Politicians pander to senior citizens when they say Social Security is sacrosanct. They know very well what will happen when the baby boomers are drawing benefits instead of paying taxes.
"Even the most gung-ho budgetcutters in Washington make it a point to say that Social Security is off-limits," says syndicated columnist Thomas Sowell of the Hoover Institution, who concedes that to say otherwise is considered tantamount to political suicide. While acknowledging that Social Security recipients would be "outraged and up in arms if the federal government reneged on its promises and pulled the rug out from under them," Sowell insists that drastic steps must be taken to avert an impending disaster.
Even if we are obliged to honor expensive promises made in the past, "we can at least stop making the same promises for the future," says Sowell. "Assure all those currently receiving Social Security checks that they will not lose one red cent," he urges. "Give the same assurances to those within a decade of their eligibility for Social Security. But there is no reason to continue subsidizing everyone who reaches a certain age," says Sowell. "If there are elderly people who are needy, let them be subsidized out of general revenues, from which a transitional phaseout of Social Security could also be financed."
Sowell explodes several of the enduring myths about Social Security. One myth is the notion that social security payments are qualitatively different from welfare relief. "As for the argument that people who have put contributions in are not welfare recipients when they take money out," says Sowell, "that of course depends on how much they put in and how much they take out." Most social security recipients extract far more from the system than they contributed.
The fact "that Social Security is currently running a surplus and that its reserve is expected to reach $3 trillion by the year 2020" serves as the basis of another myth, the myth of the system's solvency. "All of us can run a surplus," says Sowell, "if we are allowed to count all our assets and ignore enough of our liabilities." Sowell concedes that "$3 trillion is certainly a lot of money -- but not if you owe $4 trillion."
Even the I in FICA, the Federal Insurance Contributions Act, represents "pure fraud," says Sowell. "The word 'insurance' serves the political purpose of removing the onus of its being a handout like welfare or other entitlement programs. But a genuine insurance system collects money and invests it in assets which cover its liabilities. The Social Security system's assets have never covered its liabilities. It is not insurance," Sowell insists, "but a pyramid scheme in which those who enrolled earlier get what is paid in by those who enroll later."
Sowell says the scheme "worked like a charm as long as the pyramid kept expanding, with the baby boomers' contributions being used to support the smaller generation before it." But, when the baby boomers reach age 65, there will not be enough taxpayers to support social security as we know it.
