Social Security: Fun and games until someone loses an IOU
Published 9:14 am Wednesday, July 26, 2023
By Thomas L. Knapp
“Three of Donald Trump’s rivals for the 2024 GOP presidential nomination,” Jeff Stein reports at the Washington Post, “are pushing for cuts to Social Security benefits that would only affect younger Americans.”
With the first Republican primary debate approaching, the nomination contest is a two-way race between former president Donald Trump (far ahead) and everyone else (far behind). It’s Big Idea time in that trailing pack, with every candidate casting about for some kind of policy proposal that might help him or her close the distance.
Ron DeSantis, Mike Pence, and Nikki Haley aren’t really doing Big Idea Time stuff here. A Big Idea needs to be unique to a candidate. Three people saying the same thing (keep the checks coming to retirees, promise younger people fewer future benefits) isn’t a Big Idea. It’s the collective moan of runners who are out of breath and limping.
The last Big Idea on Social Security came in 2016 from Chris Christie. It didn’t help him because no one was really listening to anyone but Donald Trump, but at least it seemed actuarially sound from the standpoint of “saving” Social Security.
Raise the retirement age by one week per year, he said, so that nobody’s retirement age gets pushed WAY back; and means-test benefits such that people don’t get benefit checks while still earning more than $200,000 per year.
“Keep those checks coming to old people and tell young people they’re gonna get screwed” is not only not a Big Idea, it’s pretty much electoral suicide. Yes, older people vote at higher rates than younger people, but throwing either group under the bus is a great way to get dragged under that bus with and by them.
For the original Big Idea on Social Security, let’s consult the program’s founding father, Franklin Delano Roosevelt.
“It is proposed,” FDR wrote in a 1935 message to Congress, “that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans.”
“Social Security” should, per FDR, have served a short-term purpose then disappeared as personal, private sector retirement accounts took its place.
Instead, Congress spent all the money it took in Social Security taxes and then some, financing benefits for retirees with the taxes paid by younger workers, even as the former population grew faster than the latter. We have a name for that practice: “Ponzi Scheme.” Like all Ponzi Schemes, Social Security will, at some point, collapse into bankruptcy.
Nor, whatever you may have been led to believe, are you “owed” benefits. “The non contractual interest of an employee covered by the Act,” the Supreme Court ruled in Flemming v. Nestor (1960), “cannot be soundly analogized to that of the holder of an annuity, whose right to benefits are based on his contractual premium payments.” In short, there’s no actual government IOU to U.
Any truly Big Idea on Social Security will necessarily involve winding it down and closing it out with the minimum possible damage to its victims.
Thomas L. Knapp is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism. Write to him at thegarrisoncenter.org