Since Social Security is considered the "third rail" of politics, our
new campaign on this subject has been placed on the Our Heresies page
on our website.
We're addressing this issue because of our concern about the following
questions:
- How can the Federal State balance the budget without addressing the
biggest deficit areas, Social Security and Medicare?
- How can we protect older Americans from the coming Social Security
funding gap?
- How can we protect young people from the huge taxes that will be
needed to close that gap?
Our answers . . .
DownsizeDC.org spent months studying the Social Security mess. It was
depressing. There is NO easy, painless way to fix the problem, but we
finally settled on the following goals:
- Protect those who depend on Social Security
- Reduce the scheme's liabilities
- Give future generations a better deal
When we say "depend" we're distinguishing between those who need
Social Security to survive, and those who don't. For instance, Warren
Buffet qualifies for Social Security, but he doesn't need it. It's
wrong to rob the young to pay his benefits. With these thoughts in
mind we propose four changes:
- Phase in a gradual increase in the retirement age (Retirement Age)
- Means-test Social Security benefits to pay less to those who have
other means of support (Means-test)
- Allow young Americans to keep some of their Social Security taxes
in return for forgoing future Social Security benefits (Partial
Opt-out)
- Reduce other federal spending in order to maintain Social Security
for those who depend on it, while improving the opt-out deal for young
people (Budget Cuts)
We settled on these four proposals because, sadly, there is no way to
give everyone exactly what the politicians promised them, and/or to
let young people completely out of Social Security.
Keeping all of the irresponsible promises the politicians made would
crush young people under the highest taxes that anyone has ever had to
pay. On the other hand...
if young people could opt-out entirely, there wouldn't be enough money
to pay benefits to those who depend on them.
Some organizations, like the Cato Institute, have advocated borrowing
in order to allow more young people to opt-out of Social Security. We
think this is a reasonable proposal. Young people would probably
benefit from paying off this increased debt instead of paying the
Social Security tax, but...
we have NOT advocated this approach here because of uncertainty about
the Federal State's future ability to borrow.
These factors are why we have limited our proposals the way we have,
but even our suggested changes will be hard to pass.
To be blunt, America's seniors are the biggest obstacle to preventing
disaster. They have blocked all attempts to fix the mess, simply out
of short-sighted, immature fear. Yes, that's a harsh statement, but we
think it has to be said, just as it was necessary for the young boy to
point out the emperor's nakedness in "The Emperor's New Clothes."
Here's the truth as we see it: No one wants to harm people who are dependent on Social Security. NO
ONE! In fact, the overwhelming majority of working Americans are
willing to sacrifice to protect vulnerable seniors. But fear
mongering, by con-artist politicians and AARP, constantly convinces
seniors to react to all talk of change with hysterical fear.
Seniors need to start playing the role of wise elders, instead of
hysterical children, and start supporting reasonable changes, rather
than blocking them. Otherwise:
- America will go bankrupt, like Greece . . .
- And when that happens real, deep, painful cuts will be FORCED on
America's seniors in the most inconvenient way at the most
inconvenient time.
In other words, seniors need to become the solution, instead of the
problem. They can do this by supporting the proposals we make here.
Let's consider each proposal in turn:
- Retirement Age: People are living longer and staying healthy
longer. Social Security must adjust to this reality. Phasing in a
higher retirement age will give people time to plan and harm no one
who is dependent on the system
- Means Test: This will impact no one who is dependent on Social
Security. It will only impact those who have independent means of
support
- Partial Opt-out: This can be structured to reduce Social Security's
future unfunded liabilities, while maintaining the revenue needed for
those who are dependent on the system
- Budget Cuts: Congress must start to set priorities and make
choices. Abiding by Constitutional limits on so-called discretionary
spending, as well as terminating our role as World Policeman, would be
very helpful
Objections?
Some will oppose raising the retirement age, because previous
generations got a better deal. This is a bad argument.
All Ponzi schemes give a better deal early on. That's how Ponzi frauds
work. This is what we must change. It isn't fair that the final
victims of the scheme should pay all the costs for mistakes made by
earlier generations.
Older generations had decades to force the politicians to reform the
system. Instead, they did nothing. Who should pay for this failing,
the older people who neglected their civic responsibilities, or the
blameless young?
Finally, the original retirement age was set at 65. That was the
average life expectancy when the scheme was created. Raising the
current retirement age to match current life expectancy merely
maintains the scheme's original design.
The same arguments apply to any objections about means-testing.
Some will also argue against allowing young people to opt out of the
system, for two reasons:
Reason #1:
Alternative forms of retirement savings are supposedly too
risky.
Social Security's multi-trillion dollar unfunded liabilities refute
this objection. Social Security is a Ponzi scheme. Nothing is riskier.
Ponzi schemes always collapse.
Reason #2:
Taxes from the young are needed to fund current benefits.
Sadly, this reality may limit the Social Security opt-out for the
young. But even a small opt-out is better than no opt-out! In
addition, the politicians could, and should, enhance the opt-out by
cutting other federal spending, and perhaps even by selling off
federal assets that serve no Constitutional purpose.
If you like these proposals, please use our Educate the Powerful
System to write Congress about them.
Jim Babka
President
DownsizeDC.org, Inc.
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2011 March 14
Posted by The Coffee Coaster™ w/approval of DDC
Downsize DC | Social Security | Cato Institute | National Debt
