Be Ready

Be Ready:

Mickey Kaus has a good thought.

If there are well over a million students in charter schools now, and the federal government is pushing them to grow like Topsy, at what point does a vicious circle set in, with public schools losing their even moderately motivated students, causing them to decline even further, causing even more students to leave, etc.? Not that this public school death spiral would be such a bad thing. We should just be prepared for it. The way we should have been prepared for GM.

We should be preparing for the collapse of our public institutions, not just the schools, because they are indeed on an unsustainable course quite parallel to GM's. We already can't afford the Federal Pensions, Medicare, and Social Security promises made; and yet we've got this wonderful idea to add some sort of universal health-care, funded by yet-more taxes and regulations.

The truth is that 'if a man shall not work, neither shall he eat' -- not because he should not eat, or because we don't want him to eat, but because somebody has to pay his freight. If it's not him, it might be his children; or it might be his wife; or it might be someone he helped out when he was younger. It won't be "society," though, because they won't love him enough to make serious sacrifices for him, forever.

Population booms can allow a society to mask that for a while, as the Baby Boomer period allowed us to mask it here, by dividing the extra freight among enough people that the sacrifices aren't so heavy. Yet they were serious, even when they were so divided.

The Social Security system remained essentially unchanged from its enactment until 1956. However, beginning in 1956 Social Security began an almost steady evolution as more and more benefits were added, beginning with the addition of Disability Insurance benefits. In 1958, benefits were extended to dependents of disabled workers. In 1967, disability benefits were extended to widows and widowers. The 1972 amendments provided for automatic cost-of-living benefits.

In 1965, Congress enacted the Medicare program, providing for the medical needs of persons aged 65 or older, regardless of income. The 1965 Social Security Amendments also created the Medicaid programs, which provides medical assistance for persons with low incomes and resources.

Of course, the expansions of Social Security and the creation of Medicare and Medicaid required additional tax revenues, and thus the basic payroll tax was repeatedly increased over the years. Between 1949 and 1962 the payroll tax rate climbed steadily from its initial rate of 2 percent to 6 percent. The expansions in 1965 led to further rate increases, with the combined payroll tax rate climbing to 12.3 percent in 1980. Thus, in 31 years the maximum Social Security tax burden rose from a mere $60 in 1949 to $3,175 in 1980.

Despite the increased payroll tax burden, the benefit expansions Congress enacted in previous years led the Social Security program to an acute funding crises in the early 1980s. Eventually, Congress legislated some minor programmatic changes in Social Security benefits, along with an increase in the payroll tax rate to 15.3 percent by 1990. Between 1980 and 1990, the maximum Social Security payroll tax burden more than doubled to $7,849.

Due to the economic crisis of the moment, we've almost reached the point at which the illusion cannot be maintained. It will not be long before there is no way to pretend anymore. Your family may take care of you, but your government will not: though they may perhaps beggar your family so much that they can't take care of you either.