Is Social Security’s Impending Doom a Myth?

A problem with Social Security? Who says? Michael Hiltzik of the Los Angeles Times says that rumors of fiscal problems with Social Security are a conservative trick. In fact, by his math, there is no better program out there.

Social Security is (ahem) “one of the few U.S. government programs that actually works as intended.” He explains that Social Security has been solvent since 1983, if you view it as a trust fund. All this talk of privatization is a myth perpetuated by the evil wealthy looking to skip out on paying payroll taxes.

To be fair, some of his explanations are correct: payroll tax, and not income tax, goes into paying for Social Security; further, payroll taxes are not intended (and legally and technically never supposed) to add to the deficit.

But Mr. Hiltzik—who, let’s face it—is an open and obvious liberal, fails to stop and ask the obvious question: why is a payroll tax a good idea at all? Why should we continue an entitlement program like this? Hiltzik, we assume will point out that had we privatized social security in some mutual fund, why…why, we would all be broke today! Except, that’s an obvious false choice. There are a plethora of savings and retirement plans out there with guaranteed income. What is the net difference, in theory, between Social Security and a basic annuity?

Of course, Hiltzik is really playing his liberal card: in case you missed it, Rep. Paul Ryan of Wisconsin has put together a fairly comprehensive government spending reform plan that, among numerous other things, attempts to reform and begin to phase out Social Security as another entitlement the federal government has no business or ethical cause to support. Liberal apologist Paul Krugman wrote a piece in the New York Times that Ryan’s whole Roadmap for America plan is a fraud. Rep. Ryan countered this attack in a brilliant response that exposes Krugman’s basic ignorance about government spending.

All this is consists of is Hiltzik attempting to assist his contemporary with an even bigger myth: that Social Security is the “third rail” of politics. But while Hiltzik does a reasonable job of explaining Social Security theory, meshed with other numbers, he does not address the bigger issue: why are the so-called wealthy paying into this system when they do not need to?

The Democrats’ picture of wealthy.   The IRS’s definition.

Hiltzik claims that Social Security is incredibly healthy as is, because Treasury bonds back the trust fund against loss. However, as a commentator to his opinion piece points out, who backs Treasury bills? Taxpayers, who pay the principal and interest on Social Security. And that of course means that it isn’t just the wealthy who pay for Social Security between sips of champagne flavored with $100 cigars, but shop owners, storekeepers, and anyone who employs people.

Much of Hiltzik’s math has been lifted wholesale from other, dated, anti-Bush sources (or so it seems—both probably take their talking points from some other anti-Bush source), but somehow they cannot steer around the same proposition: “Social security is not in dire peril! It is perfectly sustainable, and is not scheduled to use up most of its funds until 2053!”

That, by any sane measure, is not a sustainable system, guys. It does not matter when it goes broke; the problem is that it will. And if the best scenario is 2053? A good chunk of our workforce will be hit hard by that; in fact, if you were born in 1983 or later, you need to stop listening to would-be econ-math whizzes like this who lip-sync their talking points from other organizations, instead of noting what actuaries compute. The science, shall we say, is settled, no?

About The Czar of Muscovy

Божію Поспѣшествующею Милостію Мы, Дима Грозный Императоръ и Самодержецъ Всероссiйскiй, цѣсарь Московскiй. The Czar was born in the steppes of Russia in 1267, and was cheated out of total control of all Russia by upon the death of Boris Mikhailovich, who replaced Alexander Yaroslav Nevsky in 1263. However, in 1283, our Czar was passed over due to a clerical error and the rule of all Russia went to his second cousin Daniil (Даниил Александрович), whom Czar still resents. As a half-hearted apology, the Czar was awarded control over Muscovy, inconveniently located 5,000 miles away just outside Chicago. He now spends his time seething about this and writing about other stuff that bothers him.