Social Security Works As Expected: Nation Outraged
From the world of misleading propaganda journalism comes this story: Social Security to start cashing Uncle Sam’s IOUs by Stephen Ohlemacher (Yahoo! News). First off, the author makes sure to use the term IOU right in the title to get people into the right frame of mind. If they get the mistaken impression that the Social Security is issuing IOUs, then that’s a real shame.
Before analyzing any further, a quick recap of how Social Security works is in order. Social Security is individually funded by a special tax (FICA) and, as the article correctly states, “collected more money in payroll taxes than it paid out in benefits” for years. However, there is nothing nefarious about this. Social Security was set up by people who actually understood statistics and actuarial realities like a boatload of Boomers retiring all at once. Because of this spike of retirees, they planned ahead and saved extra cash so that the program would have a surplus from which it could draw when its income fell below its payouts.
This is part of the plan and is not some sign of imminent collapse. The $2.5 trillion will be doled out over the decades until they finally run out sometime in 2037. The transition from surplus to deficit for the program came about a year earlier than anticipated because of the near-collapse of the economy—which put a lot of former FICA-payers out of work, reducing receipts—but planners from decades ago could hardly have foreseen how royally the stewards of the economy would screw things up.
With thirty years until the money runs out, Social Security needs—at the most—a tweak or two to keep it running at break-even or perhaps surplus again, should that be needed. Unfortunately, the planners of yesteryear were somehow less of a bunch of stumblebums than the geniuses running our government today, so it’s possible that they will put off the tweaks until it’s too late.
So Social Security is ticking along like a Swiss clock: There is no emergency. But take a look at the ominous wording from the article:
“This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.”
This doesn’t exactly sound like things are going to plan, does it? It sounds like Social Security is bleeding like a stuck pig. The problem, as it turns out, is that the government plundered the Social Security fund for other things. That does not mean that Social Security does not have the money, but that the government has to pay back what it borrowed. This is not in any way the fault of the Social Security program. To the contrary, actually. That program actually works as expected, but the pirates in charge plundered it—much like CEOs were busy plundering their own company’s pension programs. If Social Security is bankrupt, it’s because it—and we—were robbed.
But the author of the article laments that the “timing couldn’t be worse” to require the IOUs to be paid back because the economy is so shitty and the government is already in hock up to its eyeballs. Again, this is not Social Security’s fault. As mentioned above, the timing was totally god-damned predictable: In a span of decades, the switch from surplus to deficit came a year early. But our fearless leaders ignored this fiscal reality and made no plans whatsoever to provide for funding to replenish the plundered funds. So now, according to the article, “the government will have to borrow even more money, much of it abroad”. The point, however, is that the IOUs are in the form of special U.S. government bonds, which are (still) the most secure investment on earth. The only way they don’t get paid back or lose value is if the U.S. economy collapses entirely—taking the global economy with it. In that case, not having Social Security will be least of anyone’s problems.
However, despite the utter predictability of this situation, the author claims that “experts say it is a warning sign that the program’s finances are deteriorating”. Those are some shitty experts who don’t know anything about Social Security. Listen to this language:
“Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there’s concern that the looming crisis will lead to reduced benefits.”
Are you scared yet? Do the words “drain”, “trust funds”, “looming crisis” and “reduced benefits” send chills down your spine? Are you now suitably terrified of a situation that will possibly affect you in 27 years? Can you think of any other government program that has guaranteed its funding—by paying for itself—a quarter of a century in advance? Hell, the military can’t even stick to its budget for one year and it gets ¾ of a billion dollars per year. To that are usually added a couple of “supplemental funding” bills of a $100 billion or so each. But nobody complains about that or predicts the downfall of the nation because it’s the military.
Hell, the military is hemorrhaging money far worse than even the worst naysayers accuse Social Security of doing, but we don’t ever hear about that in the doomsday terms the situation deserves. The DOD lost $19 billion in cash into the sands of Iraq and nobody cared. Rumsfeld admitted that the Pentagon’s finances were beyond the capabilities of their accountants; they’re not even bothering to keep track of their money or budgets anymore. But Social Security, with its scrupulous laying of money to the side in anticipation of foreseeable expenses, is clearly the problem program. Why? Because it’s a social program.