This specific example is from the United States but it stands as one of a more basic problem facing welfare states. We already can;t afford what we’ve already promised ourselves. This does – or perhaps should – rather limit what we go on to insist that we should have:
Debates about the future of Social Security tend to confuse two issues—its solvency and its adequacy. Social Security is funded by payroll taxes. Current projections show that the system will be able to pay all of its pension obligations only through the mid-2030s, depending on your assumptions about GDP growth, workforce participation, and wages.
At that point, unless Congress acts soon to raise taxes or cut benefits, or devises some other strategy such as investing the system’s current reserves to earn higher returns, Social Security runs out of reserves sometime between 2033 and 2037. After that, it would be able to pay only about 79 percent of promised pensions from current payroll tax receipts.
So, we all promised ourselves some lovely income in those golden years. We also rather balked at paying the taxes to fund them. That is, we promised ourselves more than we were willing to pay in – this isn’t as unusual human failing as you might think.
This is true of much of that structure of the welfare state too. Here in the UK we insist that caring for the old folks be done – righteously, obviously. But we’ve not been and are unlikely to be willing to pay the taxes to do so. Or the NHS thing, every year we’re told it needs more money because ageing population and so on. But there’s always that scramble to find the money to pay for it.
Sure, there are solutions here, more competition leading to greater productivity would sure help the NHS. So would firing everyone with the word “diversity” in their job title. But we still come up against that base problem – we have already promised ourselves more than we’re currently willing to pay for or have paid for so far.
It is this which is behind all those cries that the tax bill simply must rise. Not, as might even be something we’re willing to do, to pay for new goodies that we’re about to get. But instead to just pay for what the political system has already promised us.
This does rather close down the room for promising ourselves new things of course.