February 2006
The following transcript is for the podcast entitled “Baby Bust.”
Note: President George W. Bush's remarks are displayed in blue.
Welcome to the PACT America podcast.
I watched the State of the Union Address the other night.
(pause)
And I really don't want to comment on what was said... But more how was it said?
It seems that these politicians--whether it's Republicans, Democrats, whatever... They just don't get it. They don't understand what it's like to be a working person or just an average American person. You know, they're out of touch with that. I don't know whether it's because they're so rich or just because they're so full of themselves, but they really don't get it.
And then we wonder why we have all of the problems that we do or why the government is so messed up. I mean, our leadership... They just don't understand. I mean, I don't even know how you can really call it leadership.
Anyway, I've got some audio from the speech, and I'm going to play it now.
“We must also confront the larger challenge of mandatory spending, or entitlements. This year, the first of about 78 million Baby Boomers turn 60, including two of my Dad's favorite people--me and President Clinton.”
(laughter)
“This milestone is more than a personal crisis...”
(laughter)
“It is a national challenge. The retirement of the Baby Boom generation will put unprecedented strains on the federal government. By 2030, spending for Social Security, Medicare and Medicaid alone will be almost 60 percent of the entire federal budget. And that will present future Congresses with impossible choices--staggering tax increases, immense deficits, or deep cuts in every category of spending.
“Congress did not act last year on my proposal to save Social Security...”
(applause)
“Yet the rising costs of entitlements is not... Is a problem that is not going away.”
(applause)
“And every year we fail to act, the situation gets worse.
“So tonight, I ask you to join me in creating a commission to examine the full impact of Baby Boom retirements on Social Security, Medicare, and Medicaid. This commission should include members of Congress of both parties, and offer bipartisan solutions. We need to put aside partisan politics and work together and get this problem solved.”
(applause)
Welcome back to the PACT America podcast.
Well, that sounded more like a high school pep rally than a State of the Union Address--all that applause and jeering and booing or whatever.
You know, when I watched that video, you could... You could just see the division. The Republican side of the room would stand up and applaud for something while the Democrat side sat down. And then the Democratic side would stand up and applaud while the Republican sat down.
The President said that the state of the Union was strong, but... The state of the union--our unity... How could that be strong with such division?
Anyway, I wanted to comment on something here.
I've been doing some research myself. Everybody focuses in on Social Security and Medicare, but I was taking a look at government pensions. Government workers contribute into their own separate pension plans. Much like you might have a corporate pension plan, government workers have their pension plans. And a lot of these pensions though are invested in the national debt.
For comparison purposes, take a look at the Social Security trust fund. While these Baby Boomers were working, they were contributing their checks into Social Security. And there was extra money coming in, and what happened was the politicians--they spent this money. So they spent all this money in the trust fund, and then issued these bonds.
Well if you look at these other government pension plans, like the Civil Service Retirement Fund and the Department of Defense Military Fund... And there are, I don't know, maybe dozens of other small plans in there too.
All of these workers were contributing money from their paychecks, so the government had all of this money coming in, and they said, “Well, what can we do with it? Let's spend it.”
So they spent all of this money, and now this money from all of these retirement accounts is being used to support our national debt. That's the reason that they've had such an easy time running up our national debt, because they had all of this money coming in and they just borrowed from it. It wasn't like they had to go out and ask for loans or do credit checks or something like that. They had money coming in, and they just took it and spent it.
But when you start to look at the numbers of all of these Baby Boomers retiring... And the numbers are one thing, but the big thing here is life expectancies. You know, sure the Baby Boom generation is large in numbers, but the real danger, or the real problem, is their life expectancies.
Because whether it's a Social Security benefit or a government pension benefit, these benefits aren't based on what these workers contributed in over the years, as much as it's based on what their average earnings were. You know, so it's not a...
It's not like you invested into a bank account, and you said, “Well, all my money is gone; I've spent all my savings.” No, these people are going to keep getting a benefit whether the money that they contributed in is exhausted or not. You know, so they'll... For as long as they live, they'll keep getting these benefits whether they're... Whether the money they contributed while they were working, whether that was enough to cover these benefits or not.
And you know, life expectancies have been increasing over the years. Right now, the average life expectancy is about 77.6 years. And I mean, in 1946, the life expectancy at birth was 66.7 years. So when the Baby Boomers were first born, the life expectancy was 66.7 years and now it's 77.6--so that's an increase of about 11 years.
And that doesn't sound like very much maybe, but look at it this way. In 2004, the average monthly benefit for a retired worker receiving Social Security was $955. Now it has gone up since then. I don't have the exact number, but let's just call it $1,000. So your average benefit is $1,000 a month, there's 12 months in a year, so you're looking at $12,000 a year for each person who's on Social Security.
Now, these 78 million Baby Boomers, let's say they live one year longer than they were supposed to, or they were predicted to. When you multiply that out, it's almost one trillion dollars. So that's an extra one trillion dollars in expenses if these people live one year longer than they were supposed to. What if they live three years longer, or five years longer? You're talking about trillions of dollars here.
And that's the real problem. And you know, there's not really much you can do about it, either. You just have to use common sense. You've got to prepare for the worst and hope for the best, and that's all you can do. I mean that's probably... I mean, people don't want to hear that, but it's the truth. We've just got to do the best we can.
But the stock market, that's not going to fix the problem, you know? And even PACT America... I mean, it's a good plan, but it can only do so much. And the real... The real thing that PACT America is designed to do is when all of these Baby Boomers are retiring, all of this money in the Social Security trust fund and all of these government pension funds--we're going to need to tap into that.
So it's not like you can just keep rolling over the national debt, passing it on to future generations, passing it on to future generations. No, we're coming up to a point here where we're not going to be able to do that.
We're actually going to say, “Hey, wait a minute. We need money coming in. You know, we have to pay these bonds off to pay these retired workers their benefits, and where are we going to get that money?”
So then you can say, “Alright, you refinance the national debt with PACT America accounts. That way all of these retired workers can get their benefit checks, and we can also make sure that future generations will not be burdened by the national debt in the same way.”
You know, so we're not actually going to be able to pay off these bonds outrights--I mean outright. There is just not enough money. But we will be able to refinance these bonds to get the people the money they need for their retirements, and also provide for our own retirements for the younger generation. And I mean, that's all you can really ask for, or hope for.
So it's something to think about.
This is Adam Florzak keeping it real.