Social Security Sustainability

Any retirement system, when faced with increasing life spans, must resort to at least one of the following:

1:  Delayed retirements / increasing the retirement age
2:  Lower payments during retirement
3:  Higher savings rates or taxes when working

There is nothing wrong with this.  This is simply an obvious result of longer lifespans, and is equally true whether the retirement system in question is public or private.

Thirty years ago, Ronald Reagan and the Democratic Speaker of the House Tip O'Niell made a deal with regards to Social Security in order to deal with the gradual increase of life spans that had accumulated to that point, thus extending Social Security's actuarial balance into the 2030's by building up a reserve for the retiring baby boomers.  This was accomplished by a mix of tax increases and raising the retirement age, which was set to gradually increase to age 67 by 2022.

Thirty years later, we can see farther.  Our lifespans have increased even more, and therefore we either have to save more, retire still later, or try to spread the same amount of retirement dollars over a larger number of years.  What are Social Security's options for insuring its long-term stablity?  Actually, they are not all that bad, requiring modifications no worse than what Reagan and O'Niell chose.  There are plenty of options, such as raising the Social Security tax by 1% for both employer and employee, elimination of the earnings cap (currently $113,700, above which income you do not pay Social Security taxes), raising the retirement to 70, and a host of other smaller changes such as changing the cost-of-living-adjustment to be less generous, changing the payout formulas in order to reduce benefits to higher income workers, bring state and local government workers into the system, a straight benefit cut, etc.  Of course, these can be mixed and matched in any number of ways in order to hit the target.  For example, raising the retirement age one year, phasing in a 0.5% tax increase on both sides over ten years, and raising the cap 20% would put Social Security into balance for the entire 75 years that its actuaries calculate.  A group of policy wonks could crank out a bi-partisan, balanced solution over lunch. Given that Democrats hold the presidency and half of congress, and polls strongly indicate that the public prefers tax increases to benefit cuts in this matter, a fair deal would probably focus on the tax side.  The public, wisely in my opinion, realizes that this program is extremely valuable in ensuring a basic retirement for all, and is worth the price.

In the long run, Social Security can be thought of a system that transfers about 5% of the national income from current workers to current retirees.  It is self-evident that this is forever sustainable.  The only question is whether it would be better to shift this to around 6%, in order to maintain benefits at their current levels as the number of retirees increase, or whether to keep it at 5% and spread the money thinner.  Either way, Social Security is forever....or at least as long as we want it, which I hope is the same.

The Opposite of Sustainable, Helium Edition

One way to attempt to define any word is to think about its opposite.  In that vein, the situation concerning our helium supply may well be the absolutely least sustainable element of our entire industrial system.  I won't get into the details about the Helium Stewardship Act of 2012 (details here, and here), but let's just say the situation is so bad that Republicans and Democrats are agreeing.  So what is the problem?  It is not just the mismanagement of our helium reserves - the largest in the world -which the HSA is attempting to address.  Rather, it is the twin facts that there just isn't very much helium on earth, and that if we loose it, we lose it - forever.

Helium is unique among all elements in the fact that is both very light and inert.  Hydrogen is even lighter, but highly reactive, which means that is generally found bound to heavier elements such as oxygen, forming water.  Helium, however, floats around all by itself.  Now if you remember your freshman chemistry course, you may recall that kinetic energy is proportional to 0.5 x mass x velocity squared.  You may also remember that temperature is basically nothing more than average kinetic energy.  This implies that at any given temperature, small things must be moving faster.  Well, helium is so small that its velocity at the temperatures found in the upper atmosphere (where it inevitably floats, being lighter than normal air) is so high that it often exceeds the escape velocity of the earth.  So if you pop that balloon, your helium floats up and up, and doesn't stop until it leaves the earth's grasp forever.

For this reason, helium only exists as a trace as in the atmosphere (roughly 5 parts per million), making it all but impossible to extract from air.  Rather, our helium sources here in earth are natural gas wells.  Helium is naturally formed as the by-product of some nuclear decay processes.  In a few special locations deep beneath the earth, a combination of high concentrations of radioactive elements and impermeable cap-rock has allowed small pools of helium to accumulate over millions of years, trapped beneath the earth.  This virtually always are co-located with natural gas, which is trapped under the same rock layers.  Our National Helium Reserve in Texas, whose contents we have been selling off at below-market rates for years, contains 30% of the world's known helium reserves...and will be gone by 2018.  Experts estimate that there are only 25-30 year's worth of extractable helium left on earth.

With respect to all other elements, the worst we can say is that we are trashing our high quality ores and resources, and our kids and grandkids will be forced to go through a time and labor-intensive process of picking those valuable atoms out of our trash, or extracting them at great effort from whatever low-quality resources we may have overlooked.  Not so with  helium.  If we don't catch it and recycle it, it is gone.  Our descendants will be forced to either do without, or harvest it from space at an astronomical cost.  Lest you think helium is just for balloons and blimps, it is also critical for any number of industrial and technological processes, such as MRI scanners.  All sorts of our latest and greatest inventions either cannot work or cannot be manufactured without it.  The Helium Stewardship Act is a step in the right direction, or at least a cessation of the outright stupidity of heading in the wrong direction, but we need to act far beyond what is in this bill.  Helium use should be restricted to only the highest value applications immediately, and the reserves protected rather than sold.  Likewise, helium recycling should be enforced.  This resource, more than any other, is one that we need to protect.