Social Security Goes Broke

Social Security, and its cousin Medicare, are running out of money.  Its seems that, due to changing demographics and other factors, outlays are growing faster than revenues - and the problem is only getting worse.  Economists now say that by 2033, Social Security is doomed.  In this article, I talked about failing social systems in Europe.  Today let’s delve deeper in our American system.

Sing from the mountaintops the praises of Social Security!

Social Security is the Classic Example of a governmental program that, once people start using it, then it becomes engraved like concrete into the very DNA of our culture.  Its advocates ceaselessly praise its glories, singing from the mountaintops how wonderful it is, and how it has saved millions from poverty and ensured comfortable retirement for all. 

Of course one “solution” is to dig even deeper into taxpayers’ pockets.  After all, the US government is too small, and citizens are undertaxed, right?  That is the message your typical politician wants you to believe. 

Social Security is, pure and simple, a governmental system of wealth redistribution whereby bureaucrats coercively collect money from workers (and their employer) and then pay it back out based on age and/or disability.  Minus the government's rather hefty handling charges, of course.  It should have never seen the light of day.

Before I go any further, let me put forth this disclaimer:  I am a Social Security recipient. 

Now you may be thinking:  this blogger is a nutcase!  How can he be politically opposed to it, yet simultaneously be a recipient?  It's a fair question and I will answer.

Persuasion, government-style.

Understand, first, that political support - or the lack thereof - of any government program is not the same thing as utilizing it.  Social Security, like all such programs, relies on mandatory participation.  We citizens do not have a choice.  We must pay those FICA taxes, and if we don't, we will get a friendly visit from armed government enforcers who will use whatever physical force is necessary to persuade us to comply.

And so, after happily contributing to Social Security all these decades, I now can get on the receiving end.  I could, of course, say that it's all an evil, socialistic program financed with money stolen from innocent taxpayers.  It's blood money, and I will not have anything to do with it!  But that would accomplish nothing.  It is, after all, my money.  Take it or leave it, my actions would have zero effect on the system's continued existence.

It's no different from all the other services that government finances via taxes.  Transportation, for example, should be handled by the market, not the government.  But, I still drive my car on the tax-supported roads.  Ditto for the socialized government schools where I sent my kids, and the government-run fire department, who I will certainly call if my house catches fire.  I don't like that the government runs them, but I didn't have a choice when they taxed me to pay for them. 

However, advocating for or against government-run programs such as schools, roads, fire departments, or monetary benefits is a totally different animal.  Given the opportunity, I would definitely vote to abolish any one of them.

But if you have been paying attention, you should see that there is a Catch-22 here:  I, and the millions of Americans who receive SS benefits, paid into the system.  Like many, I paid dearly for many decades.  As mentioned earlier:  it's my money, and I expect to get something back for all that "investment".  The only thing worse than the government picking my pocket for some future benefit is the government picking my pocket and then reneging on the deal.

Cold turkey.

Thus Social Security cannot realistically be cut off cold turkey.  It must be phased out. Here's how to do it:

First, current beneficiaries will be paid their promised benefits until they die. 

Secondly, anyone not currently receiving benefits would be given a choice:  stay in, or drop out.  If they opt to stay in, then they pay the contribution taxes as usual.  But if they opt out, then they pay nothing, but receive no SS benefits, ever. 

Finally, this caveat: for all future beneficiaries, the system must be self-sustaining.  All benefits must be fully paid by SS contributions.  If too many people do indeed opt out, then the premiums will need to be raised sufficiently to cover all costs.  Oldsters close to retirement must weigh the financial pros and cons and decide if it's worth it to stay in.  But for youngsters with a long way to go and possibly facing huge tax premiums, opting out might be the clear winner.

The above scenario introduces a strange, bizarre concept: choice.  Image that!  The United States of America, the Land Of The Free, giving its citizens a choice over something, in this case how to finance their retirement.  Americans could then shop around amongst investment plans, and find the one that gives the biggest bang for the buck. 

I can hear the screams of agony now, crying out:  "But we cannot do that!  If we give people a choice regarding paying SS taxes, none will, and the program will die!"

Hold on there - a minute ago, all you advocates were singing from mountaintops or something about how great and wonderful SS is.  Now you're flipping around 180 degrees and saying that, given the choice, everyone would opt out?  Which is it?  Is SS a good thing, or a bad thing?  If it really is that great, then no one will opt out.  Or are you admitting that the only reason it survives is thru coercion at the hands of armed government goons?

The SS advocates will probably come back with some argument like:  "But people are not responsible!  They won't properly invest for their retirement.  We, the all-knowing, all-caring gods of government must force them to join our program.  It's for their own good!"

Admittedly, the first part of that sentence is true - for some.  There are people who don't do the right things.  They don't eat healthy food, they don't work hard in school, they drink and smoke and cheat on their spouses, and do all sorts of stupid, irresponsible things.  But the purpose of government is not to ban stupidity.  It doesn't work.  And government ain't so smart, anyway.

Meanwhile, most people are pretty smart.  Given the opportunity, they'll invest wisely, instead of letting government dump their money into some bottomless pit Ponzi scheme. 

We don’t need a government nanny.

Besides, I’m a big boy now.  I can cross the street all by myself without somebody holding my hand.  And I can make my own financial investment decisions without a government nanny.

And by the way, don't expect a Republican to offer any kind of intelligent plan like what I have just outlined above.  Yes they talk about "smaller, more efficient government", but talking and actually doing are not the same thing.