NCPA - National Center for Policy Analysis


January 26, 2009

We have promises we are not going to be able to keep, says John C. Goodman, president and CEO of the National Center for Policy Analysis (NCPA).  It starts with the baby boomers, but it doesn't end there.  This year, the boomers are signing up for early retirement; in three years, they will begin enrolling in Medicare.  By the time they are through, 78 million of them will quit working, quit paying payroll taxes, quit contributing to retirement programs -- and start drawing benefits instead.

Cleary this is unsustainable, says Goodman.  But what can we do about it?  There are certain economic issues that must be dealt with; however, they have little to do inequality, racism, lack of diversity or poverty.  Rather, they arise from the need to protect the middle class from risks they have difficult insuring against on their own, including:

  • The risk of growing too old and outliving their assets.
  • The risk of dying young and leaving their dependants with inadequate resources.
  • The risk of becoming disabled and unable to work and produce.
  • The risk of becoming unemployed and finding there is no market for their skills.

President Bush tried to reform Social Security, but we don't have to solve the biggest problems first.  According to Goodman, there are four relatively small policy initiatives that the NCPA was involved with that promise to become increasingly important:

  • More than 12 million families are now managing some of their own health care dollars in Health Savings Accounts (HSAs).
  • More than $225 billion of retirement savings in Roth IRAs will never be taxed again.
  • Millions of baby boomers retirees will be able to reach retirement age, receive their Social Security benefits and keep supplying the economy with badly needed skills and services -- without being penalized.
  • Future participation in 401(k)s will increase by one-third due to an NCPA/Brookings Institution proposal for automatic enrollment in diversified portfolios -- producing higher and safer returns.

Source: John C. Goodman, "Promises to Keep," National Review, January 26, 2009.


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