11/29/2010 03:13 pm ET Updated May 25, 2011

Let's Be Honest About Why Social Security is Going Broke

It's funny how you often find insights where you least expect them.

A few weeks ago, my dog Kiva got bitten on the nose by a rattlesnake and I ended up with a better understanding of our health care system. This week, I came to understand why our Social Security system is in such danger just by reading the mail. Actually it was a letter that a friend of mine received from the Social Security Administration outlining his future benefits.

This friend is almost 45 and isn't working at the moment. He worked for a total of about 20 years before his current hiatus. During that time, he paid about $17,000 into the Social Security system -- an amount that was matched by his employer bringing the total contribution to $34,000. He also paid a total of $4,200 into the Medicare system.

According to the letter, When he turns 62, he can start collecting more than $10,000 a year in benefits (with cost of living increases it could be double that) for the rest of his life. So given how long healthy people are living these days (see my recent article on health care reform), he will probably pull between 10 and 25 times more out of the system than he and his bosses ever paid in.

Let's be honest.

The main reason our Social Security system faces so many challenges is pretty simple. We were promised and are receiving benefits based on formulas that tax us too little while we are working and assume that we would not live much past 65 years of age. Now that millions of Americans are living well into their 90s (with the help of very expensive drugs and medical treatments that are paid for by the government) our new-found longevity has created a national financial catastrophe.

Just after reading my friend's letter and doing the Social Security math, I left to spend Thanksgiving in St. Louis, the place of my birth. My 84-year old mother (who still drives -- which is one of the reasons why I don't live there) lives in a retirement community where the average age of the residents is 92 and most of them show up for Happy Hour every day. The young woman who works as the bartender says she is constantly being proposed to by the feisty older men.

Fortunately I had my trusty IPad with me to do research since all the seats in the computer center there were full of people tweeting, emailing, and doing their holiday shopping. My quick check showed that a 92 year old who started working in 1940 paid $100 in Social Security taxes during his first year of work and, if he paid the maximum amount allowed he put a TOTAL of less than $10,000 into the system during his first 30 years of work. Until 1980, no one paid more than $1,000 a year in Social Security -- even if they made millions.

If he retired at age 65, he would now be getting more than $20,000 a year and has pulled almost $250,000 out of the system since he stopped working. He is now getting a monthly check larger than what he paid in for his first ten years of work combined!

It was nice hanging out with these folks and, as my grandmother would have said, they should all live to be 120. But this is not the demographic scenario that the people who set up the formulas for Social Security and Medicare had bargained for. And not one of my new friends was an illegal immigrant or a welfare queen. These once hard-working, "real" Americans are the ones who are bankrupting us -- not the foreign invaders and poor people that Fox and the Right would suggest are to blame.

Responsible Americans need to have a grown-up discussion about what kind of benefit systems we can realistically promise our citizens and what our kids are going to have to pay in taxes to fund it now that we're living so damned long. It's the same grown-up discussion that we have needed to have since 9/11 about how to pay for our wars and security going forward.

But let's be honest.

These conversations have not yet taken place and there is no appetite for them now. Instead, we are encouraged by our political leaders and the cable and radio screaming heads to invent villains and blame them for everything that's wrong with the world--and some of the things that are right. Even the Tea Partiers who are angry about spending money on anything are not interested in dealing honestly with Social Security, Medicare, paying for our wars, or sharing sacrifice by calling for mandatory military or public service.

They just like to complain about politicians in general, Obama in particular, and how big government has gotten out of control. When it comes to specific details of what needs to be done or any kind of positive agenda they don't have much to say. And they sure don't want to talk about the morality of sending poor young rural kids to serve a dozen terms in Afghanistan, why we don't have a military draft or the economics of their favorite entitlement programs.

Instead of having that honest conversation, they spread phony allegations that the costs of providing Social Security and Medicare to illegal immigrants are what is driving us broke. Or they spread professionally manufactured email lies about free "Obamaphones" and other benefits that our president has allegedly decided to give to illegals, freeloaders, and drug dealers as though that would be enough to bankrupt America even if it was true -- which it isn't.

They also like to talk about how we should be investing our own Social Security accounts in stocks and gold and whatever we want. But that's not honest either because it implies that we actually have money in our accounts to invest -- which we don't. Our taxes go to pay our parents' generation and there is no money actually set aside for us to be invested even if we wanted to. That's the way Social Security has always worked and the news media and politicians know it.

We can't even begin to address these serious issues until we can have an honest discussion about the current situation and what our real choices are to effectively deal with it.

But promoting fear and outrage and creating villains is apparently so much easier that it seems unlikely that honest grown-up conversation will take place any time soon. As I've mentioned, CNBC now has a daily segment on Larry Kudlow's show that's called "Viewer Outrage." They are committed to finding people who are really pissed off about something every single day and giving them a podium from which to rant.

When we start seeing segments entitled "Viewer Sacrifice" and "What You Can Do For Your Country" where people talk about the responsibilities that each of us needs to take on to help make things better, then we will be getting closer to the road to fiscal sanity.

If the national obsession with fact-free anger, fear and demonization continues to grow, then maybe I will stop writing and move back in with my mother. Those folks seem to enjoy life more than most of my current friends and they don't seem to be afraid or outraged about anything except running out of Chardonnay during Happy Hour. They won't make very good villains because most of them are white and don't speak with an accent.

Besides, that bartender is really cute.