and that the financial system overpays for certain procedures. Yet a number of procedure based specialties still earn more than three times as much as primary care. Is it politically feasible to lower payments for the most overpaid specialties? Many other efforts at savings will run into similar obstacles since any attempt at savings is attacking what others politically powerful groups refers to as their reasonable income.

In this sort of environment, I foresee years of stagnation before any meaningful changes are implemented. I wish you the best in your efforts. If there is any way I can support you in your efforts, please let me know.

Michael

Posted by: Michael | March 31, 2008 at 12:29 PM

I just finished reading the front page of your blog, and I think it's fantastic. When I clicked the Wikipedia link to your blog, I sort of expected posts to be boring, and official, and technical, and what you would want me to believe about what is going on. And in addition it would have 7000 comments for each post, which were never actually read by anyone except a secretary's secretary's intern.

Instead, I found your blog to be candid and informative, and fun to read. It was kind of like reading one of my friend's blogs, except that it's about important things. So I added you to my Google Reader, and I'm going to continue reading and commenting.

Thanks.

Posted by: Emily | April 06, 2008 at 08:47 PM