“Houston, we’ve had a problem.” In that instant, Jim Lovell’s dream died. The promise of walking on the moon went poof. Americans have been promised a plethora of benefits. Now they face a debt problem. The super committee is tasked to find a solution, but the bigger problem is how people typically react when promises go poof.
Lovell’s words became folklore in the film Apollo 13. Over 200,000 miles from Earth, one of Odyssey’s oxygen tanks had exploded. The mission became moot—the dream of walking on the moon was dead. The crew had to solve a more narrowly defined problem—getting home. Still, promises are hard to let go of. In a touching scene, Lovell looks wistfully out his spacecraft’s window as the lunar surface passes him by.
Much of the Western world has a problem—promised benefits threatened by ballooning debt. In the U.S., The Joint Committee on Deficit Reduction has until November 23rd to produce a plan to reduce the deficit by at least $1.2 trillion over 10 years. If it fails, automatic spending cuts from defense and social programs will be triggered. These cuts, while a step in the right direction, don’t address the bigger problem—promises made that now seem unrealistic. Consider retirement promises made to baby boomers.
Every day, 10,000 baby boomers become eligible for Social Security and Medicare, from which they will receive, on average, $1 million of benefits ($550,000 from the former, $450,000 from the latter). These benefits are part of a palette of entitlement programs that were virtually non-existent until the 1930s. Social Security was first. In 1950, it had 16 U.S. workers paying for each retiree’s promised benefits. By 2010, it had shrunk to 3.3 workers. By 2025, it is projected that there will be two U.S. workers for every retiree. It’s an unsustainable program, as are interest payments on the U.S. national debt and spending on entitlement programs. Together, they consume approximately 15 percent of GDP today but are projected to devour 50 percent of GDP by 2080.
Promises also plague the Postal Service. The USPS projects deficits of $238 billion—roughly the GDP of Portugal—through 2020. The postmaster general talks of raising rates, reducing delivery, closing facilities, and trimming the work force (the second largest in the U.S.). The real problem is the USPS is not competitive. Decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx. Postal workers also receive more generous health benefits than most other federal employees—with a huge wave of retirees on the way. Yet Fredric V. Rolando, president of the National Association of Letter Carriers, warns against rescinding any promises. “This is about one of America’s oldest institutions… we have to do everything we can to preserve it.”
“The public-sector workplace has become a kind of artificial Eden,” writes New York Times columnist Russ Douthat, “whose fortunate inhabitants enjoy solid pay and 1950s-style job security and retirement benefits.”1 It’s not just the public sector however. After the housing collapse, America’s 100 largest corporate pension plans were underfunded by $217 billion. The Pension Benefit Guaranty Corporation says that the number of pensions at risk has more than tripled since 2008. Still, Americans assume they’ll get every penny promised, evidenced by the fact that approximately half of all U.S. workers have less than $2000 saved up for retirement. According to one recent survey, 36 percent of Americans say that they don’t contribute anything at all to retirement savings.2 Everyone is living in an artificial Eden. Just look at the healthcare system.
Americans believe the healthcare system will deliver on its promised benefits, no matter what. The Economist however reports that Type II diabetes alone will bankrupt the system in less than 20 years.3 Type II diabetes is usually a preventable problem—exercise and proper diet—but Americans aren’t into prevention. Today, just one in seven U.S. workers is of normal weight without a chronic health problem, according to Gallup.4 The healthcare system cannot cope with the mushrooming costs of caring for a population that is getting fat and old. The problem is, few fat people feel it’s their problem.
Recent college graduates do feel there’s a problem. “The Mortgage Crisis Was Only the Beginning”—the tag line for David Smick’s The World is Curved. The housing collapse ignited a cascade of crises, first felt by college graduates. Lisa Kahn, a Yale School of Management economist, has found that those who graduate during a recession earn seven percent to eight percent less in their first year out than comparable workers who graduated in better times. The effect can persist up to two decades.5 Couple this with the average college debt load—$28,100 for those with a degree from a four-year private school, $22,000 for those from public schools—and we have the Occupy movement. As one protestor blogged: “I am a college graduate. I am also unemployed. I was led to believe that college would insure me a job. I now have $40,000 worth of student debt.”
We see, in unrealistic promises and the rampant indebtedness of the U.S., what Yuval Levin has called a “gluttonous feast upon the flesh of the future.” The solution however has less to do with politics and more to do with how Americans see promises. In the Book of Hebrews, chapter 11, we read of believers who lived exemplary lives yet “all of these did not receive what was promised.” Only half got what was promised in this life. The other half were stoned, sawed in two, or murdered in cold blood. In a fallen world, some promises go poof. In God’s design, promises are expectations, fulfilled in this life or the next. Because of human stupidity, selfishness, and shortsightedness, we often forget this, treating promises as entitlements to be fulfilled in this life, period. Reality doesn’t work this way, however, which is why marriage vows include “for better, for worse, for richer, for poorer, in sickness or in health.” The promise to stay together no matter what keeps an expectation of good health or healthy finances from turning into an entitlement.
What about Americans—are they in this together? Through stupidity, selfishness, or shortsightedness, the public and private sector has made promises that are now proving to be unattainable in the foreseeable future. Regardless of what the committee proposes, the challenge is reframing promises. Jim Lovell understood how promises work. Once the tank blew, he relinquished the promised moonwalk. It went poof. Are Americans capable of reframing ill-advised promises and relinquishing the ones going poof?
1 Russ Douthat, “What Tax Dollars Can’t Buy” The New York Times, October 29, 2011.
3 “America’s Diabetes Epidemic,” The Economist, February 15, 2007.
4 “86% of Workers Obese or Have Other Health Issue” The Wall Street Journal, October 17, 2011.
5 Sara Murray, “The Curse of the Class of 2009” The Wall Street Journal, May 9, 2009.