Today that’s all askew. Most projections have Social Security going belly-up by 2020-2030. To keep it solvent, government leaders are going to have to address the problem, and yet they refuse to. Why? Because the AARP, lobby for seniors, recipients of social security and easily the nations most powerful voting block are holding a gun to their congressmen’s heads. Touch it and you can pack your bags for home, Senator. So they sit and watch it sink, like that scene from Titanic where the rich people who got on the rafts watched the ship slowly go down, refusing to go back for the drowning victims. The drowning victims here are you and I – the young workers. We keep giving these older people their checks, with more and more of them joining the party and less and less of us footing the bill all the time. The best part is that the bulk of today’s Social Security recipients can be divided into two camps – those who didn’t bother to save for retirement because they bought the government bill of goods that the “Mommy” state would take care of them forever, or those who did save adequately for their retirement, and don’t need their Social Security Check! Yes, we live in a Tax Culture, fat cat politicians and interest groups who gorge themselves blowing our money on wasteful pork spending. I could write every column about the evil of taxes. But the fact is, because of deductions and credits, the federal income tax isn’t even the biggest offender, it’s the social security payroll tax. Why? Not only does it stick us, but our employer must also match the contribution, and one could draw the conclusion that that money too is coming out of our pocket. AND FOR WHAT???
President Bush says he wants to take a portion of our Social Security portfolio and “privatize” it, that is, let us invest it in the market so that we get a better return. Putting it in a shoebox would give us about as good a return as we’re getting now, but I digress. The President’s words on the subject are encouraging if only because most Democrats pledge to leave it exactly as it is and not attempt to fix it at all. How can they even say that? I think it’s because they know that the seniors who they are appeasing will be dead by the time it goes bust. One thinks they’ll have to revise that school of thought sooner or later though. Bush’s “plan” is hardly better – he would have something like 2% of the total contribution available for investing. Big deal. His idea is little more than a token, he has no details worked out and even if he did he couldn’t get anything done. There’s an elephant in this room that no one wants to talk about.
As usual, I’ve got a recommendation. Let us opt out. Americans would have the option of signing a one-time waiver that would exempt us and our employers from paying Social Security tax, and thus we would never be able to draw social security benefits. With the money we saved, we could purchase affordable disability and life insurance (which most of us do anyway since we know Social Security would barely make a difference), and invest the rest in moderate-risk mutual funds. The rate of return would be tenfold what we would receive even with a solvent system that paid us what we are owed, let alone the fact that we aren’t getting any back anyway. The wealth created would be enormous; millions of retirements would be secured that don’t have that guarantee today.
Of course, opponents would argue that most people wouldn’t invest the money; they’ll opt out and spend it on daily living. That is true, and that is also a byproduct of the “Mommy State” which keeps Americans ignorant by not financially educating its citizens, relying on their ignorance to keep the State strong. A move to let us opt out of the system and give us control over our money would, in the short term, widen the gap between the rich and poor, the educated and uneducated. But as that trend grew more obvious, the financially illiterate would see the need to educate themselves and their children in a big hurry. As for those that don’t, well, that’s Social Darwinism for you.
I received my social security update statement in the mail recently. What a nice service that is – the updates by mail that is. “Dear taxpayer – here is a look it the meager amount of money you would receive, if in fact this system were still in place by the time you are eligible to receive it.” The statement broke out my contributions and how I much I could theoretically get, in a variety of ways. My favorite was if I became disabled today (a pleasant thought, thanks), I would receive not quite a quarter of my monthly paycheck. Well that would certainly make me feel better if I became disabled today. To be blunt, Social Security is a little more than a national joke. Instituted in the 1930s as a means to recovering from the Depression (and as an effort to move the U.S. toward socialism), Social Security was never intended to offer the level of support on which it is now depended. The idea, pay in while you work, retire and draw benefits until you die, was bad from the beginning, but has gotten worse as people live far longer than could ever have been imagined 70 years ago. Medical advancement has nearly doubled the life expectancy. When Social Security started, it was a good bet that men, the bulk of the work force at that time, would die before they retired, thus never drawing from the money pool. Money could be paid out to the few widows that lived a decade or so past their eligibility age. It gave citizens the feeling of a safety net without costing too much money.