Social Insecurity

As we hurtle towards the revenue/expense day of reckoning, some canards have surfaced to prepare us emotionally for the outrages that will be inflicted upon us. One of the more laughable is the attempt to justify withholding Social Security from people, partly or completely. There are usually two ruses.

The first is that Social Security is an entitlement plan, something voted on by legislators to provide special help or advantages to some predetermined needy group. What this denies is that Social Security was legislated as a sort of safety net for all people, most of whom were felt by our wiser leaders not capable of setting up on their own. The money was taken from those people (everyone but federal employees) to be held in escrow and then was to be paid back to the contributors in an amount related to their contribution but without the assumption of earnings. So the "entitlement" of Social Security is actually a tax to be repaid to the citizen at a certain age.

The second ludicrous innuendo is that people get back far more than they put in. This lie implies that people are gaming a system that no one in their right mind would have joined voluntarily and that the federal employees--including the lawmakers who created it--had the good sense to avoid. A simple way of analyzing this lie is to look at the value of the dollar over the years. One dollar in 1970 bought a certain amount of goods. Those same goods in 2010 cost five dollars and eighty cents. That is a loss of buying power of 82.76%. That is an annualized return of negative 4.08%. Annualized. Sometimes it's more, sometimes less but, on average over the last 40 years, the dollar lost 4.08% in buying power a year. So every Social Security recipient is receiving dollars that are much less valuable than the dollars he originally gave up in Social Security taxes.

Most Social Security victims would be happy just to get back what they paid in original dollars but, now, most would probably take the total in depreciated dollars. (Again, not with any interest he could get in the real world.) But the idea that anyone who paid into the system is getting a bargain here is just idiotic.