Is Social Security Beyond Redemption?

Of course, I’m not an economist but people who are economists share my belief that the Social Security system in this country is beyond redemption:

Readers of this column who pay income taxes should brace themselves for the substantial new taxes that they will soon be paying to bail out a Social Security system whose cupboard is already bare – a Ponzi Scheme whose Trust Fund is full of Treasury IOUs instead of invested monies from past payroll taxes.

The politics of entitlement is very ugly. Politicians simply cannot keep their thieving hands out of an apparently limitless money jar. Addicted as they are to the jar’s contents, they ruthlessly renege on contracts when the jar runs empty.

And of course, politicians are above the law. They cannot be sued in the courts for breach of the Social Security contract.

By the time I get to the retirement age, there will be nothing whatsoever left in the Social Security Trust Fund, so I’m not even taking it into consideration as a hypothetical for the time when I retire.

Once again, if you have better news for me, feel free to share. As you have probably noticed, I always try to see the positive side of every development (see here, for example), but I can’t see my way past the realization that Social Security is dead and gone.

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26 responses to “Is Social Security Beyond Redemption?”

David Bellamy

February 28, 2012

Social Security works perfectly well, although there need to be further upward tweaks to the retirement age. It was a dangerous travesty to reduce the payroll tax recently, since this money does need ot be made up for. The idea that Social Security is a Ponzi scheme is just conservative propaganda. It has worked well for decades, and it is not significantly different from people taking care of the elders in their own family, except that it is on a larger scale so that fewer people fall through the cracks. People taking care of elders and in return being taken care of in their old age has been successfully practiced for all of human history; it is just necessary to redefine what “elderly” means from time to time, as life expectancy changes.

The idea that the “politics of entitlement” as applied to Social Security is “ugly” is the invention of a bizarre mind. The difference is only that someone who grows old without living children will still be taken care of, and not left to starve in the streets, because the process is standardized.

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bloggerclarissa

February 28, 2012

Isn’t it true that the social security trust fund has been emptied, though? I don;t need convincing that society is obligated to take care of the elderly. The plight of the lonely elderly people touches me like few other things. But the question is not whether this needs to be done (obviously, it does.) The question is whether there is any money left in the SS system.

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1. Culture Club
  
  February 28, 2012
  
  It’s on loan to the US government, The Clinton budget surpluses together with a small increase in the retirement age would have easily replenished. Until Bush gave tax cuts to the richest people in America. You got that right, we are using your retirement monies to pay for tax cuts to the rich.
  
  Now tell me, what is the way to fix that? for you to forego your retirement check or for the Bush tax breaks to be rolled back?
  
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  1. bloggerclarissa
    
    February 28, 2012
    
    “for you to forego your retirement check or for the Bush tax breaks to be rolled back?”
    
    – I don’t think this will be enough to replenish what has been “borrowed” from the Social Security fund up to this point. The contribution of those tax cuts to the current financial issues is not that huge compared to the cost of the ruinous wars this country has been waging. That’s the black hole where the money goes.
    
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2. Culture Club
  
  February 28, 2012
  
  There would have been more than enough, according to no less that Alan Greenspan who is no leftie. That was the entire premise for his to support for the Bush tax cuts “that tax cuts were needed to prevent excessive budget surpluses”.
  
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  1. bloggerclarissa
    
    February 28, 2012
    
    “There would have been more than enough, according to no less that Alan Greenspan who is no leftie. ”
    
    – I’m sorry, but I don’t believe a single word coming out of this lying scumbag’s mouth. I just don;t see how those tax cuts could have created this huge a default.
    
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3. Culture Club
  
  February 28, 2012
  
  I just don;t see how those tax cuts could have created this huge a default.
  
  “According to a recent C.B.O. report, the Bush tax cuts reduced revenue by at least $2.9 trillion below what it otherwise would have been between 2001 and 2011.”
  
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Lori

February 29, 2012

I see later retirement age as a lesser evil than lower benefits or higher SS tax, but am concerned about age discrimination in the workplace. Raising of SS retirement age should be package-dealed with stronger recourse for age discrimination. Yet another reason we need more and better (i.e. more assertive) Democrats.

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1. bloggerclarissa
  
  February 29, 2012
  
  “I see later retirement age as a lesser evil than lower benefits or higher SS tax, but am concerned about age discrimination in the workplace. ”
  
  – This is a very important point. Who will hire a 68-year-old into a low-paying job, anyways? These are jobs that discriminate the most.
  
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David Bellamy

February 28, 2012

I should probably mention that I have a FSA (Fellow of the Society of Actuaries) friend who says that if the retirement age were raised to 70 for everyone, Social Security would be solvent for as far as anyone can make reliable predictions, at least into the 22nd century.

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GudEnuf

February 28, 2012

Social security effectively places young people in a higher tax bracket than old people. For old people, that 7.5% of your paycheck is an investment. For young people it’s a tax. A young person who earns $40,000/yr is effectively paying the same tax rate as an old person who earns $350,000/yr.

I want to move to Australia. Instead of TAKING OUT 7.5% of your paycheck for social security, they ADD ON an extra 9% to your paycheck and put it in a retirement account. The money in that account is yours; they don’t give it away to old people. The money just sits in your account earning interest until you are ready to retire.

If you earn $100 in the United States, your employer takes out $7.5 and gives it to social security. So your paycheck is reduced to $92.5 (before income taxes).

If you earn $100 in Australia, your employer doesn’t take anything out of your paycheck and you get the whole $100 (before income taxes). On top of that, your employer puts an extra $9 in a retirement account for you.So you’ll be $16.5 richer if you earn $100 in Australia than in the US.

So yeah, Social Security kind of sucks.

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David Bellamy

February 28, 2012

There is a lot of miney there, in the form of U. S Treasury notes. The payroll tax has been too large for decades, so that a surplus was built up. Prior to the Payroll tax cut last year, there was enough to pay all benefits until sometime around 2037, if I remember correctly, and 77% of benefits thereafter. But, the payroll tax cut has weakened the system, and will need to corrected for. The obvious possibility is to take the ceiling off of wages subject to the tax. This is not the only option, but it is a good one, in my opinion.

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David Bellamy

February 28, 2012

‘money’, not ‘miney’

Sorry.

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Isabel

February 28, 2012

“Politicians simply cannot keep their thieving hands out of an apparently limitless money jar. ”

We have to focus on the problem. How can we rid our government of rampant corruption?

It wasn’t always run by lobbyists, for example. It isn’t some kind of natural law. At the very least we should be constantly exposing and fighting it, not passively accepting it.

Man, the things we accept as normal drive me up the wall.

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Evelina Anville

February 28, 2012

I could be wrong. But my understanding is that SS is currently paying for itself. My understanding is that there may be a problem with SS in the nearish future. And even then there wouldn’t be a prolbem with SS at all, if the US government paid back the money it borrowed from SS. My understanding is that SS had a surplus for so long that the the feds started moving money around and never replaced the surplus that was removed. I could be misunderstanding the situation though. So if the government merely replaced what they took out and changed nothing, not even the retirement age, SS would be solvent for many years to come. Again, I could be confused here but that is my understanding. The notion that SS is broke is a conservative myth so that people are more willing to accept the privitization of a vital federal program.

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bloggerclarissa

February 28, 2012

No, I think you are right. I see it the same way. But the problem is, as I understand, is that nobody is putting any money back into it and there is currently no actual way to replenish the trust fund with anything but those IOUs.

Norway, for example, refuses to touch its retirement fund no matter what happens. Here, however, politicians started playing with this money because it just sat there and they couldn’t leave it alone.

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1. Lori
  
  February 29, 2012
  
  Norway is a petro-state, and can afford not to touch her retirement fund, because she has a Sovereign Wealth Fund.
  
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Geo

February 28, 2012

(I worked for the Social Security Administration from 1973-1980 and 1980-1992.) I think that Social Security has some very, very important values for many, while Not being what others may expect of it. It is “grossly unfair” (in a sense) for the individual who doesn’t marry/have minor children and works regularly and dies before receiving benefits – getting nothing out of the system while paying a fair amount into it. It is an Incredible help for a surviving parent of young children – who’s spouse may have worked only a few years until their death in their 20’s or 30’s – and paid in a relatively small total amount and got a lot out of the system. IF you either work until a retirement age or become disabled for over a year it may give you a moderate amount of money relative to what you put into the system (particularly if you live to a “ripe old age”). You Should Not presume that you will be able to live in the US with Social Security as most or all of your income. The system needs tweaking – but can be moderately progressive and help a tremendous amount of people. Privatization Schemes and talk of eliminating Social Security seem to me to favor primarily Rich People and is unrealistic, particularly for people who work and do Not earn enough money to save a lot while working or otherwise don’t do it. Thanks!

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NancyP

February 28, 2012

SS needs restructuring to accommodate the increased longevity after retirement. The age at first SS access needs to be raised (and is being raised incrementally), but the unpopular bit is that it needs to be raised to 70 years of age. SS was meant to prevent the former worker with few assets (near-poverty level) from falling into actual poverty upon retirement (voluntary or involuntary). The overall increased level of health in the 60 to 70 year old cohort makes raising the SS access age feasible and sensible, at least for those with physically non-demanding jobs. Frankly, if the anti-immigrationists get their way, the country will need all those 65 year old people working.

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bloggerclarissa

February 28, 2012

I have a feeling that people read the title of the post but don’t read the post itself. Why am I getting all these comments explaining to me that the Social Security system is necessary? I know it’s necessary. It’s crucial, foundational, central.

Don’t lay this at my door, folks, because I’m not the one who spent the money that was in the SS Trust Fund. I didn’t even vote for the politicians who did. I’m just making an observation that the Trust Fund is empty. I don’t celebrate it. I just mention it.

Alternatively, we can all pretend that this is not happening.

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the twisted spinster

February 29, 2012

How dare you want your money to be paid to you at the appointed time as promised. Don’t you know that makes you an entitled lazy parasitical welfare queen? It’s your fault you let them take SS funds out of your paycheck (even though there is no way to op out of it, you should have thrown a copy of Atlas Shrugged at the local IRS building or something.

(Yes, I’ve had as much said to me when I complained that I’d been having Social Security taken out of my paychecks since 1980 and they can very damn well find my money and pay me. Hold some of those congresspersons upside down and shake out their pockets, I don’t care.)

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February 29, 2012

I think the “emptiness” is propaganda. Here’s a decent (not great) short piece on it. http://www.cbsnews.com/8301-505146_162-39942944/the-social-security-trust-fund-myth/

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bloggerclarissa

March 1, 2012

I think that I might be getting blind-sided by how much this situation reminds me of what happened in my country in 1990 when all of the pensions and savings disappeared overnight. So it’s possible that I’m bringing that extraneous trauma to a very different situation.

I hope that is the case.

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March 1, 2012

No, this isn’t that. In US conservatives always claim Social Security isn’t solvent, etc. etc. – I’ve been hearing it all my life. Black people are lazy criminals, social security isn’t solvent, women are too lascivious, global warming isn’t real, etc., etc. – those are some of the right wing standard speeches.

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bloggerclarissa

March 1, 2012

OK, so this is why I’m not recognizing this: I’m a recent arrival, so I never heard it before. I now get it. Thank you!!

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bloggerclarissa

March 1, 2012

I don’t know about the federal government, but a senior colleague told me today that the state government is trying to cut down on the pensions, cheating people who have worked for the state public education system for decades out of what they are due. The state is also trying to remove the tuition waivers for the children of public school professors. 😦 😦

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