President Clinton wants to use federal budget surpluses to “save Social Security first.” It’s politically inspired gobbledygook. Informed Americans now understand that Social Security is “pay as you go,” but most take this to mean that current payroll taxes provide benefits for current retirees, while tomorrow’s payroll taxes will support tomorrow’s retirees. In fact, however, current “Social Security” taxes go not only for current benefits, but for fighter planes, education, and everything else the government buys.
Social Security is not a retirement program of the “pay as you go” or any other variety, but an income redistribution program. No individual can contribute to his or her own Social Security. There are no individual Social Security accounts. Each year, a portion of working Americans’ incomes is transferred to senior citizens. While an individual’s Social Security benefit is related to his or her earnings history, the relation is not directly proportional. In contrast to retirement programs in which we typically provide for our own futures according to our own means, active adults transfer disproportionately higher Social Security payments to seniors who, when working, earned lower incomes.
Largely because of Social Security, senior-citizen poverty has declined from 50 percent in 1935 to 11 percent today. (Without Social Security, today’s rate would be 47 percent). We do this because, as a society, we believe that active adults should take responsibility for supporting our elders. We could also properly think of Social Security simply as a current spending program in which we collectively purchase goods and services that seniors need for their support, much as we collectively construct highways or operate an army.
Social Security is no different conceptually from public education, where a portion of working Americans’ incomes is transferred to youths who are not yet working. (A small difference is that, for youth, we transfer income in the form of services—instruction—whereas, for seniors, we transfer income directly and allow them to purchase goods and services they need with these redistributed funds.) No active adult’s taxes go toward his own support when he becomes elderly, any more than an active adult’s taxes go toward his own education when he was young. We depend on contemporary adults to educate us when we are young, and we depend on contemporary adults to feed and house us when we are old.
For political reasons, an elaborate architecture of smoke and mirrors has been constructed to obfuscate these simple realities. As a result, Social Security enjoys the political support not only of seniors but of active workers, who foolishly believe their taxes go for their own retirement, not for today’s elderly. This raises interesting questions about public morality—that liberals knowingly perpetuate mythology because it helps preserve a liberal program. For the pre...
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