One of my favorite taunts against liberal Democrats on the Social Security privatization debate is to say: "You shouldn't place so much faith in the Republican Congress to manage your retirement account." When you tell liberals that, they'll say they agree with you that Republicans can't be trusted, but they only agree because they simply don't get it. Usually, they respond with some rant about how a "privatization" plan is a bad idea and that we should stick with the same old surefire bad deal in the current system. It never occurs to their tiny little brains that the Republican Party runs the federal government, and therefore the Social Security program, and that privatization would take this power out of their hands. I always have to explain:
"Let me put it in the form of a syllogism for you: The Social Security is part of the federal government; the federal government is run by the Republican Party; therefore the current Social Security system is run by the Republicans. You are placing your faith in the Republican Party to run your retirement, whereas I support privatization because I don't trust them."
The reaction is always the same: the smell of something burning – and a brief, stunned silence similar to the reaction you get from a "flash-bang" stun grenade – followed by some statement that they support a change of power to the Democrats.
That's not likely. Consider that the Democratic Party's official strategy is to declare total, unquestioned faith in the Republican Party's ability to manage everyone's retirement income, in preference to allowing the rest of us dumb commoners manage our own accounts.
A party with such a low opinion for the ability of the majority of the people to outperform a spendthrift Republican Congress financially is not one poised for a return to power. After all, what kind of contempt for the common American is manifested in the assertion that they have less financial prowess than the same body that recently passed 11,000 pork barrel projects in a single bill? Remember, this is the same Congress responsible for emptying out the so-called "Social Security Trust Fund." This is the same body that is the main financier of Boston's sieve-like "Big Dig" harbor tunnel project, perhaps the only $15 billion (and counting) combination underwater tunnel and car wash project in modern history. Yet liberals say the average American can't invest his money as wisely as Congress.
Yes, the liberals claim to represent the people. But they detest the same people they represent. They believe that the American people are too callous to provide for their less fortunate neighbors voluntarily, which explains the need for a welfare state. And don't try to buy a handgun for protection, because the liberals don't trust you with them either. If you want protection, just do what the other "common men of the people" such as Ted Kennedy do, hire a squad of full-time bodyguards.
Social Security is already a bad deal for retirees compared with any private stock index fund, even at the bottom of a serious bear market such as we experienced in 2000–2002. That's a provable fact, and I've proven it in a recent article for The New American magazine. What's more, because workers under 40 are paying more as a percentage of their income into Social Security than their fathers (and for smaller benefits), the ripoff is becoming more and more pronounced. Anyone who doubts this fact can check out the spreadsheet I created contrasting Social Security benefits with a private account, or create his own spreadsheet comparison.
A surefire indicator that you've won the argument on Social Security privatization is when the liberal you are talking with starts spouting the Democratic Party talking point about how "Social Security is not a retirement program where you acquire your own personal stash, but an insurance program." That's the equivalent of saying "I don't care if I impoverish America's workers, including the working poor, along with America's elderly; the most important point is to keep the government in control of their money."
The recent proposal by Senator Chuck Hagel (R-NE) to extend the full retirement age for Social Security from 67 to 68 years is indicative of the inherent problem in a "pay as you go" scam like Social Security. The main problem with any "pay as you go" system (other than the fact that it is beyond the authority given to Congress under the Constitution) is that the longer the people live, the worse a deal the system becomes. If three people paying taxes for 40 years support one Social Security recipient receiving benefits for 20 years, then a recipient who collects for 30 years after retirement must have three people working 60 years to support the same benefit level.
When people live longer – and the American people are increasingly living longer – you must either raise the contribution (taxes), cut the benefit payout, or postpone the date of retirement (which is a cut in benefit). Liberals have made their decision about which they would prefer to do. They want to increase taxes, especially if they can be raised only on "the rich." (Remember the Bill Clinton definition of "rich" for the purposes of tax increases: anyone making more than $30,000 per year.)
The payout from a stock savings fund, however, is not based upon how long other people will live to collect the benefits. Rather it is based upon how much you put in, and how long it earned interest. Once you have money in stocks, you can keep collecting until you reach 150 years of age and it won't impact the solvency of the stock fund.
In short, the longer Americans live, the worse a deal Social Security becomes compared to a private fund. The only way the Democratic Party might be salvaged is if the Republican Party self-destructs on privatization. That may happen. Bush may bungle the issue with a phony "privatization" that will discredit the issue for years to come. However Bush and the Republicans in Congress handle their reform agenda, it won't change the fact that Social Security is an ever increasingly raw deal for all Americans.
It's time for a "New Deal" that is a good deal: Total privatization now!
March 14, 2005
