Conservatives have never been fans of Social Security and for years have advocated fully or partly privatizing it (which Wall Street would adore) or at least pushing through major cuts, which they are often inclined to call “entitlement reform” because most people don’t realize the main “entitlements” they’re talking about are Social Security and Medicare.
Many people mistakenly think that “entitlement” somehow means “handout,” and I’ve seen people angrily insist that Social Security is not an entitlement but something they earned. But their earning it is what makes it an entitlement: In government circles an “entitlement” means something to which you’re legally entitled and hence is not part of annually budgeted “discretionary spending.”
There are tons of myths about Social Security, some of which I’ve mentioned before, and which are have been nicely debunked by Jared Bernstein in an article last year. In brief, the program isn’t a Ponzi scheme, is much less of an “unfunded mandate” than most other major part of government, and has financing problems that are quite minor and easy to fix. In fact, even if absolutely nothing is done and the Trust Fund runs empty in a few decades it will still have no trouble paying the great majority of promised benefits the same way it has paid benefits for its entire history: out of taxes coming in. (If you think that’s not how Social Security was originally supposed to work, or you think it makes Social Security a Ponzi scheme, please see the links above. If you think rising life expectancy means we need to raise the retirement age, you’re very possibly right, but as noted before, it’s not quite as simple as one might think. Life expectancy hasn’t gone up across the board.)
In fact, there’s a serious proposal on the table from the New America Foundation that would not only address Social Security’s minor problems but expand the program to address a real and growing need: paying for retirement. Those of us without defined benefit pensions, meaning almost all of us, are supposed to sock away enough to finance a decent retirement in our tax-sheltered 401(k)s, 403(b)s, IRAs, SEPs, SIMPLEs, Roths, and whatever. And indeed some of us have. But I know a fair number of people who haven’t, and data I’ve seen suggest that they’re in the majority. The one part of the US retirement and disability system that works the way it’s supposed to, and provides most — and in many cases all — the retirement income for the majority of elderly Americans, is Social Security. It makes some sense to look for a solution in something we know works, even if it horrifies those with a knee-jerk reaction to anything involving government. Kevin Drum offers his take on the proposal here.
Incidentally, sorry I’ve been away from blogging for a while, assuming anyone actually reads this stuff. I’ve once again been a mixture of busy and a bit under the weather.