January 3, 2018 by Anders Ingemarson
Emboldened by their ability to gobble together a tax reform compromise, early indications are that Republicans may turn to entitlement reform before the 2018 mid-term elections potentially wipes out their control of Congress.
However, Social Security is unfortunately unlikely to make the short list as Senate rules forbid changes to the program through reconciliation—the procedure the Senate can use to pass legislation with only 50 votes. This means that a 60 vote Senate majority is needed for getting a reform proposal to the President’s desk, and we don’t see a red-and-blue Senate kumbaya moment in the cards.
But Social Security has to be addressed sooner rather than later. The only moral end-state is abolition, restoring the respect for our individual rights by removing altogether the shackles of dependency on the government for our retirement financing. We have to tirelessly keep nudging and pushing and advocating to prevent our elected representatives from burying their heads in the sand and to prime the American people for the moral crusade to come.
Reforming Social Security on paper is not a hard nut to crack. As we have outlined in “Separation of State and Retirement” the following three actions would put us on the path towards abolition in relatively short order without unduly penalizing those who are chattel of the current system and dependent on it for their livelihood:
- Increase the retirement age for instance 1 year every 3 years until reaching the average life expectancy of Americans (currently around 78-79 years). Today’s 67 would become 68 in three years, 69 in six years, etc. Same for ranges of early/late retirement options: 62/70 would become 63/71 in three years, 64/72 in six years, and so on. If you’re 59 today, you’d have to wait until age 71 to collect in full instead of age 67. If you’re 50 today, you’d have to wait until shortly before age 75.
- Reduce benefits from a certain cutoff date, allowing everybody who is for example 50 and above to collect in full once reaching the retirement age as calculated above. For everybody younger than 50 reduce benefits with let’s say 2.5% per year. If you’re 49 at the cutoff date, you’ll collect 97.5% when reaching full retirement age, if age 48 95%, if 40 75%, etc. That will allow for plenty of time to save up for retirement for those younger than 50.
- Reduce Social Security taxes gradually to zero after all current liabilities have been funded (assuming the above gradual dismantling).
Combine the above with increased tax deductions for retirement savings and regulatory rollback and we would soon be on track towards total separation of state and retirement. If you think the math doesn’t add up, then make the retirement age increase and/or benefit reductions more or less aggressive.
What will it take to gain traction on liberating us from the shackles of government retirement control? The answer is a sea change in moral sentiment. For the past some 80 years, champions of Social Security have occupied the moral high ground with vague promises of financial security for everyone in old age. But a system that robs Peter to pay Paul is both morally and practically fraudulent.
For example, if you are currently collecting Social Security consider the following:
- There is no Social Security “trust fund”; the system is “pay-as-you-go.” The funds you and your employers paid into the system your entire working career went to paying for the retirement of your parents’ and grand-parents’ generations. In fact, the program got off the ground in the first place in no small part due to a Supreme Court case (Helvering v. Davis, 301 U.S. 619 (1937)) that upheld the program because “The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way’. That is, the Social Security Tax was deemed constitutional as a mere exercise of Congress’s general taxation powers.”  So while the scheme hasn’t exactly been secret, it should make you no less indignant.
- That no money is in the “bank” (the Treasury) means that you are a welfare case; there is unfortunately no other way of putting it. You are at the mercy of the people who continue to pay into the system and grant you a monthly handout. The only thing separating you from the person with the food stamps in front of you at the supermarket—and from a crushing blow to your self-esteem—is the government depositing your welfare check directly into your checking account giving you a false sense of independence.
If this makes you feel morally uneasy (this doesn’t seem right, does it?) or outraged (this is wrong!) or anything in between, you are now part of the change in moral sentiment that is a prerequisite for reform. You may be dependent on the current Ponzi scheme for the rest of your life, but don’t you owe yourself a fight for reforming the system to give your children and grandchildren the opportunity to live independently off their own savings in retirement, without being at the mercy of their fellow men and the heavy hand of government?
What if you are not yet collecting Social Security? The fact that you and your employer are paying a combined 12.4% “welfare flat tax” (i.e. FICA) to finance other people’s retirement needs and not your own should make you feel morally betrayed; absent a change you will be a welfare case just like today’s retirees—if there is any money left to dole out when your time comes to collect. So much for a “Golden Age.” Do you think this is a moral travesty? Congratulations, you just added a ripple to the moral current we’re talking about.
The time is ripe for retaking the moral high ground for individual rights-respecting retirement independence. Start fighting the moral injustices of the current system. Force your elected representatives’ heads out of the ground. Fight for your individual right to plan and save for retirement and to reap the fruits of your labors in the later parts of your life without government interference. Make the case for organized abolition of Social Security. With just an ounce of moral conviction on your part, you will find that the opposition’s hollow defenses come tumbling down.