Will Rogers said that everyone talks about the weather but no one does anything about it. That certainly, in part at least, could be applied to the current, for lack of a better word, hysteria over the fate of Social Security.
So many people are talking about the giant program and how to fix it, the blizzard of babble is almost deafening. Whether anyone will do anything about it can only be answered by whether the public is convinced there is a crisis as the president has declared and if the reply is loudly affirmative that privatizing a segment of a worker’s accounts is the way to solve it.
If “personalization” is seen by a consensus of voters as a legitimate response to the predicted 2042 bankruptcy of Franklin Roosevelt’s legacy to the welfare of Americans, the next question becomes just how much that will cost and whether it will entail as critics contend both cutting future benefits and raising taxes. The only agreement so far among the parties who will be responsible if anything is done is that privatizing accounts will take a hunk out of the payroll tax now used for all sorts of other things, including paying those who are currently receiving benefits.
Following the daily ups and downs of this debate is like being at sea during a violent storm. The effect on the stomach is about the same. There is a new plan every other hour from someone in Congress, from economists of every philosophical stripe, from the White House, and from every society of ideological opinion molders from the Heritage Foundation on the Right to the Brookings Institution on the Left. Only Iraq gets more front-page ink or broadcast air time and then not by much. One has to be utterly deaf not to hear the plaintive public wail: “We’re so confused.”
What average citizens know about Social Security is that they put a little more than 6 percent of income into this big trust fund each payday and that their employers match that amount. After their earnings reach a ceiling, that has climbed steadily as Congress finally sought to pay for yearly increases in benefits, the deduction stops for the year. Actually, most Americans now pay all year because the ceiling is $90,000. At age 62, a worker is eligible for a reduced monthly stipend, or the employee can wait until 65 for full benefits. How much is based on years of contribution, salary, cost of living and other factors.
That is the way it has been since the 1930s when it was proposed by FDR to a Depression stricken nation. Just put in one’s money; let it grow, and collect it when the time comes or even earlier if one is disabled or the orphaned child of a qualified recipient. Over the decades, that scenario has been so assured and so sacred that it became known as an “entitlement” that no politician in his right mind would tamper with _ certainly not its basic formula at any rate _ until George W. Bush came along. Pretty simple isn’t it?
Well, not really. First of all, there is no Social Security Trust Fund as such because the payroll tax is wrapped into the general budget and spent on all sorts of other programs. When it spends this money, including payment to current beneficiaries, the government issues Treasury notes to back up Social Security into the future. What wasn’t counted on when the program was adopted, of course, was something called a “baby boom” which is just now beginning to produce what will become a devastating flood of new recipients that will tax the system to the limit. This problem is exacerbated by the fact that Americans are living longer and staying on the roles many years more than envisioned.
How to fix all this is the issue. Should we have new taxes and a higher ceiling, catching the upper bracket earners? Should there be an increase in the collection age? Or should all these things be done, staving off the next crisis for nearly 100 years. Should young workers be given the opportunity to invest some of their contribution in stocks and bonds that might earn them with compound interest far more than the return they get from Social Security?
Or, and this is the key question, will the Congress despite all the loud pronouncements of dire consequences decide that a crisis of 2042 is really not a crisis and that fiddling with the basics too much is still political suicide? I’m betting on the latter.
(Dan K. Thomasson is former editor of the Scripps Howard News Service.)