John Goodman will crunch numbers but he won't mince words.

"If we do nothing, the tax burden for elderly entitlement benefits will keep growing as far as the eye can see," he said during a recent visit to his office.

Mr. Goodman is founder and prime mover at the National Center for Policy Analysis in Dallas, a public policy think tank that has succeeded by keeping geographic as well as intellectual distance from Washington D.C.

While some criticize the NCPA for its decidedly free-market orientation, I've admired both their willingness to tackle difficult economic problems and their ability to offer creative solutions.

And few institutions need creative solutions more than Social Security.

I asked Mr. Goodman what he thought were the three most important facts about the current Social Security debate.

"The main thing is this--- if we do nothing, the tax burden will become uncollectable. It's now 15.6 percent but it will climb to one third to one half of incomes by the time today's teenagers retire. We won't be able to keep all the promises we're making.

"I don't think there are three points. There is only one: we are on an unsustainable path. It's not just in the United States, its everywhere. All over the developed world, countries are in terrible shape with respect to entitlements.

"In a developed country you need a birthrate of 2.1 to sustain population. In the U.S. we're at 2.0 and all of Europe is 1.5. In Italy and Spain--- both Catholic countries--- the rate is 1.2. The world has never seen fertility rates this low. It's not a fad. They've been falling for 100 years."

I asked what that meant.

"If you're not replacing your population, it will peak and then decline. The burden of caring for the elderly will increase. It means you're on a path that isn't sustainable.

"It also means you need to accept much higher--- massive--- immigration if you don't change Social Security.

"So this isn't just a U.S. issue. It's a worldwide issue. We should be a leader, not a follower."

I asked why something this pivotal wasn't mentioned in political debates.

"Others get confused by the (Social Security) trust fund. This is a complicated and confusing issue. You really need to keep your eye on the ball. The reality (of Social Security) is that each generation is hoping that the next will pay for its retirement."

The fundamental reality--- one he keeps coming back to--- is that it is demographically inevitable that the expense burden will be too large for the next generation, that something must be done to help each generation pay its own way.

I asked how that could be done and how it relates to the current budget surplus.

"The Social Security surplus for the next ten years amounts to about 2 percent of payroll. That's why all of the plans (for changing Social Security) focus on 2 percent. It's a small amount but for someone entering the labor force today, investing that 2 percent would enable him or her to replace half of their Social Security (retirement) benefits.

"What no one is talking about is taking the rest of the (federal) surplus, another 2 percent, and putting it to use as private investment. If we did that to 4.3 percent (of payroll) we'd have the first generation to fund its own retirement. Then we could turn our attention to Medicare."

But what about paying off the federal debt with the surplus? Won't that help solve the problem?

"Buying back debt doesn't solve any of these problems. It will lower interest payments but it doesn't solve the problem of paying promised benefits. Buying back debt doesn't do anything to reduce claims against the government. With a private account, you'll reduce the claims on government."

To demonstrate how a privatized Social Security would work and how it compares to the existing system, the NCPA has launched a website with the most sophisticated calculator currently available. Rather than taking your current age and income and blindly projecting forward, the NCPA site uses lifetime earnings curves for nearly 500 specific occupations to forecast future earnings.

Is there a reason our friends in Washington need to deal with the retirement income problem rather than trading salvos of sound bites?


"The reality is that Medicare is the biggest problem," Mr. Goodman said. "By the time today's 21 year old will be retired, we'll be spending more on Medical care than on Social Security checks… In 2025, if you take all retirement consumption (expenditures), they'll be spending more than half of their income on medical care. Eighty year olds are already doing this."

Want to learn more? Information resources on the web are constantly improving. Here are a few:

The NCPA Social Security Calculator, with a major collection of links about Social Security    

The Social Security Administrations Benefit Calculators      

The URL to visit to apply for your most recent benefit statement delivered by mail.      

Some life expectancy calculators so you can see how long you'll live in retirement and what you can do to live longer.