Social Security: Point/Counterpoint

UPDATE: Welcome Instapundit readers. Glenn has honored me with my first ever Instalache.

Raven posted here earlier today about the Social Security reform debate. Coincidentally, I was perusing blogs last night and over at VodkaPundit I found these ads being run on TV and in print from our “friends” at Of course, a pretty safe position to take is simply if MoveOn is against SS reform, I’m all for it. But where’s the fun in that?

In the interest of full disclosure, I don’t personally have a dog in this fight because I am one of the lucky few Americans who are not covered by the SS program. My good fortune at being in the Civil Service Retirement System does not extend to my spouse however, and she is not a happy camper about the plan to “privatize” social security. And even though I have never posted on SS reform, that didn’t stop her from leaving this comment on my blog:

By the way I think permitting young people -under 40-to invest some of their money into private accounts, with matching funds from the government or private employers, is a pretty good idea provided it is on top of the normal (or slightly reduced depending on who is making the matching funds) contributions they would make to Social Security. This would make their retirement accounts portable which is a good idea in our mobile society. You can even eliminate the ceiling on deductions for Social Security. Let SSA administer the program like a thrift to keep administrative costs down, few choices and automatic rebalancing. That way if the investments tank, which can happen trust me, these young people are not left without a safety net. Social Security is suppose to be a safety net not a gamble. Besides, if you don’t keep the safety net in place and the investments do tank our country will end up paying for these people through welfare one way or another.

My wife’s daughter Ashley is a twenty-something professional with an entirely different perspective. She responded by saying:

Hmm, I am not rich enough to pay for baby boomer’s social security checks or their Viagra, which I just found out will be covered under Medicare. And although I think it is big of you to believe we young people should be “permitted” to save any money we have left over after paying our bills and old people’s retirement – I would like to keep all of my money. And if I blow it and I don’t have any money when I am old-tough cookies for me. If the government keeps taking my money it will be tough cookies for me anyway since I won’t be eligible for social security until 2051.

Makes sense to me, but commenter Carol did not see it that way and responded:

I don’t happen to think that if due to a fluctuating market, Ashley’s generation does not have the money to survive in old age that their children and grandchildren should have their taxes doubled to pay for the welfare programs needed to support Ashley’s generation. What do you think will happen? That America will simply let you starve? So you want them to basically hedge your bets? I believe a compromise is in order here that protects the money I paid in, that you plan to pay in and for future generations.

Ashley was not convinced by this argument, and revealed some rather strong feelings about the entire concept of social security:

My generation’s children and grandchildren are already going to have their taxes doubled to pay for my social security. Never mind them, I am going to have mine raised because the best solutions Dems can come up with is (1)getting rid of the ceiling (tax raise) (2)a more direct tax raise by upping the amount workers and their employers put it or (3) raising the retirement age (also basically a tax increase). So there you have it-the AARP and the liberals in their pocket have indeed solved the problem. I can work until I die to pay your generation’s retirement. I won’t need SS because I will die on the job. Besides, if you would stop with the knee jerk reactions, and listen to the plan that Bush put out there – it is a compromise. Everyone over a certain age (those close to retirement with no real prospects of being able to save at this point) will still get their checks. FDR was a friggin socialist-it was a stupid plan from the beginning and it has just grown worse over time.

Uh oh. The gauntlet has been laid down and Carol loves an argument. She responded:

You need to do your homework. I have no problem with permitting folks in your age group to invest a portion of your social security, a proposal by the way that was first floated by the Dems. I do have a problem with Bush changing the indexing of social security from wages to inflation. I needed to save 400k. Well it is 20 years later and I am not even half way there. The down turn in the market in 2000 and 2001 (the market has never returned to its pre 2000 levels) wiped out half of my thrift savings. That is the gamble you take. I accept that. Now however, Bush wants to reduce by nearly 60% the amount of social security that I would have been eligible to draw over the remaining (hopefully) 15 years of my life. That is calculated on my being able to withdraw at age 67. I might get lucky and realize only a 40% reduction. I had planned to retire at 60 but not withdraw until 67. I am too old to start investing part of my social security besides I am already gambling with my thrift. Social security was suppose to be my safety net. The Congressional Oversight Office calculates that with no change in the current system that by 2043 recipients will only be able to receive 73% of the benefits currently paid to recipients but that will be at 2043 dollars not 2005 dollars. Right now I only pay social security on the first 87k I earn. I am willing to pay it on all of the salary I earn in order that your generation does not have to take a reduction in benefits. I am willing that you should have a portable retirement, i.e., thrift that you contribute to just like I do and gamble with just like I do. The social security administration could administer this plan for the smallest amount of overhead just as the government currently administers the thrift. The mechanisms are already in place. This would save the government a considerable amount of money, money that could remain in the system to pay out the benefits that I have been paying towards for the past 32 years. Under Bush’s plan I will be an impoverished old lady.

I realize you are a good and dutiful daughter and that you would never let me starve or otherwise live poorly. However, if you experience the same unfortunate luck with the market that I have experienced then you will not be able to afford to assist me without impoverishing yourself at a time when you will be ready for retirement. I am not totally against Bush’s plan but I am not totally for it either and who can blame me? There is also the concern that the additional debt the Bush plan would add to the already burgeoning national debt could cause a downturn in the market further killing my thrift! I am not asking your generation to continue paying into a system that will not be around to give you anything in return. I know the feeling as politicians have been predicting the demise of the social security system since I was 20! I am willing to pay social security taxes on all of my income. That is not a raise in taxes for you until you make more than 87k a year and if you were already making that much then I would not feel bad about suggesting that you pay it. I am willing to take a small cut in benefits but not 40% and certainly not 60%. The alternative is that you will pay for my care as an old lady at a time in your life when you probably thought you’d have a little extra cash and are ready for retirement yourself. That is what would keep you from being able to retire!

Ashley was far from convinced, and she gets the last word.

As a dutiful daughter I will most certainly take your advice and do more homework. Unfortunately, I suspect that my homework will lead to a violation of the 5th commandment because it will prove you wrong.

1. You are paying ss taxes on $90,000 not $87,000. Do your homework.. (Damn, I have already violated the 5th commandment)

2. When that socialist set up SS he was playing a game with the American people. He set the retirement age several years after the life expectancy. SS was never meant to be a retirement fund – only a feel good sop to idiots.

3. I have pointed out already that I will never be able to retire. It seems my grandmother’s generation was a bit randy and my generation has a lot of people we need to take care of. (I remember that when I was at USC I had a Chinese sociology professor who explained to us one day that China would collapse because the “sandwich” generation would not be able to care for both their parents and their children. The equivalent is my generation in America.)

3. Of course I would take care of you in your dotage, that was what families were for before Big Brother.

4. I skirted around this in my first post so as not to make you feel old but the cut-off age where retirees would still receive their checks under Bush includes you. (What the hell-I have already broken the 5th commandment by not buying what you are selling hook, line, and sinker.)

6. What the hell good would 73% of my benefits due me at 2005 dollars in 2043?!?! (Oh, that’s right–according to the letters Michael and I got from the SSA we are not eligible for full benefits unless we WORK until we are 75-so that is probably more like (to pull a fairly conservative number out of my…)55% at 2005 dollars. Whoopee! There is no way we could save that much by ourselves.)

7. If you were paying SS on more than $87,000–oops, scratch that I mean $90,000–that would not benefit me in any way. The gov’t would either give it to crack heads or spend it on pork and I will still end up in a worse position.

8. Bottom line–it is theft. The gov’t is stealing my money. It IS my money. I go to work everyday and I earn it. I love you Mom, but it is not your money and it is not the government’s money. It is my money. You raised me to be a hard worker but if you had told me so it was so the gov’t could steal from me maybe I would have considered other options. I could have been a crack whore-liberals would claim it was because I was downtrodden and I would have had a free ride for life. Or, I could have become a housewife with a pile of kiddies-conservatives would say I was doing my wifely duty and given me lots of nice tax cuts like the Child Income Credit. As it is I am paying for the welfare Moms, the soccer Moms, the Viagra needin’ leacherous old men, and I am staring down the barrel at having to fund the bingo and golf money for the enormous Baby Boomer generation–give me a break, can I please keep something for me??

Fascinating debate. My position is a simple one. Republicans say its your money and your responsibility. Invest wisely or suffer the consequences. Dems say you can’t be trusted with your money, give it to the government and the nanny state will do what is best for you. Hmm, tough choice, eh? Sorry Carol.

What I think is going to be particularly interesting is how this issue plays out with the voters. I suspect that many people Ashley’s age have similar views towards social security. If this drives young voters to the Republicans the Democratic party base is further eroded. Then again the Republican boomers who are a sizable voting block may defect if they see their dreams of a comfortable retirement disappearing. MoveOn aligning with the AARP is the best description of strange bedfellows I can imagine. I suspect that as the debate over SS continues in Congress (and in families) we will see more of these shifting alliances. Looking forward to seeing how it all shakes out politically.

cross posted at The Wide Awakes

51 thoughts on “Social Security: Point/Counterpoint

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