close window

  NEWSLETTER  # 35        FALL    2004








      As in the past, we hosted a table at the Newark, DE Community Day on September 19th.  In addition to trying to sell our views this year, we asked visitors if they would like a chance to “win a hundred bucks” – our prize for the person who submitted the most nearly correct answers to a series of questions related to the financial future of the United States.

      Seventy-seven people accepted our challenge.  The clear cut winner was George Jurgensen of Newark, Delaware.  He was awarded a check for $100 and a copy of “The Coming Generational Storm” (Kotlikoff and Burns, MIT Press, 2004).

     Several runner-up winners were also awarded copies of “The Coming Generational Storm,” and all participants were offered the SAFE pens with which they filled out the questionnaire.

      The questions and answers (with sources) for “Test Your Knowledge” are posted on our website.  We have included some comments as to why the questions are important (rather than interesting trivia) and described how the participants answered them.  In our opinion, their answers suggest that people may have a more realistic view of the outlook for Social Security and Medicare than our political leaders have.

back to top 



     Several SAFE members belong to a retired men’s luncheon club, sponsored by the Lutheran Church in Wilmington, DE.  The Board of Directors of SAFE decided to give a ball point pen to each of the approximately 150 attendees.  These are the “SAFE pens” used at

Community Day – the user sees our name and website.

  The October 15th luncheon was chosen, because the luncheon speaker discussed the financial future for retirees.

  We were given five minutes to let members know that our main interest is the financial future of the next generations.  We also took the occasion to remind them that we sponsored a 2001 talk by Maurice McTigue.  He participated in New Zealand’s recovery from financial problems due to overspending.

  Incidentally, McTigue gave a similar talk this year at Hillsdale College.  We have copies and will be happy to send you one if you wish.

   After the retirees luncheon, SAFE Founder, Bill Morris and President – Elect Bill Whipple were invited to join with the program committee of the luncheon organizers.  The upshot is that Bill Whipple is scheduled to talk at next May’s luncheon about fixing Social Security for our grandchildren.  The talk will undoubtedly include information from “Running on Empty”, a book reviewed in this newsletter.

back to top



     According to our Constitution (we do have one) we have an Annual Meeting to elect officers, to review the previous year and discuss plans for the coming year.

     The 2004 Annual Meeting will be held 1:00 PM Thursday, November 18th at Winterthur.  Winterthur is off Route 52 about 4 miles west of Wilmington, DE

     If you plan to attend, please let us know to facilitate planning.

    You are welcome to come earlier, as early as 11:30, to join the Directors for a cafeteria-style lunch.


This morning. . . . I had that old fashioned treat, buttered toast dunked in fresh brewed coffee.

back to top 


     The AARP is hosting elaborate breakfasts (scrambled eggs, bacon, sausage, etc.) around the country in an effort to convince its members to oppose Personal Retirement Accounts.  Barry Dorsch, Bill Whipple, and Bill Morris attended one on October 4th in Wilmington, DE.

     Speakers included Dick Johnson of Wilmington, an AARP Board member; Evelyn Morton, an AARP Social Security expert; and Peter Orzag of the Brookings Institute, who recently co-authored a book called “Saving Social Security”.  Johnson read a talk, Morton was effective off the cuff, and Orzag gave a Power Point presentation.

     The main AARP points were that the market is risky and Social Security is solid, so our government should under no circumstances allow younger workers to set up Personal Retirement Accounts and opt out of traditional Social Security coverage.  (Everyone agrees that people who have already retired or are about to do so should receive the Social Security benefits they have been promised).

     While Orzag opposes PRAs, he agrees that action is needed.  His plan for saving Social Security entails a combination of benefit cuts for future retirees (especially high-income retirees) and payroll tax increases (including raising the FICA tax ceiling), which he believes should keep the system solvent for the foreseeable future.  If gains in life expectancy outstrip the officially projected increases (as many experts anticipate); however, he would make up the difference by indexing the retirement age to life expectancy.

    Why is the AARP so adamantly opposed to PRAs?  We can speculate that they feel they own Social Security and don’t want to see if ever go.  If the PRA approach works as we expect it to, the old pay-as-you-go Social Security system could disappear in a couple of generations.  If so, we say good riddance.

back to top


Bill Whipple

     We reviewed The Coming Generational Storm by economist Laurence J. Kotikoff and financial columnist Scott Burns, MIT Press, in the last issue of this newsletter.  Briefly, Kotlikoff and Burns conclude that it will be next to impossible to provide the promised level of Social Security and Medicare/Medicaid benefits to a rapidly growing population of seniors – certainly not without unfairly (perhaps unrealistically) increasing the tax burden on working Americans.  Something will have to give, they say, and we must act soon because our country is headed for a fiscal meltdown.  

     In Running on Empty (Farrar, Strauss and Giroux), Peter G. Peterson examines the same issues from a public policy perspective that he is uniquely qualified to represent* and reaches very similar conclusions.  Starting with the New Deal, Peterson offers an insightful explanation of the actions (and inaction) of political leaders on both sides of the aisle that have gotten us into the present mess.  He also makes clear, as did Kotikoff and Burns, that matters can’t be resolved until the Democrats and Republicans tone down their rhetoric and start working together. 

     The authors offer somewhat divergent proposals for reforming Social Security and Medicare.  Other experts have their own ideas, as do we at SAFE, and that’s fine.  The most important thing at this stage is not the precise shape of the solution – it is convincing people that a restructuring of Social Security, Medicare and Medicaid is needed so that these benefits for seniors will be affordable over the long term. 

     Some people will resist this conclusion.  In its 8/30/04 issue, for instance, “Business Week” states that “both books express extreme distrust of technology and warn the reader not to count on it to solve our problems.”  Really?  History shows that the U.S. economic growth rate is unlikely to soar into the  stratosphere.  Even  if it  did, as the authors explain, Social Security benefits accruing to active workers are linked to wage levels (which should rise faster than prices due to productivity gain) and technological progress is a key driver for soaring healthcare benefits (everyone wants the most advanced care available). 

     We at SAFE have long believed that a fiscal crisis was brewing that would be triggered by the retirement of the baby boomers.  These fine books demonstrate that the need for corrective action is even more urgent than we thought.

*  His resume includes:  CEO of Bell & Howell, U.S. Secretary of Commerce, chairman of the Federal Reserve Bank of New York, a founding president of The Concord Coalition, chairman of the Council of Foreign Relations, and Chairman of The Blackstone Group.

back to top



     Our President, Barry Dorsch, liked this cartoon so much, he obtained permission to include it in this newsletter.  We like it, too.


Sinatra had his vocals. . . . Kennedy had his Bay of Pigs, Truman had his atom bomb, Ike had his D-Day, Kate Smith had her God Bless America, Brando had his Streetcar named Desire.  What will you and I have as our legacy?


Ever buy more than you need of any product. . . .thinking they may not have it again or it will be discontinued?  Because it was so good.


Member Erwin Vogel points out correctly that “health insurance” is a misleading phrase, because it provides most of the money for health care.  Insurance generally covers rare, major events.  Medical Savings Accounts (also called Health Savings Accounts) do involve real insurance – catastrophic coverage.


For historical purposes we are listing the First S-A-F-E Newsletter in the Newsletters Page.  Most names will be unfamiliar, even to the present Directors.  That illustrates the fact that we always need new activists.  We invite you to attend any Director’s meeting in case you miss the Annual Meeting.

back to top

Close Window