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In his new column on Politico, Matt Miller identifies President Obama’s most important task: “To clear out the cobwebs in the American mind.”

Miller, a senior adviser at the consulting firm McKinsey & Co., takes a strong broom to some of those cobwebs himself in his provocative new book, The Tyranny of Dead Ideas. I caught up with Miller recently to ask him about “dead” and “destined” ideas in the looming debate over baby boomer “entitlement” spending.

In Tyranny, Miller puts “The Grey Boomer Fiscal Squeeze" at No. 3 on his list of four forces that he says will deliver the "epochal shock" that opens our mind to new ways of thinking. “Aging members of the baby boom generation will shortly send government’s health and pension costs through the roof,” Miller writes.
But as President Obama readies plans for his “fiscal responsibility summit”, the debate over Social Security remains dominated by two entrenched camps that have crowded out fresh thinking and obscured promising trends.

In one camp are those who insist the only alternatives are lower benefits, higher taxes, slashed budgets or crushing deficits.

In the other camp are those who argue that it’s a myth that Social Security is broken, so there’s no need to fix it.

For example, Newsweek’s Robert Samuelson, last month declared flatly, “The impending bulge of baby-boom retirees presents no good choices.” With Medicare and Social Security spending obligations already locked in, Samuelson wrote, we’re facing “a huge transfer of income from younger workers to older retirees.” The logical conclusion: “Generational tension, and maybe generational war, is an inevitable part of the Age of Obama.”

The response came quickly. “Social Security doesn't need reforming,” Dean Baker of the Center for Economic and Policy Research argued last week on Huffington Post. Baker cites a Congressional Budget Office report that he says demonstrates Social Security “can pay all promised benefits for the next 40 years with no changes whatsoever.”

Baker was delivering a preemptive strike in advance of President Obama’s summit, calling to the barricades baby boomers on the eve of retirement who have been hit hard by plunging home prices and 401(k) balances. “The vast majority of baby boomers will be approaching retirement with little other than their Social Security and Medicare to support them,” Baker concluded. “And now President Obama is apparently prepared to appoint a commission that will attack these only remaining pillars of support.”

There’s some truth in both positions. But neither camp offers what Miller would call a “destined idea” with the power to replace today’s dead ideas.

“People don’t appreciate that as bad as the deficit is now - $1.8 trillion is like the low-end for this year - the budget situation is only going to get much worse because we’re doubling the number of people on Social Security and Medicare,” Miller told me.

“The crunch this is going to impose on health and pension costs is going to force us to revisit everything we do on social policy,” he went on. “If the debate seems a little unreal now, the press of events is going to force much bigger change in all of these things.”

With more than $40 trillion (some estimates are as high as $100 trillion) in health and pension commitments that have no current source of funding, those costs will crowd out other spending, from schools to science to homeland security, Miller writes in the book. Government won’t be able to broaden its safety net even as corporate America withdraws its own. “Will it simply abandon these vital functions? If not, how will it cope without raising taxes to levels that wreck economic growth?”

Tyranny is light on the specific elements of Social Security reform. Still, the rough contours of a win-win approach are not hard to see. (Note: Reforming Social Security is the easy case in comparison to Medicare. But it can serve as the beta version, or pilot, for a new social compact that can lay the foundation for health care reform as well.)

The first element of the new social compact is that economic security is a vital precondition for the kind of confidence that supports social innovation. As Miller notes, downward mobility makes people less generous, and less willing to mess with resources to which they feel “entitled.” The broad social need for security in the face of rapid economic change applies to older adults no less so than to the rest of the population. Among other things, this means strong protection of a true safety net for the disabled, the frail and the otherwise disadvantaged.

Second, the key to both national fiscal health and personal financial security is longer working lives. Nearly all financial planners and retirement experts agree that this is the single most effective way to assure that financial assets last through the end of increasingly long lives.

“The key point about working longer is that you don’t touch your 401(k) or Social Security until later, so those sources will give you a higher benefit,” says Steven Sass, coauthor of Working Longer: The Solution to the Retirement Income Challenge. Deferring the drawdown of retirement assets by four years increases a person’s eventual monthly income – for life – by 33 percent, Sass says; an eight-year delay can produce a 75 percent monthly bonus.

As for the federal budget, a 2006 study by the Urban Institute found that if Americans worked five years longer than they currently do, their continued payroll and income tax payments would more than wipe out the projected Social Security shortfall in 2045.

But longer working lives need not mean an increase in Social Security’s “normal retirement age,” which would indeed hurt those who are not able to work. Americans’ average retirement age has been increasing for more than a decade and survey after survey shows many people actually want to work longer than their parents did, and even longer than they expected. The intrinsic satisfaction of work, the opportunity to make a social contribution and, of course, continued income turn out to be pretty good incentives for people to launch their encore careers. Voluntary measures and policy sweeteners could encourage this promising trend without damaging the safety net.

Miller says policymakers should seize on this behavioral and aspirational shift. “The fact that people have talent and capacity that they can still contribute – that 70 is the new 50 – is key to personal fulfillment and social contribution and part of managing the demographic wave.”

That suggests the third element: Marry Social Security to social renewal. Budget balancers should make common cause with the interest of aging baby boomers in giving back, and more broadly, leaving a better world for their children and grandchildren. For starters, that could double the dividend on many components of President Obama’s recovery plan, from the $100 billion investment in education to the $87 billion investment in green jobs to the need for financial counseling and planning for strapped homeowners. All could be turbocharged by a massive infusion of baby boomer time and talent.

By contributing program management, technical expertise, training and mentoring, baby boomers in such encore initiatives would expand opportunities for young people, not compete with them for limited funding. Such a growing pie highlights the fourth essential element of any Social Security reform: intergenerational partnership.

At a very practical level, baby boomers have a vested interest in the success of subsequent generations: it will primarily be younger workers who not only pay for their Social Security benefits, but buy their houses and sustain the economy. That reality will drive political shifts on a whole range of issues from education to immigration.

No doubt the two opposing camps will continue to do battle in the same old debate. But Miller and other innovative thinkers are pointing the way to a new way of thinking about the social contract.

As Abraham Lincoln said during another difficult period, “The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.”

Could it be destined that people who are willing, able and, indeed, eager are entitled to not just a check, but to a purposeful and meaningful job that leaves them, and the world, in a better place?