French Protests, British Austerity Give U.S. Glimpse of Its Future

The French government has increased the age for a minimum pension to 62 and to 67 for full benefits, sparking furious protests in France. Americans already have to work to age 62 to qualify for early Social Security benefits and to 66 (eventually to 67) to get full benefits, says USA Today.

The U.S. retirement system isn't quite as rickety as France's, but it's not far behind.

Social Security is in the red this year, forcing the Treasury to borrow to pay benefits, just as France is.

Social Security is projected to get better once the economy recovers, but only temporarily.

The system is forecast to go into the red again in 2015 and then get steadily worse.

Social Security is hardly the United States' only budget problem. Massive borrowing is driving the national debt to unsustainable levels. But neither party has a credible plan to restore balance after the economy gets better.

Britain's government, by contrast, decided to act, says USA Today.

Faced with budget deficits just a little bigger in relative terms than the ones in the United States, Britain has just announced its most far-reaching deficit reduction in 60 years.

Most government departments will be cut by an average of 20 per cent, almost half a million government workers will lose their jobs and many taxes will go up.

The sheer scope of Britain's spending cuts and tax increases is a pretty good road map for where U.S. politicians will have to go if they're serious about getting the budget near balance.

It wasn't so long ago that Congress and presidents produced serious deficit-reduction plans that helped balance the budget from 1998-2001. That took courage and serious leadership, both of which appear utterly absent today. Before making fun of the French, Americans ought to take a hard look in the mirror, says USA Today.

Source: French Protests, British Austerity Give U.S. Glimpse of Its Future, USA Today, October 24, 2010.

For text: http://www.usatoday.com/news/opinion/editorials/2010-10-25-editorial25_ST_N.htm

For more on Economic Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=17

First published by the National Center for Policy Analysis, United States

FMF Policy Bulletin/ 02 November 2010