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The Lie Upon Which Rubio’s Social Security Plan is Built
Marco Rubio has laid out his plan to save Social Security in the 21st century at National Review Online. As with pretty much every other Republican candidate’s plan save Huckabee’s, it basically entails three steps.
The first: Raise the retirement age for receipt of Social Security benefits:
With Americans now living longer than ever before, the strain on Social Security’s finances is steadily increasing. … First, we must gradually increase the retirement age for individuals under 55.
This is often (nearly always) the first idea. Were this healthcare, it would be called rationing. Yes, people live longer today than they did when the system began. The system was never designed to pay a person for 20 years of inactivity in the labor market. Well, duh: The system was never really designed to pay out at all. It was merely a tricky, feel-good way for the government to confiscate even more of a person’s wages. People were to pay into the system their entire working lives, and if they won the genetic lottery, maybe collect a few years of benefits before the Reaper made his appearance.
Well, innovation has again thwarted the money-grubbing politicians, and people are living long enough to force the system to make good on its so-called promise. The most immediate and obvious solution is to change the promise. Sure, government may have said you were paying into an “insurance” program, investing in your own future with the backing and surety of the United States Government, but it was a lie. The Supreme Court long ago decided that taxes paid into the Treasury belong to the government; the government is at liberty to spend the money as it sees fit; and taxpayers have no rightful claim on any money once the government takes possession of it. Government can, should it will, simply alter the time and amount of “return” you get after a lifetime of seeing 12.4% of your wages confiscated and squandered by the government. This leaves the question of whether or not it should.
To those who have never done physical labor, it probably makes sense just to inch up the retirement age. Sitting at a desk shuffling papers and staying awake through gawdawful PowerPoint presentations is one thing, humping load chain and slinging it over cargo on a flatbed is something altogether different. Working past 65 because you’ll live beyond that (with whatever quality of life that entails) is a completely different experience for different people in different occupations. At 43, I already fear doing my job at 53, and I cannot imagine being physically capable of performing it at 63 or 70.
This ties into Rubio’s second step, means-testing Social Security benefits:
[W]e should do more to protect seniors on the bottom of the income scale, who are too often consigned to poverty in old age. This can be done by reducing the growth of benefits for upper income seniors while making the program even stronger for lower-income seniors.
Again, this is a very common approach to the problem. Return more to those who require more. The stink of Marx is all over the idea, but that’s another problem. Those to whom this is directed are likely the very same ones the first idea tries to kill by keeping them in the labor force longer. The amount of physical exertion required in an occupation seems to often be inversely proportional to the compensation received for it. Like the first, this suggestion is rationing. It is worse because it returns more to those who contributed less financially, and makes the redistributive quality of the program more blatant without acknowledging it plainly. It embodies the Marxist maxim, “From each according to his ability, to each according to his need.”
Rubio’s third idea (also standard conservative dross) is the least bad of the set, but comes with its own negatives. He calls for private retirement:
[W]e must empower our people to save more for retirement. Social Security should be one component of retirement security along with employment-based plans and personal financial assets like IRAs, mutual funds, and personal savings accounts. Americans should also be able to save for retirement without paying taxes on their retirement investments. My tax-reform plan eliminates taxes on interest, capital gains and dividends. Educating Americans on the benefits associated with retirement saving and planning is also important.
This is a model the government is already mostly behind, at least for its own workforce. People make a big deal of federal government pensions, but for a couple of decades these have been a tripartite system comprising a small pension, Social Security, and the Thrift Savings Plan (a contribution-based retirement account with some employer matching contributions). If such a system is good enough for the Feds, surely it’s good enough for everyone else. What the Senator describes is exactly what is already in place for him and his staff. In this system, Social Security becomes less important to one’s retirement. The individual is mostly left to sink or swim based on savings and wise choices about how that money is invested and grown.
Mind you, the same disparity exists here as it does in the other points of reform. Those who make less have less to save; their physically useful work life limits the amount of time they can contribute to their own savings; and, let’s face reality here, they may not have the wherewithal to give appropriate attention to the husbandry of their retirement accounts. The same people who work harder will still have less to show for it, and they will be just as dependent on the benevolence of government in the end. Things could turn out better for them, but there’s no guarantee. So it’s easy to see why Huckabee’s call to keep the status quo is appealing to the blue-collar segment of the electorate. Of course, using the tax code to compel desired behaviors is yet another un-conservative idea that’s widely accepted when couched in the right terms.
Well, smarty Prawn, you might ask, what exactly is your prescription? I can’t lay out a nice three-point plan to save Social Security or provide comfort in old age to the populace. I hate to point out a problem without suggesting a solution, but this matter is way bigger than me. The key thing, in my uninformed opinion, is to start hacking away at the very root of the problem: The entire Social Security system is a lie. This is not an insurance plan where you pay your premiums and receive your reward when it’s your turn.
Social Security is a direct payment welfare program. The wages of the barista at Starbucks, struggling through on $11/hour (or $15 in Seattle), are confiscated and given immediately to her grandmother. The young are taxed to subsidize the old. This often takes from those with the greatest need and just as often gives to those with the least. If we really believe this program satisfies a collective moral obligation, then let’s treat it as such. Let’s abolish the myriad taxes and replace them with “one tax to rule them all.” Take from all without bias or favor, give to those actually in need. If we must redistribute wealth, if we must ration the redistribution, then let’s do it all above-board and honestly. If we want our elderly population to live in dignity, if we believe a redistributive welfare program accomplishes that goal, then let’s do exactly that and nothing else with the taxes we confiscate for that purpose.
Rubio’s plan is tinkering around the edges and playing with the balance sheets. But never touches the real problem, which is the lie upon which the system is built.
Published in Domestic Policy, Economics, Elections, General
And here we are once more surrendering the very principle of Constitutionally limited government by meekly accepting the false equivalence of defense spending with other SECOND TIER boondoggles. The federal government has a Constitutional requirement, not an arrogated power, to provide for the common defense. The “general welfare” clause is nowhere near so well-defined nor supported in attendant writings, and in fact is contested fairly strongly in much of the early dealings of the government.
If we will not fight on principle, then our victories are individual, fleeting and meaningless.
If only.
In 1961, “heart disease and stroke” were the top reasons for being labeled disabled.
Today, more than one-in-three (33.8%) diagnosed disabled workers cited “back pain and other musculoskeletal problems” as the reason they can no longer work for a living.
Over 33% of Puerto Rico’s disability recipients qualified citing “mood disorders.”
As a physician part of my patient history is “what kind of work do you do?” I frequently get the answer back ” I’m working on getting my disability”. This from strapping 20 to 30 year olds who are fully able to work.
I can tell you that I see tons of people on SSDI for “back pain” and “psych” issues ( most of those people used were on it for drug and alcohol addiction before they were removed as viable reasons, hence the migration to psych). The problem is these are almost impossible quantify objectively, it’s largely subjective and widely subject to fraud. Lots of shady physicians make a nice living working hand in hand with shysters to push people onto SSDI.
The VA is run through with claimants who seemed to develop sleep apnea at OHHHH about nineteen years of service.
This argument isn’t really going to carry the day, no matter how well defended, is it? this being the era of the ‘Living Constitution’ and all.
I hear different stories on this. But it’s not like back pain and musculoskeletal disorders are imaginary. I hope as a doctor you know that hard work for thirty or forty years does, in fact, wear out your body and the damage accelerates after fifty. My point is that raising the retirement age disproportionately punishes people who have a significant physical component to their jobs. Cuts to everyone, even means tested, are much fairer.
The Constitutionality of these programs was surrendered seventy years ago. Since then, the primary purpose of the government is to take money from some people to give it to others. Do I like it? No, of course not. Particularly when I’m one who will never get a check mailed to me. But we can’t fix problems until we can look them in the eye and see what’s going on.
Oh, and frankly, I don’t buy that we can’t cut a dime of military spending without endangering the country. In the end, military bureaucracy is just another bureaucracy; it will fight to defend its petty fiefdoms and when asked to make budget cuts will make sure bones and muscles are destroyed before relinquishing their fat.
Only you don’t seem to have considered folks who might be disadvantaged with your proposal. Are there folks who DO have the ability to work a few years longer, but have no savings to offset lower benefits? Under your plan, they might work anyway (or not) and get some additional payout as a result when they retired if they did, but maybe not as much as they would with a higher RA.
JoJo,
We can take this further. There are cohorts of retirees who have considerably lower life expectancies than the rest of us, smokers and obese folks, diabetics and the paralyzed, for example. Since they stand to receive a much lower total payout from the system, do they deserve to be ‘health’ tested to certify that they are eligible for higher annual benefits, assuming they contributed all their working years?
The other thing to not forget is that if one works a hard job for many years and must transition to something physically less demanding to survive to this new higher retirement age, he starts at the bottom. All the skills and the years of experience mean absolutely jack squat in a new profession. Not everyone who starts as a stock boy ends up running the company. Many people work in the same physically demanding positions their entire careers.
People sometimes ask why I am a crane operator when I’m afraid of heights. The answer is simple. I made close to $60k/year net while I was in the Navy. Starting over in the real world where my military experience and skills meant nothing I would have made less than half of that. Going mil to gov meant taking this job but keeping my earnings near there so the transition was merely a burden rather than a catastrophe.
The thing that bugs me (just a leeetle bit) is that conservatives are supposed to believe in self-responsibility. This is just about the cardinal virtue. So are we responsible for the effects of the decisions we make in the employment we seek, and in the training/education we either do or do not endure to obtain same, or not? If we decide we are not, then shucks, we all just might as well become Democrats.
Someone in society has to do the hard, sometimes menial, but always physically demanding work that keeps everything running. A lot of these are good jobs doing meaningful work that pay reasonably well. We don’t want these occupations to always be relegated to the young and inexperienced. Not every occupation morphs into a desk job. But, these are not the kinds of occupations where one can just keep doing it for another 5 years just because. Government has confiscated greater than a tithe for a person’s entire working life, money that could have gone towards a real retirement plan but didn’t because the money grubbing leach class took it. Giving a person who worked honestly and honorably his whole adult life the choice between starting over at an advanced age on the bottom rung of the labor force or working until it kills him is not a conservative value either. Telling a great welder he should have been an accountant is not the answer.
See, you are telling me that we are ultimately NOT responsible for our choices in life. This has nothing to do with “working honestly and honorably”. Doing the latter, but taking no care for the future?
I’m saying that government confiscating over a tenth of one’s output takes control away from that person.
Why do I get the suspicion you’ve never sweated except in recreation or sport.
But I chose not to do manual labor. And worked my rear end off studying to not have to do so. Does this mean nothing? Are we responsible for our life choices or not?
You’re providing a false choice that doesn’t account for the confiscation. Not everyone gets to make the same choices you made for yourself.
Should we just give free college to everyone so we have a nation of tax attorneys and no plumbers?
Amy ,yes fixing things like deficits are hard. You made my point. Fixing SS is also hard. SS spent 895 billion, 815 billion of that was funded by FICA taxes. If you think it’s bad now wait until the bill comes due on Obama Care and the elephant in the room is the certain rise in interest rates on the debt. A conservative estimate is triple your 229 billion or more than we spend on national defense.
In the latter scenario, plumbers would be making the handsome salary I earn (because of the supply and demand equation, and low supply of plumbers you postulate) and would end up in the means-tested group that I will be in – and I doubt we would be having this conversation.
Bottom line: someone undertakes a physically hard job that doesn’t pay that much because too many folks are in the same line of work. Come retirement time and they are all worn out and have little savings (not allowing them to retire early and live well). Do we not hold them at least somewhat responsible for these choices?
I paid my own way. And junior college is pretty cheap I understand.
My idea, keeping the age at 67: The 67 year old without savings who can still work another 2 years is still better off than the 67 year old without savings who cannot work another two years. The one who can work will make more and can probably save more, and increase his monthly payments. Also very likely he will live longer and collect more SS in the end.
Your idea, raising the age to 69 increases the benefit to the one who is better-off already and severely penalizes the one who is already worse off. The one who can work will end up with higher monthly benefits. The one who cannot work and has no savings will end up with those higher monthly benefits too, after two years of starving in the gutter if he lives that long.
At the risk of sounding like a broken record (remember those?) we should hold people completely responsible for those choices, and, at the same time, allow them to take complete control of their earnings and savings so that their responsibility is conjoined with the authority to do something about it. The plumber can demand from the beginning of his career that he be paid enough to put aside sufficient funds for his retirement at the age he projects he will no longer be willing or able to work. If the market will not pay him that amount he either accepts what the market pays or finds another line of work.
It is the lunatic idea that we should require the generations yet unborn to pay for our retirement that itself must be retired, and soon.
And doesn’t necessarily lead to the increased wages you think are out there for everyone with a piece of paper hanging on the wall.
The main point about manual vs non-manual labor is that even good paying manual labor (like plumbing, those guys make a lot of money) is not something one can arbitrarily just keep doing longer. Yes, they can live off their own savings and retirement plan until SS kicks in, but if that’s the case, then what the hell is the point of them getting a government check anyway? The big lie of the program is that everyone should get something out of it.
We do not “hold them responsible” by designing government policies that put additional disproportionate burden on them.
We do not “hold them responsible” by neglecting their interests as inferior to those of those who went to college and by the way are very fit at 63.
If you want to send the message that anyone whose job is involves physical labor is a foolish loser of no consequence, you are doing a good job. I don’t think it’s healthy for the country.
This. The only problem is that some people never will earn enough for both life during work and retirement after. It’s a simple fact. They may work hard and honorably yet never be high earners. As a nation we made a choice that throwing them on charity was not in our character. How do we honor that ideal without this enormous pile of manure that is the program we have today? Also, what do we do with those who could have chosen more wisely but did not? Do we leave them to nature? How do we incentivize those who can to prepare for their own retirements and disincentivize people from irresponsibility for which we’ll all have to pick up the tab? There is a cultural component to this as well as a fiscal one.
Maybe we should raise the SS retirement age to 80?
Or just scrap the whole mess and make an age based, means tested welfare program. It’s not the greatest outcome, but at least it would be affordable and honest.
The first question about social security is never asked: what need are we intending to meet with this program? If it is to give every retired American a check, then we must ask if that is feasible. If the answer is to accomplish something else such as provide dignity to those in retirement who cannot support themselves, then we have a whole slew of other questions to ask about how to accomplish that purpose.
I just looked at the SSA website. Their mission is to provide services. They’ve lost the bubble, as we might say on submarines.
Maybe I need to go back and scrutinize your math, but I don’t see how we can go from here to there – we have to come up with a trillion dollars or so to buy off current and future recipients with a private 401K that will pay as much as they have been promised.
Take someone going to retire in 10 years. There is no funds in his government ‘Trust’ fund right now, is there (maybe there are gov IOUs though -which makes this hurt my head)? So, we would have to find enough additional moneys to fill up a new gov 401K with enough dollars, so that, with 10 years additional payments on his part along with higher returns for mutual funds vice inflation, his retirement income remains what SS would pay. We would then do this for folks 11 and 9 years from RA, etc. Where do we get those additional monies (and how much are we actually talking about here?)?
“Amy ,yes fixing things like deficits are hard. You made my point. Fixing SS is also hard. SS spent 895 billion, 815 billion of that was funded by FICA taxes. If you think it’s bad now wait until the bill comes due on Obama Care and the elephant in the room is the certain rise in interest rates on the debt.”
You were acting like Social Security was some tiny portion of our spending. (“the other ninety percent”) My point was that it isn’t, and there’s no way we can just balance the rest of the budget while mailing out welfare checks that never get cut. Particularly when we also can’t impose any kind of cost controls on Medicare or Medicaid patients without the cry of death panels.
Promises that can’t be kept, won’t be. There is just not enough money to let everyone live for decades on the dole (my great-grandmother collected for over half a century) while getting all their first world care medical bills paid. Particularly when Boomers didn’t do their part in creating more payees into the Ponzi scheme than themselves.
And it’s high time someone in politics came clean about this fact.
Exactly. Why the hell is every single American (and a lot of non-Americans) on the dole in the first place? Oh, that’s right — government made a promise. Must have been one of those that can’t be kept and won’t be, at least not if we want to have a military.
The only solution is to bite the bullet and start kicking people off the dole. Means test the crap out of those who remain. No, this is not politically feasible, but reality will eventually eliminate all other options.
We take the $1 trillion we are going to pay them anyway on SS, and convert it. We don’t have all the money? So we tell everyone, and I mean everyone, including current retirees of whom I am one, that there is going to be a cut. “Sorry, but we’re out of money.” We try to make the cuts as painless as possible through means testing. We do everything we can to make the transition happen, because like a lot of painful things it will be more painful the longer we wait, and it will have to happen if we are to save the country.
And at one time, laborers did exactly that.
Before Social Security came along – and before laws that privileged unions over other organizations, turning unionization into little more than legalized thuggery – manual laborers joined fraternal organizations, sometimes unions and trade associations, sometimes other organizations like Elk and Moose, to insure one another against disability, to purchase access to discounted medical care, and so on.
These people working risky jobs weren’t fools. They knew they had chosen professions where physical injury put them at considerable risk of loss of livelihood – and they did something about it.
What they did about it has since been crowded out by sundry government “services”. Is it reasonable to blame people 100% for not being immune to government crowd-out?
Do we blame people for not being immune to other government usurpations, like burdensome regulations. Or are conservatives rightfully angry that these usurpations make life worse for everyone? (If manual laborers deserve 100% blame for not coping well with government usurpation, then so do entrepreneurs – then it’s always individuals’ fault, not government’s.)