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Sic Semper Tyrannis

Tuesday, August 19, 2008

Cap Times: "Defending Social Security against the 'crisis' lie"

Say what you want about the Capital Times, they are great ideological writers.

Just take this editorial on Social Security. They manage to spin away any problems the program may have, ju-jitsu into an attack on capitalism and those who practice it (because you need a bogeyman to divert attention), and end with…

…well, you can probably guess. I won’t spoil it yet.

All emphasis added.

Social Security is a popular program, so popular that neither of this country's major political parties would suggest eliminating it.

Unfortunately, both parties have been guilty of fostering the fantasy that the program might be dying.

For too many years, Republicans and Democrats have promoted the lie that Social Security is "in crisis."
Kinda depends on how you define “crisis,” doesn’t it? We’ll come back to that. Here comes the reflexive distrust of people who make money:

Getting Americans to buy into this fantastical premise is the first step in achieving what the financial services industry -- which donates generously to politicians in both parties -- really wants: privatization of Social Security so that the federal government will start promoting speculation on Wall Street rather than ensuring that Americans will have the resources they were promised upon retirement.
And…wait for it…

The truth, as honest financial analysts have always argued, is that Social Security is secure -- and will be for decades if Congress agrees to minor reforms, such as requiring wealthy Americans to pay their fair share.
Bam! Raise those taxes!

Bottom line, the Cap Times is absolutely right, depending on how you choose to define “crisis.” It’s all relative, see. Subjective. “Crisis” is in the eye of the beholder.

For example: the deadly virus spreading at an exponential rate might be a crisis, even if it’ll take some years to reach epidemic status. Tornado warnings aren’t really crises – heck, we get those several times a year. But then the tornado is bearing down on your house. Then it’s a crisis.

The Alaska-sized asteroid hurtling on a collision course with Earth won’t get here for nine or ten years. Crisis?

In nine or ten years, Social Security will begin to spend more than it brings in. Crisis? Well, no. Not compared to the asteroid.

So there. It’s not a crisis. Fine. As Social Security begins spending more than the taxes which (hypothetically) support it bring in, we’ll simply incur more debt to pay the benefits.

See? No crisis.

When, right around 2041, all the funds Social Security has (hypothetically) accumulated run out, we’ll just keep going into debt. Something like $30 trillion dollars over the next few decades.

It’s not the best idea. It’s not a great idea. If you asked the editors at the Cap Times, they’d probably agree that it’s a really bad idea.

But it will keep Social Security going without handing it over to the evil overlords of Wall Street.

Oh, sure, you might get that tax increase, but you’ll never get a big enough tax increase to keep Social Security in the black. Not the way the demographics are going. Not unless that asteroid really hits.

But still: you’re right. Social Security isn’t dying. It isn’t, under this definition, in crisis.

Fine. It still isn’t good.

It isn’t good that we’re in this position in the first place. It isn’t good that the federal government spends all the money and re-fills the coffers with IOUs. It isn’t good that we’re talking about tax increases or benefit cuts when the money ought to simply belong to us.

It really isn’t good that the annualized rate of return is, for most Americans, under 2%.

Less than 2% a year. You can do better with a money market account. There are all kinds of perfectly safe investments that offer more.

In other words: we can do better.

I acknowledge the Left’s fear of the free market and, in particular, of investment. I don’t understand it, but I acknowledge it. I’m begging you: get over it. Because we can do better.

Note: while writing this, I ran across a few interesting web pages on the subject.

Coyote Blog, written by Warren Meyer of Phoenix, AZ, ran the numbers based on his own Social Security statement last year. Here are his results.

Based on that, Political Calculations used Social Security’s actuarial notes to create a neat little benefits calculator.

This awesome page at

And this older piece by the Heritage Foundation, discussing rates of return and, in particular, why Social Security is wealth redistribution away from minorities.