The Social Security “Crisis”

Watch– I can reform food into poop!

There are a lot of really, really ignorant people in this country. It’s no regular ignorance, either– it’s a very rabid anti-intellectual ignorance that flings itself full-force into combat against any clarifying information. It hates informed experience and abhors expert advice and insight. It is lulled by false promises of shiny objects and pacified by biased exaggerations of potential doom and benefit. And the proponents of Social Security privatization are wielding this ignorance like a victory sword.

I’m still somehow surprised at how oblivious people are to the irony of their own hypocrisy. They buy new ideas for “fixing” the supposed “problems” from the same people they claim created the problems in the first place. For this, these people are stupid. There’s no other word for it.

Now we have a bunch of morons running around spouting refined shitheadedness, with phrases like “Social Security is just a chest full of IOU’s” and “the system is broken because we’re paying in more than we’re getting back!” Boy, I sure am glad we have all these geniuses around to do all of our rocket science for us.

There’s so much stupidity to address with this “Social Security Crisis” that I’m not sure there’s even a good place to begin. I guess I’ll start with the aforementioned “IOU” thing. Question: do you have any cash on you? A credit card, maybe? Checks? Yeah, I thought you might. Not gold, though, right? Silver? Parcels of land? Right. That’s because our entire economy functions on and revolves around IOU’s. Cash? It’s a note– look at it, it says it right on it. The only thing that gives that note any value at all is the mass willingness to honor it as though it’s representative of something of actual value. It’s a fucking SLIP of PAPER, okay? I don’t see any pixie dust that magically makes it anything else. It’s kind of a collective IOU that’s issued by the government. Checks? They, too, are paper, in case you haven’t noticed. “I owe you fifty dollars. Redeem at any bank that will honor this as representative of the indicated amount of value from my account.” Credit cards? Just IOU’s with interest. It’s all IOU’s, dammit.

“But wait,” you say, “the system is still fucked up if we’re paying in more than we’re getting out of it!” No it’s not, actually. See, there was a “baby boom” just shy of sixty years ago, and at some point, all of these people are going to be latching on to the silken teat of Social Security. It’s the “pig in the snake”, as some call it (i.e. Think of a snake that’s just eaten a whole pig, and watch as it moves along through the digestive system), the danger of which has been severely exaggerated. Of course, not all of our elected representatives are total ass-heads, so in the early 1980’s, they passed legislation (developed in part by Alan Greenspan) to increase payroll taxes in order to accumulate a Social Security trust fund. In the time since, people have been paying slightly more in payroll taxes, and the money has been put into government bonds (one of the *ahem* most stable kinds of investments, but we’ll get to this in a second). When the baby boomers start their tsunami of retirement, the system will be paying out more than it’s taking in. This is hilarious, by the way, because the proponents of Social Security privatization have been using both “it’s taking in more than it’s giving out” and “it’ll be giving out more than it’ll be taking in” as arguments for “reform”. These arguments, um, cancel each other out. More goes in earlier in order to build a surplus before the baby boomers start retiring, and then the surplus gets spent later, after the retiring commences. It’s really not that fucking complicated, here, people. Let’s start using our brains instead of just finding an open notch in the gears of Fox News and connecting our mental machinery to it.

There’s a lot of confusion about how the Social Security system works, especially in terms of the aforementioned surplus. Allow me to clarify: The money you are paying right now will go directly to people on retirement, save for the extra bit going into the surplus that will be used to counter the baby boomer retirement. It is not going into a savings account for you, to sit and accumulate the entirety of your payments until you retire. When you’re retired, the people who are employed at that time will be paying for your Social Security. You won’t be getting the money that you paid in, you’ll be getting the money that’s being paid in by the younger people who are working and paying into FICA.

This creates a problem for any plans of privatization. If the money that you’re paying into the system is taken away, then people who are retired, or have been paying into the system and are on the verge of retirement, or whatever, won’t be getting any Social Security benefits. It’ll just stop. It’s not like they have all these accounts that they’ve been paying into, and the government will go “here, have your money back in one chunk and invest it in the stock market”. If you don’t pay in, they don’t get shit. Got it? If the Bush administration’s privatization plans are adopted, Social Security won’t start running out of money in 2051 as predicted (in which case, of course, it will still be able to pay 80% of benefits), it will run out in 2006. If you’re getting 2/3 of what you’re supposed to be paying into Social Security back, what, exactly, do you THINK is going to happen?

And if you think that you’re going to be able to just take your money and invest it wherever you want, you’re wrong. The government CHOOSES where you’ll be able to invest. You’ll still have choice, on some level, but it won’t be “HERE GUYS, HAVE SOME MONEY AND DO WHATEVER YOU WANT WITH IT!”

Back to investing. I mentioned above that the Social Security money is currently invested in the government. It’s one of the most stable investments available. If the U.S. government becomes unable to pay back bonds, your retirement is going to be the least of your fucking worries, let me assure you. And do you really think that if the U.S. government is doing that shittily, the stocks they’re going to be letting you choose will be making massive gains?

Ever stop to consider investment fees? The government won’t be paying them, or if they do, it’ll be with a portion of whatever you’re supposed to be “getting back”. In all the other places they’ve tried privatization, brokers have been raping people with investment fees. Think it’ll be any different here? That our government with this administration won’t manipulate things to benefit its big business friends? One word for you: Halliburton.

Yes, Social Security is in peril, but not because of inherent instability. The danger it faces is “reform”, which, for anyone who hasn’t been paying attention to the last century, is the attempt at manifestation of over half a century of resentment and anger by the republican party toward anything remotely close to socialist ideas. They abhor the New Deal because they hate the idea of “losing money” for programs from which they perceive they don’t directly benefit. Why pay for public transportation if you have your own Hummer Limo Monstrosity and driver?

I’m sure this is an issue that won’t be dying anytime soon, so I’m going to save some of this for later. In the meantime, I encourage you to start reading articles by Paul Krugman. You can find some over at The New York Times (it’s free to register for an account), but you have to pay to get older material from the archives. Google for caches/mirrors/syndicated runs of his column, if you can find them. You can also buy a copy of his book, “The Great Unraveling”. Trust me, you don’t win the John Bates Clark Medal for “economist under forty years of age” for nothing. This guy knows what he’s talking about.

4 thoughts on “The Social Security “Crisis””

  1. “But wait,” you say, “the system is still fucked up if we’re paying in more than we’re getting out of it!” No it’s not, actually. See, there was a “baby boom” just shy of sixty years ago, and at some point, all of these people are going to be latching on to the silken teat of Social Security. It’s the “pig in the snake", as some call it (i.e. Think of a snake that’s just eaten a whole pig, and watch as it moves along through the digestive system), the danger of which has been severely exaggerated. Of course, not all of our elected representatives are total ass-heads, so in the early 1980’s, they passed legislation (developed in part by Alan Greenspan) to increase payroll taxes in order to accumulate a Social Security trust fund. In the time since, people have been paying slightly more in payroll taxes, and the money has been put into government bonds (one of the *ahem* most stable kinds of investments, but we’ll get to this in a second). When the baby boomers start their tsunami of retirement, the system will be paying out more than it’s taking in. This is hilarious, by the way, because the proponents of Social Security privatization have been using both “it’s taking in more than it’s giving out” and “it’ll be giving out more than it’ll be taking in” as arguments for “reform". These arguments, um, cancel each other out. More goes in earlier in order to build a surplus before the baby boomers start retiring, and then the surplus gets spent later, after the retiring commences. It’s really not that fucking complicated, here, people. Let’s start using our brains instead of just finding an open notch in the gears of Fox News and connecting our mental machinery to it.

    So many errors, where to begin…

    First off – actually, if we are paying more than we are getting back, it IS fucked up, no? Please please please look at social security in the form of past, present, and future. I think everyone understands that what you pay in goes out to pay those that are on collecting, but lets look at it in a bigger perspective. You talk about the baby boomers, and since there are so many of them going to be collecting, more will be going out. Well, I assume that since when the baby boomers were working, and there weren’t that many collecting since the baby boomers were so numerous, that they collected a huge amount of money in order to be able to pay for the baby boomers. Right? Oh wait, no, that money is gone. Damn.

    Lets look at it this way. Generation 1 goes through, puts in say X amount of dollars, do they collect more than X or less than X? Generation 2 goes through and pays Y amount of dollars. Do they collect more than Y or less than Y? Lets assume Generation 1 is the baby boomers. How much did they put in, and how much will they collect? Will they collect more than they put in? You realize that a person born today will put in 7 times the amount that they will collect. If that happened for every generation, WHERE THE FUCK IS THE MONEY GOING? So I assume that the baby boomers put in LESS money than they are going to collect, or they put in the same or more money than they will collect, but that money was lost somewhere. In either case, something is fucked up. If they put in less than they will collect, fuck them, they get capped at what they put in, or they can work longer in order to pay their share. (Before you go all apeshit and say ‘but the baby boomers were paying for their parents blah blah liberal rant blah, let me cut you off and say I understand that, but my point is that some generation is going to get fucked over if one puts in less than they collect, no matter where the physical money flows).

    Lets look at this quote:

    This is hilarious, by the way, because the proponents of Social Security privatization have been using both “it’s taking in more than it’s giving out” and “it’ll be giving out more than it’ll be taking in” as arguments for “reform". These arguments, um, cancel each other out.

    Now, do you see how you failed to understand the argument? The first statement is ‘It is taking in more from A PERSON than it will give out to A PERSON.’ Basically, I will pay $100,000 in social security tax, yet only collect $10,000. The second is saying ‘At this present time, it is giving out more than it is collecting AS A WHOLE.’ So no, they don’t cancel. Basically, the baby boomers failed to put enough money into social security, but expect to collect a full amount. Fuck them, they didn’t pay their share, they can work till they are 75.

    Please Josh, try to understand the arguments before you try to argue against them.

  2. No, no, no. You missed the point. (Referring to your last paragraph.) One of the arguments I’ve been hearing is that right now, the program is building a surplus, and in the future, it won’t be taking in as much as it’s putting out. You’re confusing one argument with another, or trying to make what I said argue a different, similar point. I was clearly referring to the program income/outflow in general, not to the difference between what an individual will pay into the system and what they’ll get out of it.

    And baby boomers didn’t start retiring in the early 1980’s, when they upped the amount people were paying into the system. Most of them HAVE been paying that extra amount into the system over the last twenty years to build the surplus. And the surplus isn’t gone, it’s in government bonds. It’s entirely separate from the government’s general funds.

    So, what, do we tell all these people who have been paying into the system their whole lives, and have been paying even more into it for the last twenty years to cover the difference, “fuck you, you get nothing, we’re going to give all the Social Security money to people who are currently working so that they can gamble it on the stock market”?

    And even then, the government is still not going to trust you enough to let you just invest in whatever you want, or sock it away under a bed, or bet it on a horse. THEY will tell you what you can invest in. So you’ll have just about the same amount of participation and control, but you’ll just be paying investment fees. I know that’s where I want my retirement going– investment fees.

    And look at how financially irresponsible people are. Do you really think that if we went with a total “here, take your money, we’re eliminating Social Security and you can invest it however you want” that most people would actually invest it all in a responsible fashion? I don’t know, there are a lot of Americans with massive chunks of debt, or people who would like to send their children to college, and after all of life’s expenses, they’d have nothing. At least with Social Security, they’re forced to set up SOME level of retirement.

    How about supplemental investment? As far as many are concerned, Social Security was never intended to be a massive retirement package. It just helps people get by if they can’t work, or if they’re too old to work. How much have you invested or saved? That concerned over retirement? Don’t buy so many computer parts, or opt for the less expensive ones, and stick some of that money in “stable” stocks. People bitch about how they want privatized Social Security, but I don’t see very many of them taking the initiative to invest any of what they currently have. Play the stock market a little! Go for it! Win big! If you can make millions with the money you’d be getting back from what you paid into Social Security, you can make millions with any other money, too.

    I’m not saying it isn’t a flawed system, but it’s certainly better than what they’re proposing. It DOES need some fixing, but not like this.

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