Sunday, 6 February 2005

Social Security for thee but not for me

Today’s WaPo carries an interesting op-ed on social security from one of the paper’s junior writers, Laura Thomas. Here’s the meat of her discussion:

It seemed as though my family (a mixture of partisan extremes, from Rush Limbaugh fans to passionate antiwar protesters) saw Social Security’s troubles as a small matter—contrary to the president’s description last week. Whether the impending collapse of Social Security is a myth or not, I shouldn’t be relying on Social Security to take care of me when I retire anyway, they said. I was taken aback by their mistaken impression that I had a sense of entitlement to Social Security, just as I was amused during the State of the Union speech to hear that Bush thought I was expecting to receive it.

I didn’t want to stir up a Christmas Eve brawl, but I nonetheless felt compelled to explain that never in my life had I assumed that Social Security was coming to me. Every time I see that somewhat shocking Social Security dollar figure subtracted on my pay stub, I choose to look at it as giving back to my older family members who’ve been known to drop random checks in the mail to their poor, desperate niece or granddaughter.

By the time we finished the antipasto, we decided that we were all more or less on the same side: Start saving now, because Social Security, if it still exists when you’re older, will only be for people on welfare or those who didn’t have the foresight or willpower to save (which will not be you, Laura).

Todd Zywicki at the Volokh Conspiracy (who gets the hat-tip for the link) says none of his students “are counting on a dime from Social Security when they retire.” I haven’t polled my students on this question, but I suspect he’s right.

Meanwhile, all Kevin Drum can do is mock her stupidity for buying into Republican propaganda, although the truth—the fundamental truth—is that social security is—even today, while still “fully solvent” according to the government’s bogus accounting principles (which would land a company’s CFO and CEO in prison)—at best a safety net; anyone not on welfare who thinks they’re going to retire at the standard of living they’re accustomed to on social security alone is the “insane” one. Every penny that Drum has in his IRA, 401(k), and/or other retirement accounts puts the lie to his politically-expedient defense of the current system.

The beauty of social security is that the public was conned into having a welfare system for seniors the only way a pluralistic society can—by turning it into a handout for everyone. That social security, and its related pal Medicare (which is universal healthcare for poor seniors, packaged as a handout for everyone), are both in serious fiscal trouble is no unforseeable accident; it’s the unavoidable consequence of a system established by Democrats to ensure these two welfare schemes wouldn’t be taken away at the ballot box, like “welfare as we know it” was and Medicaid is almost certain to be.


Any views expressed in these comments are solely those of their authors; they do not reflect the views of the authors of Signifying Nothing, unless attributed to one of us.

Laura Thomas’ potsition is one I have also heard from people her age group.

Sadly it is completely false. If young people really believed that SS will not be there in the future their savings rate would have shot up, as they compensated for the loss of retirement funds. But there is no evidence of that, despite Laura contributing to her 401(k).

Faster than she expects Laura and others her age will realize retirement is looming and then their views on SS will likely change very quickly, as many of them realize they what they used to scorn.


GT: I’d buy your argument if I bought the argument that individuals are truly rational decision-makers. In reality, most 20–30 year olds aren’t looking at a long-term time horizon—they’d rather have a big-screen TV and a car that isn’t 20 years old, rather than putting a few bucks away for a retirement that’s 40–50 years away.

It may also be the case that some young people expect to work past traditional retirement age. In my profession, at least, there’s no good reason (other than ill-health) why I should quit working when I can collect social security.



That is my point.

When 20 year olds say they don’t think SS will be there they don’t really mean it. It’s just a phrase. Their actions show they do in fact depend on SS.


Huh? No, GT, what happens is they hit 30, grow up, and get real jobs with retirement plans (or they divert income to IRAs if their company’s plan sucks).


I’m not sure about the premise of GT’s argument. Is retirement account savings counted as part of personal savings? I don’t see how it could be, since it’s essentially pre-tax dollars put away for a long-term situation, as opposed to traditional savings, which is after-tax income.

I knew one fellow student who was 28 and already had over 20,000 put away in a 401K from his time working at a daily newspaper.

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