Where peace is not a pie ...Rick's Cafe Americain

To my mind, Social Security is a singularly flawed system.  As a philosophical matter, I reject the notion that the government can or should force me to plan for my own retirement, much less direct how and how much.  As a practical matter, it has become what has to be one of the worst retirement plans ever.  Social Security’ actuaries estimate that, for a single male worker born in 2000 with average earnings, the real annual return on his currently-scheduled contributions to Social Security will be only 0.86 percent. For someone like me, who makes more than the FICA maximum, the expected return is actually negative.  Nor are the benefits nearly enough for any wage-earner to maintain his/her standard of living – although it was never intended to do that; it was always supposed to be a supplement.

President Bush has called Social Security “the single most successful government program in American history”.  He has campaigned hard in both presidential elections on his goal of “strengthening” social security.  However, he has yet to set forth a detailed plan for doing so.  Indeed, all we really know is that he plans to “privatize” at least part of it, allowing contribution into diversified investment accounts at least similar to 401(k)’s.

“Strengthening” Social Security, as President Bush proposes, will not be cheap.  In order to ensure that benefits continue to be paid, even as contributions are diverted into personal accounts, “transitional” costs of anywhere from .$500 billion to over $1 trillion dollars, depending on how the system is reformed, and how high a return the investor is guaranteed.  President Bush has not yet disclosed where he plans to get this money (although Edward Crane of the Cato Institute suggests getting at least some of it by ending corporate welfare, which I think is a damn good idea.  Otherwise, we’ll have to borrow the money.  Maybe Iraq will lend it to us.

What is clear is that something must be done, and the sooner the better.  The first of the baby boomers will start collecting Social Security in 2008 – imagine that a tired, aging mare who can barely feed her two foals suddenly gives birth to two more.  Not that I think privatization of the Social Security system is a good idea.  To the contrary, I think that the Social Security system as we know it should be dismantled.

The current system, which is headed for fiscal collapse anyway, helps no one.  Those who can afford to put money aside for retirement do not need the government’s help, nor should the government interfere.  Those who cannot afford to plan for their own retirements do not benefit from Social Security.  Most pay more in payroll taxes (FICA) than they do in income tax, and a disproportionate number of poor people, who tend to have shorter life spans, never even get to see benefits.  The system deprives the poor of much-needed income, without even offering them a decent return – if any – on their “investment”.  Hand me my .30-.30, maw.

I’d rather see the “nanny state” replaced by the “welfare state”.  If Social Security were converted into a retirement fund to help only those who really need it – for example, those whose income before retirement was insufficient to allow for significant retirement saving, and who have no children capable of supporting them – I believe we could help a lot more people while greatly decreasing the cost of the program.

When I was a kid, my parents gave me an allowance and taught me the importance of fiscal responsibility.  If I spent all my money during the week (say, on snacks at school), and then wanted to go to the movies on the weekend, my parents would not give me money.  In this way I learned to live within my means and manage my money.  If the goal is to encourage the growth of an “ownership society”, to increase personal choice and responsibility, then I believe the government needs to take a page from my parents’ book.  Freedom of choice means facing the consequences of our choices.  Let’s put Social Security out of its misery.