1/26/2005

Social Security Sleight of Hand

It’s been said that there are two sides to every story. Nowhere is that more true than when trying to determine the future of Social Security. One side says Social Security is in pretty solid shape. And they’re right. The other side says Social Security is in tremendous peril. And they, too, are right.

Is it any wonder we can’t agree on what to do about it?

Understanding Social Security itself is pretty straightforward. Today’s workers pay for today’s benefits. What’s left over – and today there’s lots left over - goes into the Social Security Trust Fund, which is like a savings account that can be drawn upon when the day comes that there aren’t enough workers to pay for that day’s benefits. Simple enough.

What happens with that trust fund is where the problems arise. That’s because the trust fund isn’t put into a bank. Instead, it’s loaned to the federal government, which uses it to pay the current bills. In other words, we are spending tomorrow’s Social Security benefits to fund today’s military, highways, welfare and such.

Now, those who say Social Security is on solid ground point out that the trust fund is invested in U.S. Treasury notes and bonds, among the most secure investments around. True enough. And as long as the government makes good on it’s debts, which it always has, Social Security can probably survive another seventy-five years with just some minor tinkering. But that’s a mighty big if.

That’s because come 2018 – a mere thirteen years from now – we’ll need to start drawing from that trust fund to pay social security benefits. At that point, the federal government won’t have the trust fund to borrow from anymore. Instead, they’ll have to start paying it back. And with our government currently spending fifty percent more than it takes in, that’s like expecting a drunken sailor to pay back the twenty bucks you lent him just before shore leave.

Which begs the question – is it Social Security that needs fixing, or the federal government? Seems pretty obvious that it’s not Social Security that’s acting like the drunken sailor. So why are we focusing on it as the culprit, feeling an immediate need to partially privatize it?

For one, it’s the old sleight-of-hand trick, where the magician diverts attention elsewhere so no one notices what’s going on under the audience’s nose. In this case, they want us looking at Social Security so we don’t focus on the fiscal irresponsibility going on today.

For another, it’s like the family that keeps borrowing from their 401k to fund today’s expenses. Instead of fixing today’s budget that makes such borrowing necessary, they seek higher returns on what remains in the 401k to make up the difference. But as any investment professional will tell you, higher returns always come with higher risk.

None of this means that there isn’t a place for private investment as a component of the Social Security program. Yet as I’ve argued before, it should be as a supplement to, not a replacement for, today’s program. Such an approach will create the ownership society that the president envisions, while reducing our reliance upon Social Security.

But for now, we must be ready to bite the bullet in order to get our fiscal house in order. After all, it’s government of the people, by the people, and therefore, it’s time that we the people take responsibility for the mess we’ve allowed on our watch.

1/20/2005

Kelly's Choice

Kelly O. must make a decision every morning about how to get to school. As a student within Lakota’s new “no bus zone,” she can opt for the longer mile-plus walk along busy side streets, dodging the early-morning commuters preoccupied with radios, cell phones, coffee and makeup. Or she can take the shorter, quieter route past the home of a registered sex offender.

Kelly is six.

A first-grader with big blue eyes, Kelly doesn’t understand why the bus doesn’t take her to school anymore. She doesn’t know why the grown-ups around her believe they have better things to spend their money on. I wish I could explain what is so important that we make her walk that road.

Kelly is an innocent victim of an electorate understandably tired of higher taxes, but one that is lashing out at the wrong target. Unfortunately, she and all the district’s other children get caught in the crosshairs as voters take aim at schools they see as wasteful.

It’s too bad, because Lakota has been extremely responsible with their finances (and anyone who reads this column knows I’d be the first to holler if I thought otherwise). But don’t take my word for it, consider the facts.

For one, Lakota’s cost per student is well below the state average. For all the talk of overpaid administrators, Lakota not only has fewer administrators per student, but pays them less on average than comparably-sized districts. The same holds true for teachers. Yet it consistently receives an “Excellent” rating from the state for it’s educational performance. That’s not wasteful, that’s called getting your money’s worth.

Regarding schools that have been called too extravagant, the newest ones – VanGorden Elementary and Lakota Plains Junior – were built for twenty-five and thirty-five percent less per student respectively than the state average. The cost per square foot – which is the best way to gauge wasteful spending – was a combined twenty-two percent below average. That’s performance to be applauded, not derided.

And for those who think the district should downsize just as a business would, they already have. Long before the first levy failure, they approved more than $3 million in cuts when they froze hiring and administrative pay, reduced overtime and outsourced services. Then came the levy defeats and another $4 million in cuts. Cuts that go to the heart of our school system – reduced bus service, fewer advanced placement courses, increased class sizes, reductions in textbook purchases.

But there is a limit to how much the schools can follow a business restructuring model since schools struggle due to growing enrollment rather than a declining customer base. Whereas struggling businesses can close unneeded plants and cut excess capacity, struggling schools must instead add capacity.

This is not a game of chicken, where we wait for one side to blink. The need is real. Each month, nearly two classrooms worth of students are added to our already overcrowded schools. We cannot wait for a state that is $4 billion in the red to come to our rescue. Instead, we must take responsibility ourselves.

I hate taxes. But this levy will cost me about a dollar a day. If that’s what I have to sacrifice to put Kelly and her classmates back on the bus, I can find the money. For we’ll not only put them back on the bus, but on the road to a brighter future.