I was cleaning out the message files in my cell phone this morning and came upon a series of messages I had received on Friday concerning former Sen. Alan Simpson's remarks about Social Security. For those who do not know whereof I write, he is reported to have made offensive remarks in an email to the Executive Director of the Older Women's League, including a comparison of Social Security to "a milk cow with 310 million tits," and the suggesstion that she call him when she got an honest job. While I find Mr. Simpson's remarks more appropriate for a Howard Stern or Dice Clay monologue and believe he probably ought to resign as Co-Chair of the National Commission on Fiscal Responsibility and Reform, I must say there is merit in the underlying frustration with the mentality of many Social Security beneficiaries that he so crudely expressed.
One of the most frequent comments one hears concerning Social Security from current or future beneficiaries is, "I paid for it and I deserve to get what I paid for." Taken at face value, there is nothing with which I can disagree in that statement. What it ignores is the fact that most retirees receive many times their personal contributions, plus interest, over their remaining lifetimes after retirement, which means they are living free off of others who are still working. I do not have the particular numbers for Social Security, but I doubt they are much different from the SC Police Retirement System, of which I am a current beneficiary. I have been retired two years and have already received more than half the total contributions made by my former employer and me plus all the accrued interest. If I live past age 59, and I think I probably shall, other law enforcement personnel will be supporting me for the rest of my life.
Is that unfair? Not necessarily -- I worked to support other retirees and was glad to do it, knowing that my time would come. What is unfair and unreasonable is to expect the system to continue without modifications (other than those that would be to the advantage of its beneficiaries). In particular, three changes I think should be considered reasonable under certain circumstances are an increase of payroll taxes, indexing benefits negatively to other retirement income and increasing the retirement age, in that order.
Currently, Social Security payroll taxes (FICA) are taken only from the first $106,000 of earned income each year. Employers must match those withholdings. My first suggestion to make Social Security more financially stable is taxing 100% of earned income at the current rate, with a possible exemption on matching contributions above a certain level for employers whose ability to stay in business might be jeopardized by the increased tax. Of course, people in the highest income brackets would be less likely to get back all they had put in, but all insurance plans are based on the assumption that the total premiums paid in will exceed the total benefits paid out. Social Security is insurance against homelessness and starvation in old age.
My second suggestion is aimed at Mr. Simpson's "greedy geezers," the wealthy retired who continue to draw their Social Security because they think they earned it or just because they can. Ronald Reagan drew his full benefit for the last five years of his Presidency because he was over the age of 72. Can you imagine an auto insurance company refunding all your premiums every year you do not file a claim? That company would not exist long, unless it got federal bailouts. Social Security benefits should be phased out as income from other sources, earned and unearned, increases. They should also be phased out for retirees who are sitting on assets they could be using to support themselves in old age. The idea that a Bill Gates or George Soros should ever collect a dime from Social Security is so ludicrous as not to merit comment.
My final suggestion seems to be the most inflammatory, but for the life of me I do not understand why. When Social Security was created in 1935, few people lived beyond the age of 65. Most Americans agreed those who did should not have to worry where they would sleep or what they would eat from day to day. It was, compared to the Social Security of today, a modest program to prevent homelessness and starvation among the elderly. I doubt that many young workers begrudged the elderly a cent of what was deducted from their pay. But life expectancy in the U.S. is continually increasing while the birth rate continually declines. Allowing an ever increasing population of older workers with ever increasing lifespans to stop working at 65 and live longer and longer off the labor of an ever decreasing population of younger workers can rightly be called nothing but a plan for the enslavement of the young by the old. If I must wait until I am 67, 70, or even 75 to collect my benefits, that is preferable to having the system collapse because it is unsustainable. It is also morally preferable to forcing young workers into serfdom for the benefit of older folk who can still look out for themselves.