On Eliminating Social Security

Should one advocate a gradual phaseout of Social Security and Medicare, or outright abolition? That’s a question on which I’ve had mixed thoughts for a while. On the one hand I see the point of Ayn Rand’s own statements in support of a phaseout because people have become dependent on the system. But my attitude has been hardening on this over the years, and I find myself agreeing with the “Too bad — it’s not my fault” argument that I’ve started to see some of my younger friends and acquaintances advancing.

Here are the facts about Social Security and Medicare as I see them:

  1. ALL of the money that has been collected for these programs has already been spent. It’s gone, period. The only way to get some of it back now would be to start liquidating federal government assets, such as the obscenely large amount of land it owns in the American west.
  2. Legally, Social Security and Medicare are nothing more than income taxes, collected under the authority of the 16th Amendment. The Supreme Court has twice ruled that the federal government has no fiduciary responsibility whatsoever to repay a cent of the money that it has collected in FICA taxes. That’s because legally, and all propaganda to the contrary notwithstanding, that’s all that they are — just income taxes.
  3. The current and near-future generations of retirees are not blameless in the disaster that’s about to befall them. And I say that as a baby boomer whose demographic is among those likely to get hit hardest by it when it does.

Some of us who have always opposed these programs may tend to over-project our own understanding and convictions about them onto the general public. I think that’s a mistake. Social Security and Medicare would have been eliminated years ago if the American public had chosen to act rationally and responsibly about the matter. They didn’t.

Instead, as recently as a few years ago, the Bush administration was once again electrocuted for trying to touch the third rail of American politics and propose merely a semi-partial privatization of Social Security. The facts about these programs have been available to the American people for decades, and they have evaded the responsibility of facing them. In my opinion, most of my generation will get exactly what it deserves if the next decides not to accept the role of sacrificial animal and tells us to go to hell.

I would argue that no one who would be affected by the elimination of Social Security and Medicare has had any right or any business expecting them to be there when they retire. Those of us who have had the resources with which to plan our retirement accordingly have either been doing so, or will deserve what happens when the system that we sanctioned for so long finally hits the fan. I know that I have, and it’s required me to live a much more modest lifestyle than most as a result.

So I’m not inclined toward any sympathy toward most of my generation on this issue. The only ones I do sympathize with are those who’ve recognized what’s wrong with the system and have helped to fight it, but who (thanks to the payroll tax itself) haven’t had the resources with which to plan for retirement on their own. Those folks I’d like to see helped by private charity.

One objection that I’ve heard regards the “property rights of those who paid into the system their entire lives and are entitled to something back from it — especially when they’ve been guaranteed those entitlements.”  Well, I’m sure that the victims of Bernie Madoff wanted their money back, too. That doesn’t change the fact that it’s gone, squandered by a crook running a Ponzi Scheme. So is the money my generation paid into Social Security. At least most of Madoff’s victims can actually claim to have been defrauded; Social Security and Medicare, by contrast, have been openly run as pyramid schemes since their inception.

If action had been taken as late as ten years ago, something could have been done to contain the damage and avert the disaster we’re now facing. Instead, seventy years worth of voters have continued to elect leaders who have perpetuated and even expanded this destructive system. Indeed, their overwhelming refusal to elect leaders who would have rolled it back (such as Barry Goldwater in 1964) is the reason why it’s become known as the “third rail of American politics.” Because of this, relatively few Americans were truly forced into the system and can claim to be innocent victims of what is to come. And that is why protecting them from the consequences of their actions by trying to keep the system going any further would be just another bailout.

As I said, none of us have a legal “property right” interest in a dime that we’ve paid in FICA taxes.  Politically, they’re nothing more than an exploitative and immoral system of intergenerational wealth transfer.  And legally, they’re nothing more than just another income tax.  For a good discussion of this issue, see Property Rights: The Hidden Issue of Social Security Reform:

“One of the most enduring myths of Social Security is that a worker has a legal right to his Social Security benefits. Many workers assume that, if they pay Social Security taxes into the system, they have some sort of legal guarantee to the system’s benefits. The truth is exactly the opposite. It has long been law that there is no legal right to Social Security. In two important cases, Helvering v. Davis and Flemming v. Nestor, the U.S. Supreme Court ruled that Social Security taxes are simply taxes and convey no property or contractual rights to Social Security benefits.”

The reason why this is true should be clear. If Social Security and Medicare had been anything other than just another pair of income taxes, the Supreme Court would have been forced to declare them unconstitutional.

I’m sympathetic to folks who feel the system “owes” them for what they’ve been forced to pay in, but only up to a point — and that includes myself. I’ve known these facts about Social Security and Medicare since my early 20s, and planned my life accordingly. My money is already gone, and I simply have to accept that. The next generation does not have an unchosen obligation to make good on my losses, which were not their fault. Aside from going after and liquidating federal assets, I don’t see any way for me to get back any of what’s been stolen from me by the twin frauds of Social Security and Medicare.

43 thoughts on “On Eliminating Social Security

  1. Amit Ghate

    Thanks for this. I have to say that over the past few years I’ve been having many of the same thoughts and feelings about the issue. But I still find it hard to completely cut-off the people who were forced into the program.

    In any case, here’s my (long) take on the subject for whatever it’s worth. (It’s addressed to the layperson or typical tea party member, not to Objectivists, so it gives more background and analysis than most readers here might require.)

  2. Ariel

    One additional point, per Richard’s “solutions-oriented” approach: rather than wasting too much time debating hypotheticals, why not make the SS crisis an opportunity?

    Just as with the case for selling off government assets, use it as a rhetorical wedge to advocate for all kinds of deregulation and dismantling of the welfare state, with the idea that this is the only practical way of managing the massive expense of transitioning from SS and Medicare.

    For example consider the case for immigration liberalization. Just point out that freeing up immigration could help mitigate the expense of supporting those remaining in SS whilst it is being phased out. Right now as I understand it, in the US every four or five people working are supporting one retiree. In Western Europe, the ratio is even worse, something on the order of 1:2.

    So in addition to making the moral case for capitalism, it might be a good idea to incorporate this idea into your practical talking points for potentially every single concrete issue.

  3. Ariel

    I’m inclined to side with Richard on this one. Also I would be more sympathetic to Repeal’s position (and I am already very sympathetic) if it were known that subsequent generations would likely be less collectivist than preceding ones. But the bulk of available evidence indicates the opposite. I.e. why should the (admittedly few) innocents of previous generations be sacrificed, just so that younger generations can continue to expropriate and victimize others in ways other than SS, Medicare etc?

    Finally, as AR pointed out, this is simply a situation where there’s no good resolution, morally speaking. No matter what, someone is going to get screwed, and morality is out the door. Accordingly, those innocents of the older generation (who through no fault of their own) were unable to save enough for a retirement bereft of SS are likely to have a very different perspective on the issue than Repeal does.

    This is simply a case where there’s going to have to be a conflict of interest among honorable men.

  4. Bernard M. Russelman

    We definitely need to solve this debacle because the Country is being destroyed by SS and other “entitlements”. People are being turned against each other, because that is what socialism does. It creates envy, jealousy, and worse, mediocrity.

    Here is more evidence that if you have ANY property or savings, you will not see any of YOUR “social security” money:



    This money is what you worked for and handed over at 7.6% of your salary and that your employers “matched” (with money that should have been in your pocket, and not sent directly to the government) at 7.6% for a total of 15.2% of your salar…y over the course of your working career.

    If you earned $50,000 per year from ages 22-60 (38 years), you would have earned $1,900,000 during your career. Your FICA TAX consfiscated from you for social security and medicare (15.2%) is $288,800 during your career.

    That $288,800 earns ZERO INTEREST during those 38 years and the government says that OTHER TAX-PAYERS (some not yet born, in my case) will pay for your social security and medicare, because YOUR $288,800 was “given” by these vote-seeking, power-hungry politicians, to pay for OLDER retirees “benefits” (and secure their votes).

    What has our American worker lost if “their” $288,800 was ACTUALLY INVESTED and earned a decent 8% average return?


    $50,000 (no raises from age 22-60) per year multiplied by .152 (15.2%) for annual FICA TAX = $7,600

    $7,600 divided by 12 months = $633.33

    Using the calculator in the link above,

    YEARS = 38 (work from age 22 to 60)
    PERCENT YIELD = 8 (not too conservative and not to risky)
    INITIAL BALANCE = 0 (start from scratch)
    MONTHLY CONTRIBUTION = 633.33 (15.2% of an ANNUAL salary of $50,000)

    Hit the CALCULATE NOW! button and the FINAL BALANCE is:


    So next time liberals and democrats tell you that the United States and Capitalism keeps the “working man” down; simply refer to this SOCIALISTIC program that liberals and democrats LOVE! This is the MAJOR CAUSE of GENERATIONAL POVERTY in the United States!

    A working person making an average salary would be a MILLIONAIRE (almost 2 times!) with a simple investment strategy, but these politicians would rather you give your money to THEM to spend.

    WAKE UP AMERICA – they are robbing you every payday and making you feel you are better off for it – that you are going to somehow be “secure socially” if you listen to these politicians, who don’t care about you now, and certainly don’t care about you when you are 70 years old and receiving $1,200 PER MONTH from social security…

    Stop being used as a working cog in their socialistic scheme and demand PRIVITIZATION OF YOUR OWN MONEY FOR RETIREMENT!!!



  5. Richard

    The root issue here is not whether SS is right or wrong… it is wrong.

    The issue is the manner in which SS should be repealed.

    If one views the method of repeal from the false view that SS is a criminal Madoff scheme, then the *method* of repeal will be wrongful. If one chooses a method that acknowledges the cultural scale of SS, and seeks to minimize the upheaval and destruction SS has set up, then one is in pursuit of benevolence and reason.

    [Do you appreciate that the billion dollars of charity sent to Haiti only amounts to $177 dollars per person? The advocates of abrupt cessation of SS are so out of touch with reality, it is mind boggling.]

    The ‘cold turkey’ approach —a heroin withdrawal reference— is NOT Objectivism, is not benevolent and is not reasonable.

    I only advocate a gradual approach using available resources whilst reducing taxation. Work with it, rather than dismiss it out of hand. Find resources, rather than create victims. In this cultural context, even taxing the next generation by half is an improvement, provided the goal is to zero.

    If SS is treated as narrowly equivalent to Madoff, the solution proposed will be similarly barbaric. Look more widely, there are smarter solutions.

    I dread the possibility that some well read blog, or other mainstream medium, will get hold of this discussion and view abrupt abolishment as the Objectivist solution. In essence that abrupt approach is a Libertarian approach. Libertarianism is anathema to Objectivism. The Media will only find fuel to to oppose Objectivism, rather than further it.

    Do you really want to engage in that role?

  6. Richard

    Keith, I was never insulted; I was annoyed by the repeated use of epistemic methods that were not rational. Only your sense of justice has me continuing.

    My assertion, that abruptly ending Social Security entails a False Alternative, prompted you to ask what is the “excluded middle in the false alternative”.

    Aristotle’s Fallacy of the Excluded Middle (FEM) is not an essential feature of the Fallacy of the False Alternative (see Peikoff’s lecture series on Logic).

    Aristotle’s FEM, …serves the epistemic function of ensuring that A is an unsullied, unique, point of interest. It requires that all of A is distinctly NOT anything else. A and B must include the entire Universe of possibilities, of which A must be a distinct part of that Universe.

    If A is not distinct, or B does not include the rest of the entire Universe, then A is not uniquely identified & that which is attributable to A may also be attributed to B. The “may” in that description is all important: if there is one ‘fuzzy’ element in A, then A is no longer a singular, objective, concept.

    The FEM is a problem with faulty inductions. For example, “All swans are white” fails because some (Australian) swans are actually black. However, we must appreciate the epistemic process that has been invoked: “All swans are white” is not an induction, it is a generalization.

    Induction and generalization are not the same thing. That major confusion muddles much of the reasoning in David Harriman’s “The Logical Leap”).

  7. RepealTheBailouts Post author


    You are right that I am disregarding the possible “scale of the consequences.” If you think that makes a difference to the principle involved, I would be interested in hearing an argument to that effect. To be valid it would have to present and justify a criteria for determining at what scale the principle that should govern this issue changes, and why.

    From your description the Weinburger case involves the question of due process, not the question of contract. Flemming vs. Nestor makes that distinction; for elaboration, I recommend reading the Wikipedia page on the case.

    As for the suggestion that “we both are right” and that the government can treat a contract as a non-contract and vice versa: with respect, I think that is nonsense. I’ve already linked to a seven page article which explains why and covers the relevant case law and legal issues in some detail, and have nothing further to add.

  8. Keith Weiner

    Please accept my apology Richard, if my last post looked like an attack. That was not my intent. I assumed, wrongly as it turned out, that you were a current or near-term beneficiary of SS. As you note, this is not the essential issue anyways.

    Like Repeal, I am also curious as to what you think is the excluded middle in the false alternative of either taxing future generations to pay current beneficiaries or cutting them off. Means testing and extending the retirement age are methods of continuing the current system of taxing the young to pay for the old, so I assume you do not mean either of these…?

    I also have to add my $0.02 on whether SS is a “contract”. I am not a lawyer, but it seems to me a promise that was made without the means or intent of honoring it is not a “contract” under any theory of contracts that I can conceive of. It is a promise by politicians, and like all the others, subject to endless revisions. In any case, honoring this “contract” brings us right back to square one: taxing the young to pay benefits to the old, which you say you don’t advocate.

    Finally, I want to address your point that unless we eliminate all taxes, we’re just indulging a sense of self-righteousness. For my part, I advocate elimination of all taxes. As Repeal has noted, this is not likely to happen in my lifetime, but that doesn’t change the essential correctness of this position: morally, practically, economically, etc.

    This segues into something else I have been writing about on other sites: the impending collapse of our monetary system. This will happen, not merely in our lifetimes, but in the next 5-10 years. The reason is simple. Our government has set up a process for capital destruction that has been accelerating for decades and continues to accelerate now. Also, debt has built up everywhere in the system; there is no extinguisher of debt in a fiat money system. Debt can be transferred but not eliminated. The system is drowning in unpayable debts.

    The federal government (not including states, counties, cities, towns, sewer districts, etc.) admits to $13T in debt. But if they kept their books the way any business with $5M or more in revenues does–the accrual basis–the liabilities are between $70T and $130T including unfunded promises from SS and medicare. I don’t think $13T can be repaid, but I am certain that $100T cannot. What cannot be paid will not be paid.

    Capital is leverage on human effort. It is the difference between scratching a subsistence out of the soil with your fingernails vs. typing in an air-conditioned office and having such luxuries as regular meals, hot showers, fresh clothing every day, etc. Oh yeah, by the way, also include mobile phones, PC’s, cars, etc.

    It is being destroyed by taxes, by litigation, by environmental and other regulations, labor law, EEOC, etc. And it is being destroyed by the Fed’s 28-year pressure to force down interest rates.

    The sooner the monetary system crashes, the sooner we can stop destroying capital and the sooner we can get to rebuilding a system that works, based on gold and a free market for money and interest rates.

    It goes without saying, but I should underscore it here, that one aspect of this crash is that all liabilities are going to be defaulted one way or the other. This includes SS.

    1. RepealTheBailouts Post author

      @Keith: I think we could deal with the $13T debt if we got serious and exercised the necessary fiscal discipline. But I don’t see how that can be done without massive reductions in federal spending, of the kind and scale that involve essentially dismantling entitlements such as SS.

      I will “quibble” to the extent that I do not agree that Medicare and SS should be included in an enumeration of “unfunded liabilities.” They are not liabilities precisely because of the point that I raised. SS and Medicare are a welfare system funded by income taxes, and not contractual obligations. As Rounds explains in his article, SS payments can be reduced or eliminated at any time, and at the sole discretion of the legislature.

      That is part of the reason why I wrote that no one in my generation who had done the civil due diligence of learning about the law and workings of the system had any business expecting to SS to still be there when they retired. That’s why they should, if they were rational and responsible and could at all manage to afford it, have been saving as much as possible for a retirement without it.

      1. Keith Weiner

        Estimates are all over the map, because the states, cities, ands counties finances make the federal look like a bastion of transparency. But let’s assume the total non-federal gov’t debt ex-pensions is another $5T (it may be far higher). Pensions become a trickier issue at the state and local level, because they may be considered contractual obligations, but let’s assume not for the moment.

        So $18T in public-sector debt, assuming the $13T number isn’t badly understated (I believe it is). This is obviously not considering private sector debt (especially including derivatives) which has to be paid from the same incomes, ultimately. How many people are actually employed, and thus could pay taxes? One number I’ve seen bandied about is 155M.

        Let’s ignore for the moment that roughly 25M are employed by government and millions more are employed by contractors and vendors. Whatever they pay in taxes is just recycled tax money…

        So 155M people have to shoulder an 18T public-sector burden, not including their own personal debt burdens or business debts. That works out to $116K per person.

        The next question is: at what interest rate? Today, in a check-kiting scheme of epic proportions, the Fed buys basically all of the net new issuance of Treasury bonds. Because of the way their so-called “Open Market Operations” works, it is a giant game of front-running the Fed’s purchases of bonds. With everyone bidding up the price of bonds, there has of course been a bull market in bonds for 28 years. This has driven down the interest rate to insanely low levels. The 10-year bond now pays an interest rate of well under 3.5%.

        What would the market interest rate be? It’s hard to even guess, as interest rates have been centrally planned for over 100 years. I would have to think 10% would be a more reasonable rate. And in this environment where everyone is starved for capital (it’s a capital crisis, not a liquidity crisis) 15 or 30% would not be out of the question either, as people who still have precious capital want to be compensated for their risk and foregoing the use of their capital for other purposes.

        Let’s assume 10%. What time period do we assume each worker must pay off his $116K? Over a 10-year amortization period, it works out to $1533 per month per worker; households with two workers would have to pay $3000. Over a 20-year amortization period, it is $1120 or $2240 for a two-worker household.

        At ever step, I have tried to bend over backwards on my assumptions. And the best case is $1120 per month for 20 years. Do you think this is payable? I don’t. Remember, this is on top of mortgage debt, credit card debt, student loans, etc. I think the average person is drowning in debts to begin with.

        There is a deeper economics reason why the debt cannot be paid off. In short, our paper money system is based on debt. One party’s debt is another’s money. It is not a bug in the system that debts cannot be paid off (in aggregate) but a feature. There is no extinguisher of debt, only transferring the debt from one party (perhaps a private party) to a bank or the central bank. But this is a whole ‘nother topic…

  9. Richard

    On Repeal’s point #2:

    “The Supreme Court has twice ruled that the federal government has no fiduciary responsibility whatsoever to repay a cent of the money that it has collected in FICA taxes”

    I understood that was a recent development to SS, but I learned the date for the second ruling is 1960, a working lifetime ago.

    At times the government will treat a non-contract as a contract & vice versa. Hence, fifteen years after SS is not a contract:

    “Weinburger v. Wiesenfeld (1975): A widower claimed that he was entitled to his deceased wife’s benefit, even though he had not been dependent on his wife. The court upheld his claims, stating that automatically granting widows the benefits and denying them to widowers violated equal protection in the Fourteenth Amendment.”

    That is typical of vague regulation: it is a contract and it isn’t a contract. In effect, Repeal, we are both right…

    That fine point does not change my overall argument. A “cold-turkey” ending of SS is based on faulty premises*, on a non-essential similarity with Madoff/Ponzi, and a disregard for the scale of its consequences.

    (*again, this is not, repeat *not*, support for ongoing taxation to fund SS.)

    In Point number 1 – “It’s pretty clear to me that it’s either-or.” That this is still how the issue is being conceived, after lengthy explanations of why the “Ponziness” of SS is not its only feature, and of ways to eliminate SS without catastrophic harm to some 10 million people, demonstrates to me how powerful false alternatives can be to those who are fully engaged in one side or the other. It explains why my own remarks have been construed, not for what they are, but as a defense for the opposite side of the false alternative.

    Indicating the consequences of a faulty argument, and the nature of its error is not being uncivil. “Uncivil”, in this context, is distorting someone’s argument into something else and then emotionally reacting to their newly created distortion. It is even more uncivil —as crocodile tears— to then suggest a lack of civility on the part of the person whose argument has been distorted!

  10. RepealTheBailouts Post author

    I only have a moment to comment now, but a couple of quick observations from skimming Richard’s latest post:

    1. If you don’t want to place “an unchosen obligation on members of the next generation” to pay through taxes for Social Security benefits to be received by the retiring generations, then it seems to me that you have to advocate scrapping the system. It’s pretty clear to me that it’s either-or. If you think it’s not, then perhaps you could elaborate as to how.

    2. There is no contract at the heart of Social Security (at least not here in the US). I went out of my way to discuss this issue at some length in my article, when I pointed out that it is (and has been repeatedly ruled by the US Supreme Court to be) an income tax that places no obligation for the payment of benefits on the federal government:

    Legally, Social Security and Medicare are nothing more than income taxes, collected under the authority of the 16th Amendment. The Supreme Court has twice ruled that the federal government has no fiduciary responsibility whatsoever to repay a cent of the money that it has collected in FICA taxes. That’s because legally, and all propaganda to the contrary notwithstanding, that’s all that they are — just income taxes.


    For a good discussion of this issue, see Property Rights: The Hidden Issue of Social Security Reform:

    “One of the most enduring myths of Social Security is that a worker has a legal right to his Social Security benefits. Many workers assume that, if they pay Social Security taxes into the system, they have some sort of legal guarantee to the system’s benefits. The truth is exactly the opposite. It has long been law that there is no legal right to Social Security. In two important cases, Helvering v. Davis and Flemming v. Nestor, the U.S. Supreme Court ruled that Social Security taxes are simply taxes and convey no property or contractual rights to Social Security benefits [emphasis added].”

    Let me repeat that: Social Security in the United States is not a contract. This is openly available knowledge to anyone willing to devote the minimum civil due diligence to learning about such a large and important part of the American political system.

    I would suggest that further comments on this subject be restricted to civil discussion and analysis, and focused on identifying the differing premises from which the interlocutors on both sides are approaching it (as I just tried to do, regarding the “contract” issue). The rest is really not helpful.

  11. Richard

    The thing that most amazes me here, is that the response to my comments has been so fully off the mark. I think that alone is worth examining, because it focuses on how conclusions (at least on this topic) are reached.

    There seems to be a Straw Man Fallacy approach being used to refute what I have said. Where have I advocated placing “an unchosen obligation on members of the next generation”? Yet that is where responses to my argument seem to focus. Given the quality of the participants here, I find this extraordinarily out of character. In fact, I have already pointed this mis-focus, yet Repeal does it again! There is also a tu quoque accusation that I do not appreciate others’ arguments, when I am clearly making an effort to look into them more deeply than their spokespersons. Very Weird.

    As to the scale of the harm SS benefit removal would produce: take a look at the financial position of the lower third (a guesstimate) of the 30 million recipients. SS is pretty much the only way ten million people have to live, and they are not exactly in a position to leap into a new career. Walmart Greeter will barely put food on the table. Charity may help a bit, but will likely make no visible dent. What is needed is the active and immediate implementation of the aforementioned “alternatives”, and the invention of more. Throwing Bernnie Madoff under a bus may be a just decision, but doing something similar to ten million people, when other solutions are possible is not rational. Abstractions must be concretized.

    Those whose plan is to eliminate SS cold turkey, in the interest of protecting new generations from forcible payments to SS, ought to also have a plan by which no-one in that younger generation will be taxed for any purpose… otherwise their moral high ground dwindles to unrealistically selective, self-righteous pontificating.

    This is particularly interesting:
    Of the retiring generations: “They have already been harmed. Their losses (from the payment of FICA taxes over many years) are actual and not potential, ”

    This suggests harming them more, by breech of a contract (however lousy it may be), is now offered as a justification? Wow.

    An engineer friend of mine, overheard coworkers bemoaning their problems in minimizing the company’s environmental environmental footprint. Though he was no environmentalist, he realized their negativity was a big part of their problem.

    When the opportunity arose, he asked, “Suppose a change in solar output revealed that Earth would be plunged into a permanent Ice Age in 25 years. Would you just give up? Let’s figure out everything engineers can do to ensure the lasting survival of humanity.”

    Fortunately, one immediately took the bait: “without environmental concerns, I say nuclear power plants, lots of ’em”.
    Another: “Humans should move between the two Tropics, which will buy a bit more time.”
    — Oceans and deep mines can provide geothermal heat and energy.
    — Domes and other structures can be prefabricated, for rapid assembly.
    — some Domes would be agricultural, perhaps with hydroponics.
    — With all our nuclear power, we could light significant areas of shallow ocean for aquaculture.
    The ideas came pouring in, and so did other engineers. Some drew designs, and brought them in for what became Show and Tell. Yes, they were doing this all from a “can do” perspective, with no regard for ethics or politics —but the point of the story still has application.

    Last I heard, there was never any more talk of the insurmountability of environmental problems. The men took more interest in finding solutions, rather than bemoaning problems.

    Please, look for smart solutions, rather than throwing up hands and settling for inhumane ones as if they were justice.

  12. RepealTheBailouts Post author

    I agree that we should all try to keep the discussion focused on issues and avoid taking offense or making it personal. Let’s remember that whatever our disagreements, we’re all on the same side here. As regards having one’s essential arguments ignored: with respect, I see some evidence of that on both sides of the debate. I suggest that we simply focus our attention on clearly and constructively identifying the differing premises that are leading to it. That is, in fact, one of the reasons I posted this article in the first place: to see if there was a different perspective on this issue that I might be missing.

    So far, though, I have to say that I haven’t seen it. I’m not unaware of the phaseout options that I think Richard is suggesting as better alternatives, such as means-testing, PRA reform, and so on. I’ve spent a fair amount of time reading and thinking about Social Security, and advocated them for many years. I still do, in any context where the alternative is the status quo. And I don’t kid myself that outright elimination is politically feasible given our current culture, or anytime in the foreseeable future. I’m not known, however, for a penchant for shying away from asserting what I think is right just because it’s “too much” to be possible today. As Wendy suggests (and as I think the left has demonstrated for decades), that is precisely how one shifts the parameters of the debate.

    @Richard: I’ll have to come back later to address some of your specific points, but at least as I read them now they mostly seem to be ones that I’ve already addressed in my article. The fact that the analogies I gave involved criminal activity is not essential to the point I was making; I could just as easily have cited ones that didn’t, such as a person without insurance whose house is destroyed in a freak flood. Their loss is a tragedy, but it doesn’t entitle them to force me to compensate them for it.

    As I said in my original article and have repeated many times in these comments, I DO NOT “indict” all recipients of Social Security (although we do appear to have a difference of opinion regarding which and how many of them really are innocent). Nor do I suggest that genuinely innocent victims of it should further victimize themselves by not trying to get back what they can from the system while it is still in place, as long as they continue to advocate its elimination. I do see your point about how SS was a cultural and political phenomenon as potentially relevant, but I don’t yet see how that fact places an unchosen obligation on members of the next generation.

    As Keith pointed out and as I have repeatedly explained, I simply do not agree with your characterization of eliminating Social Security as something that would harm members of the retiring generations. They have already been harmed. Their losses (from the payment of FICA taxes over many years) are actual and not potential, and the harm to them was not done by the coming generations who would be asked to bail them out (which I argue is precisely what a phaseout of Social Security would accomplish). I don’t have a problem with helping the innocent among them through private charity, including assistance from their children. But I don’t understand (and especially from an Objectivist perspective) why this should not be considered sufficient.

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  14. Richard

    I have made it very evident that I am aware of such obvious matters as “the money taken by SS is gone”.

    “What you label as “non essential” is the defining characteristic of the thing! ”

    This simply throws out several paragraphs of my explanation as to why it is non-essential, and offers no substitute other than to repeat the obvious claim. I can only ask that he re-examine the two issues from some perspective higher than “street view”. If that is not possible, I can only shrug.

    “Now the choice is whether current retirees bear this loss -or- whether the government will forcibly inflict this loss on current workers.”

    Again, a repetition of the false alternative, with no rational examination of my arguments as to its being a false alternative.

    “You say it is not fair to “punish” SS beneficiaries. Is it fair to punish new people for the sin of working (i.e. taking 16% of their income) to make up for the losses of the SS beneficiaries?”

    I have made it eminently clear that I am NOT advocating further depredations on working people, and that smarter alternatives are available. Too many people here write as if ending the depredations of SS are the only problem, and as if ongoing depredations will not continue to occur, to pay for other programs. The workers will not suddenly be free of taxation if SS is abruptly stopped. But that is not my point, despite efforts to pin it on me.

    “SS cannot be “fixed” in the sense of tinkering with it …”>

    Is that addressed to me, or just a shout into space? If the former, and Mr. Weiner had actually taken the time to think about what I have written, then surely it is blatantly obvious that I am not advocating tinkering.

    I have to say I am terribly disappointed in the willful adherence to a false alternative &/or unwillingness to even consider other alternatives. The content and meaning of my arguments are being ignored, or are being shoehorned into being a support of continuing SS. That is an amazingly ridiculous attribution —suggesting a deeper motivation than just rectifying the impending financial crisis. Somehow alternative solutions are not to be explored, cannot even be grasped as possible. It must be the significantly unjust and catastrophic solution—regardless of the obvious fact that it will never wash politically!

    1. Keith Weiner

      What can I say, Richard?

      You say you understand that your money is *gone*, but you say that you want your “contract” to be “honored”. If there was indeed any contract, it was breached every day they took your money.

      You want for current and near-future beneficiaries to be paid, somehow, without taking the money from current workers. You’re right, I don’t address this in my thinking about the two “false alternatives” because this is no alternative at all. In order to pay you, the government must take the money from someone else.

      This is profoundly unjust to that someone else.

      1. Richard

        First of all, I am not an American citizen and do not live in America. (But, America is important.) Your twisting this into a personal matter about me, is a cheap and disappointing manipulation (I have read much better from you elsewhere, and thought you were above that).

        If you must comment in this thread, please address the different perspectives I & others have offered, or contribute something rationally new.

        This site is a great idea, help it progress.

  15. Richard

    The emphasis, by RepealTheBailouts, that the Madoff and Social Security schemes are equivalents, has helped me clarify why I disagree. That they resemble each other as Ponzi schemes is superficial —a non-essential given quasi-credibility by its widespread use.

    Yes, both schemes rely on recent victims to pay the earlier ones, which then keeps the illusion of a successful program. But the resemblance ends there.

    The Madoff fraud was criminal & hidden.The SS scheme was culturally and politically open for all to see, and was accepted. That alone suggests something different is at stake.

    Madoff’s scheme effected some 16,500 mostly innocent people (source) trusting the expertise of others, but he was a consciously immoral law breaker. Of course, criminal justice can only go so far within the context of each case. A “life sentence” for a murderer does not bring the victim back to life; Madoff’s victims are going to suffer, some drastically. Madoff’s swindle was not a cultural and political phenomenon.

    Social Security (the Old Age, Survivors, and Disability Insurance program) began in 1935. It was initiated by politicians elected by voters, all of whom are now dead. It has been part of the financial ‘terrain’ of Americans for 75 years. Its use was not a criminal act then, and it is not criminal now.

    Though stupidity can seem criminal, Social Security was made possible by a majority portion of, now deceased, eligible voters, who had long lost the meaning and vision of The Founders. Many acted out of benevolence without the understanding needed to grasp the ethical, political & economic consequences. (Rand pointed out she would not have been as sure about Capitalism without the evidence of The Industrial Revolution.) Many supporting it were well enough off that they had no need, nor intention, of using SS. Initially, the taxation needed to administer SS was small, and was viewed as trivial.

    Many people believed (and still believe!) that SS payments were/are invested, via banking, into the economy. Therefore the money was not really being taken from ‘the economy’, and gains the money made, they thought, would enlarge the wealth available for SS & sustain it. Voters did/do not appreciate the degree to which politicians disregard the purpose of ‘earmarked’ funds, if they can redirect it to their latest power lusting program (see “campaign” in next paragraph).

    In politics, SS supporters did not understand that within a democratic system, such a grand scheme is a tool for politicians of the worst sort to obtain power. Since SS had ‘gaps’ —most women and ¾ of Negro males could not receive it— a politician could campaign to ignored groups that he would close this and that ‘gap’. Instituting a law is easy, it takes Herculean effort to repeal one.

    Once such a system is in place, and you are paying into it, it is senseless not to demand your SS reimbursement even if you voted against the program. Your demand is not requiring Paul be robbed to pay Peter. It is not a demand for the unearned. It is a demand that your (forced) contract be honored. This is similar to Rand’s student loan example, but the student was not forced to pre-pay it.

    Viewing the SS as merely an open fraud perpetrated by people seeking the unearned, is an enormous over-simplification.

    In 2010 Social Security was provided to 53,000,000! people, and it constitutes an average of 40% of their income! Sure, many SS recipients will do just fine without SS, as will many of Madoff’s 16,500 victims. However, with SS, the number significantly and/or unjustly harmed will be millions. The harm will not simply be an economic consequence. By some of the language used on this web page, the indiscriminate harm will be a calculated intent.

    That many SS recipients seek the unearned is no reason to indict all. To punish those who do not, amounts to an injustice of prejudice (which means-testing can mitigate). None of the above is to be construed as arguing that further takings from the young is desirable. Nonetheless, a weaning off process using many disparate methods (as comments above mention) is more economically sound and more just.

    The Madoff Swindle is a massive crime, whereas Social Security is a massive cultural failure. They are only superficially comparable.

    1. Keith Weiner


      What you label as “non essential” is the defining characteristic of the thing! SS took money from people and spent it immediately. The money is gone, but unfortunately people believe it is still there and due to be repaid with interest!

      It would help all parties in this discussion if you would acknowledge that the money taken by SS is gone.

      Now the choice is whether current retirees bear this loss -or- whether the government will forcibly inflict this loss on current workers. You say it is not fair to “punish” SS beneficiaries. Is it fair to punish new people for the sin of working (i.e. taking 16% of their income) to make up for the losses of the SS beneficiaries?

      SS cannot be “fixed” in the sense of tinkering with it so that it truly operates in the way that people falsely believe it has operated for all these decades. It can be perpetuated if and only if you are willing to punish a vast group of future victims, people who will be forced to pay for it during their whole careers and who can expect to receive nothing when they retire.

      Now that it is obvious that the thing is insolvent, it is time to do the right thing and shut off this machine which destroys wealth and, as you correctly noted, hurts people.

  16. RepealTheBailouts Post author

    Richard: it’s getting late, so I’ll have to pick up any more extensive discussion of this at a future date. But with all due respect, I think that I’ve already written all that is necessary to address the point that you ask about in my article. The “yanking of the financial rug” under the retiring generations has already been done, and over the course of many decades. There is literally nothing in the trust fund. It’s all been squandered. What we are discussing now is the proposition of extracting money by force from members of the following generations to make up for it. I’ve already said that I would like to see the innocent victims of this who need it helped by private charity. Why is that not sufficient?

    Let me put the matter another way. Suppose you had invested your retirement savings in Bernie Madoff’s Ponzi scheme. Or if you think the element of force is crucial, then suppose you had liquidated it to buy gold, hid it in a safe in your home, and had it stolen by burglars. As a result your life savings is gone, and you’re going to go into your retirement years destitute. That is a tragedy, but does it entitle you to point a gun at my head and demand a bailout for what you have lost, at my expense?

    The situation with Social Security, I am arguing, is exactly analogous. The wealth that all of us have paid in FICA taxes over the years is gone. How is our plight different in principle from the one described in my example?

  17. Keith Weiner

    I think Repealthebailouts has addressed every objection to stopping the scheme of looting known as SS.

    I wanted to add a point about Medicare Part D. I know people who complain that they had a much better (i.e. more generous) drug plan through their pension, often a city or state worker’s retirement system. They are upset that Bush effectively cut their benefits.

    My hypothesis is that the federal government took over the obligation to buy drugs for all seniors as a bailout. Ponzi schemes “work” while there is an acceleration of fresh money coming in. They collapse when this stops. I strongly suspect that the state and municipal retirement systems drug obligations were starting to threaten them with insolvency. So they transferred tens of trillions of dollars of net present value liabilities to the federal government.

    Part D cannot be paid either. The money is gone, and even if they try to break the backs of current workers, it will not be enough. This is because of a principle identified by Art Laffer. If your goal was purely to maximize how much the government could take out of the economy via income taxes, where would you set the rate? At 100% tax rate, the government gets zero as all economic activity ceases. The tax rate which maximizes the tax take is substantially less than 100%. It may be at or below the current tax level!

    I submit for everyone’s consideration the following. One way or the other we will have to deal with the consequences of having accrued liabilities which cannot be paid. Whether default will occur via repaying everything in worthless paper scrip, or whether it will come the old fashioned way by non-payment, default is coming to SS, medicare, part D, and most defined benefit pensions. It will also come to most bonds.

    Someone (I forget who) once noted that SS is a system of the old literally eating the young. I think that is a great way to think of it, if one finds one’s self thinking it has to somehow be preserved for those who depend on this. Even if it were true that someone depended on eating the young, would it be worth preserving his life??

  18. Richard

    My terminology was not intended as an insult, it was a description of the moral position of a proposition that is hardly objective. I clearly recall that Rand used that method, and exact word, when it was applied in that way.

    I am every bit as opposed to SS as anyone here. I am as appalled that a voting majority is willing to drive America into complete bankruptcy. I am disgusted that adults are willing to drag every productive person down with them. Nonetheless, the emotional reaction, described elsewhere as “crush the poor and the helpless”, is quite wrong, and apparently I must repeat: especially when rational alternatives are available. As HB points out, it is a view to be used facetiously, not literally.

    Rather than re-construing my statement as an insult and then threatening to veto it on those grounds, please demonstrate that my statement is wrong. Demonstrate that yanking the financial rug from under the feet of any and every seventy year old —which is a time when one is least able to recoup, and most likely to have the largest impending medical bills of their lives— is anything less than (euphemism alert:) inconsiderate & unkind.

  19. RepealTheBailouts Post author

    A Warning for the Record

    I don’t necessarily expect everyone who posts comments here to agree with me or with each other, but I do insist that such disagreement be expressed civilly, respectfully, and thoughtfully. Accusations of viciousness, for example, do not qualify as such. Constructive and civil criticism are welcome here, but in future rudeness and insults will simply be deleted without comment.

  20. Richard

    It is inescapably collectivist to assume all who were forced to pay SS deserve catastrophic consequences. It becomes vicious to advocate that when smarter solutions are possible. Perhaps we should research which dead offspring of these retired parasites benefited from SS, and retrieve the SS payments from the property of their offspring. The descendants do not deserve it either.

    The more virulent commenters here might consider examining the reasoning of Rand’s article on accepting student loans. Her explanation might also help them grasp that quite few retiring adults are not walking about with horns and a spiky tail. It is an injustice to lump them in with the ones who are.

    1. RepealTheBailouts Post author


      It is false to suggest that I “assume all who were forced to pay SS deserve catastrophic consequences.” If you are confused on this point, please re-read what I wrote.

      It is rude and insulting to characterize my remarks and those of others who’ve agreed with me here as “vicious.” Please make an effort to discuss this topic in a civil and respectful manner, as everyone else who has posted here has done. Otherwise, I will not hesitate to show you the door.

      I understand the reasoning of Rand’s article on accepting student loans very well. If you think it is relevant in this context (I do not), then please offer an argument to that effect. As I understand it the article does not, for example, advocate extending programs like Social Security, but simply upholds the morality of drawing benefits from them while they exist and if one advocates their repeal. Not only have I never denied that, but I went out of my way in my remarks to distinguish individuals who fit that description from the rest.

  21. Ed Thompson

    From the 90s, through my participation in the President’s Committee to Save Social Security (2001), I was active in the Personal Retirement Account (PRA) drive, having founded a 501(c)3 to promote same—to the point of being contacted by the White House. I mention this merely to indicate my level of interest and experience re the Social Security issue and not to pull rank. Your opinions on philosophical aspects of the matter may be at least as valid as mine.

    Your fundamental premise is that Social Security should be abolished cold turkey, damn the consequences, rather than phase the program out gradually. Philosophically, I have some sympathy on a superficial level. At a deeper level, I’m with Ayn Rand on this one.

    Participants have no choice in the matter; we are forced to participate. We have no vehicle for eliminating Social Security, or for that matter, any other government program, except our vote. Voting for Bush, who ran—twice—on the promise to implement PRAs got us nowhere. (It got us Medicare, Part D (drugs).) It would be cruel indeed to pull the rug from under those for whom it is too late to recover. (That is not to say that means testing might not be appropriate, but such matters are beyond the scope of my response.)

    The discussion needs clarification; it is one thing to sort out the moral issues from an Objectivist perspective and quite another to propose legislation for public consumption. I agree with the tenor of your moral arguments. I would put it thus: The moral is the practical; Social Security is immoral, ergo it is not practical. But okay, we know that Social Security is immoral. The question is what to do about it.

    However, it would be the height of naivety to propose anything other than a phase out, which implies personal retirement accounts (PRAs). I will comment further, below.

    First, I will comment on your enumerated points:

    1. You are correct, the so-called trust fund is a sham. Social Security is a wealth transfer from taxpayers to retirees—money in, money out. However, the oft-mentioned sale of federal assets is an illusory remedy. Putting large tracts of land on the market, with the large overhang of the yet to be listed, would severely depress the market in normal times, never mind how ineffective it would be in the current depressed market. It would therefore damage private sales, yet another inequity. Any such sales would probably barely dent the national debt, much less have anything left over for Social Security. Social Security must be handled on its own.
    2. You are correct. (Except to say that grammatically, Social Security is not taxes, FICA is.) I actually knew the author of the paper you cite and the principle established by those two rulings are well known in reform circles. This may be helpful in formulating a phase-out plan, e.g., means testing. However, reducing benefits as part of a phase-out is more of a moral/political issue than a legal one.
    3. It is a fallacy to assign blame to “generations”. That is collectivist. Individuals, as I state above, have no choice in the matter; there is no way out.

    It is eminently appropriate to identify the true nature of Social Security and to list its moral flaws (which begins with the fact that it exists). But calling Social Security a fraud does not help; it is not a fraud by the very nature of the fact that you know enough about it to write your post. Social Security is law—a very bad law, but law nonetheless. It has been established openly. There is nothing unknown about Social Security to those who want to know.

    It is quite another task to formulate a strategy to eliminate it. As I wrote on HBL last week:

    The solution lies in the establishment of a system of personal retirement accounts (PRAs). In my version, anyone under the age of, say, 25 or 30, would have some of his FICA tax (12.5% of salary, total), typically 5 percentage points, diverted into his PRA. He would be out of the system, which means that Social Security as we know it would be phased out—abolished—in a couple of generations, as current participants die off.

    There is no fair way to solve this problem. Our goal must be to minimize the inequities and spread them across the various demographic groups. How to do that becomes a judgment call.

    I have addressed only a few of your points in order to provide some insight into real solutions to the Social Security mess. A much broader discussion is required in order to understand the issues fully.

    1. RepealTheBailouts Post author

      Ed, thanks for your comments. A few observations:

      I entirely agree that it is a collectivist fallacy to “blame generations,” but not that that observation is relevant to my analysis. I thought I was clear in my remarks, for example, to differentiate between the moral culpability of those who have opposed the system for most or all of our adult lives, as opposed to those who sanctioned it and voted for politicians who perpetuated and expanded it.

      That said, however, I don’t think it’s possible to meaningfully discuss what is fundamentally an intergenerational wealth transfer scheme that assigns individuals into collectives by age without talking about its effects on different generations. We should eschew the notion of collective guilt, but not of individual guilt — and as I argued, most Americans today are guilty as individuals for supporting the existing system over the last 70 years. There are exceptions, but that doesn’t entitle us to victimize the young people of tomorrow (none of whom are old enough yet to be anything but innocent in the matter) for their benefit — much less for the sake of the rest.

      You remarked that it would be “cruel indeed to pull the rug from under those for whom it is too late to recover.” As I asked Henry, cruel to whom? Is not the alternative cruel to others? You’re right to say that there is no way to solve this problem that is fair to everyone, but the injustice has already been done to those now in or approaching retirement. It has not yet been done to the coming generation of workers, and two wrongs don’t make a right. Just as it is not my responsibility to make good on your losses, regardless of whether those losses are your fault or not, so it is not the responsibility of tomorrow’s workers to face crushing taxes to make good on ours.

      When it comes to “cruelty,” doesn’t the individual’s culpability in sustaining the system play any role? As I said, those of us who have been responsible and opposed the system have either arranged our lives so that we can survive our old age without needing Social Security, or couldn’t afford to do so. The first will be OK, and the second I said I would like to see helped by private charity. Who else do you see as being the victims of “cruelty” if the system were to be eliminated? Those who knew it was unsustainable and could have afforded to provide for a retirement without it, but didn’t, instead choosing to spend what they should have saved? Or those who sanctioned the system for decades through negligence or vice?

      If it’s cruel to confess myself indifferent to the fate of these latter, then so be it: I am cruel. To quote one of my favorite lines from Atlas Shrugged, “Those who grant sympathy to guilt, grant none to innocence.” As far as I’m concerned, they can beg for alms from those who they set up to take the fall for their irresponsibility, and be thankful if they can get it.

      Don’t get me wrong. If the choice is “privatization” and a phaseout versus trying to “save” the system, I’ll take the former. But I’m no longer inclined to any mercy toward the guilty who let this get as far as it did.

  22. Wendy

    A people are responsible for their government. There is no such thing as an ignorant but innocent older person. Older people are not entitled to Social Security, and they do not deserve to get it. If they end up dying under bridges because they do not have the resources or family members to take care of them, then that is what they literally deserve by the laws of causality. To argue that we have some sort of forced moral responsibility to these people is to invert ethics on its head. It is to advocate slavery because the ends justify the means.

    However, there is a difference between what is moral and what is politically achievable in these times. A cold turkey plan won’t fly politically. The best we are going to get is a solution with a phase-out with means testing of some sort.

    But keep playing “bad cop” anyway. It provides the space that reformers need to achieve total privatization and go draconian on the means testing for the grandfathered until they die off. If no one is making these arguments, then the country will continue to accept the morality of forced redistribution of wealth and at best will try to half-ass reform. “Reformers” like Paul Ryan are trying to tweak the numbers to save Social Security and offer a little bit of privatization on the side, and so far, they speak for the political right, so keep the pressure on.

  23. Richard

    I support the means testing notion and agree about the culpability aspect. Michael & Mike N, respectively, suggest selling off Federal assets and the solutions implemented by Chile, Australia and other nations are the way to go. They are also good as PR for, “this is the re-birth of rational capitalism” (redundancy as in “rational selfishness”) . These ideas, plus well timed reductions in taxation & increases in freedom, support my contention that other means can bring about a positive end to SS.

    Nothing is to be gained, and a lot of human decency (and PR for capitalism) would be lost, if seniors end up living & dying under bridges. I imagine that is why this blog. It’s a terrific opportunity to pursue such actions as Repeal Social Security, Objectively. Well done.

  24. B Nelson

    I too have had mixed thoughts about the issue of cutting off those currently collecting “social security benefits.” I’d like to make a couple of points I’ve thought about. 1) This is nothing more than a welfare scheme for seniors, so we, and Congress, should call it what it is and stop pretending people “pay in” to some “trust fund.” 2) When the scheme was instituted it was designed to pay people who lived an extraordinarily long life; our life-span has increased since that time – why has the age at which the payments begin not increased along with it (the minute increases of late are nothing compared to the age we would start collecting if liife-span were the standard)? 3) There is no reason other than disability why older people cannot work, and in fact many do to supplement their “social security”; so not only should there be a means test, but an “ability to continue working” test as well.

  25. Michael

    I agree with all of your points. However; since the Federal Government owns more than 40% of the land in the United States, selling off every acre of land to the highest bidders would be more than ample solution to abolish social security. Not to mention, Americans would not only regain its independence from the progressive era, but it would most certainly reinvigerate the spirit that sent millions of people to a foreign land. Private ownership!

    1. RepealTheBailouts Post author

      Michael: I haven’t done any research on that topic, so I can’t comment on the numbers. I certainly hope, though, that you’re right regarding the value of Federal assets that could be liquidated to finance a phaseout of Social Security.

      1. Keith Weiner

        I think selling off assets would fall just a *wee bit shy* of the tens of trillions of dollars of net present value of SS and medicare. Especially if the government was a motivated seller.

  26. Gregory Turza

    I agree that the seniors should not be spared. But I would be less draconian. For example end benefits for Warren Buffet or any one making more than $50,000 per year. Means test it.

    But I am an estate planning lawyer and many clients have social security and that’s it. It is too late in life to replace the income with productive work. There has to be a transition.

    But on principal I agree that the seniors are the ones who have their heads in the sand all these years. They should should feel it too. I just can’t bring myself to pull the rug out from under those who count on that check and are too old or ill to replace it.

  27. Mike N

    Great post. I think the phase out option with means testing will work. I would add that a look at Chile’s private system could help us. An opt out provision for those on SS who see the better benefits of the private plan would help end the government plan sooner.

  28. Richard

    Philosophically, an immediate cut off is what *supporters* of SS deserve, but there are a greater portion who have been defrauded by their educators and by the culture. To be an Objectivist, even 30 years after Rand’s death, is still to be quite a heroic and unusual person.

    Cutting off SS, cold-turkey, is an unjust treatment of the better sort of person who specializes in non-political ideas, works hard for his life and tries to be honest within the culture. These are not people standing around hoping for a hand out.

    George Reisman gave an excellent lecture on how to implement Capitalism in a manner that would repeatedly, on a media noticeable scale, show the benefits of repealing legislation & taxation. Yes, by all means, implement means-testing, but give those innocent citizens paying into SS increasing portions of their income back at the same time.

    I maintain that running SS into the ground and cold turkey extrication are false & vicious alternatives. (Obama has certainly made a terrible situation MANY TIMES worse.)

    1. RepealTheBailouts Post author

      Richard, thank you for your comments. A couple of thoughts:

      Discussion of this issue and plans to address it often display a one-sided bias regarding those to whom those plans would be “unjust.” One of the points I am trying to make, though, is that there is no way to deal with the situation without an injustice to someone.

      A second and related point that I am trying to emphasize is that the injustice to the retiring generations has already occurred. Because of that, I think it is simply wrong to say that a cold turkey elimination would be unjust to the “better” individuals among them. Those people have already been victimized by the system, and the injustice to them is already a fait accomplit. To quote myself: “My money is already gone, and I simply have to accept that. The next generation does not have an unchosen obligation to make good on my losses, which were not their fault.”

      As I wrote in my article, the facts about Social Security and Medicare have not been hidden; both have openly been run as pyramid schemes since their inception. That’s part of the reason for the hardening of my perspective on this issue. Because of it, I no longer share your more sanguine view regarding the relative innocence of the “better sort of person who specializes in non-political ideas, works hard for his life and tries to be honest within the culture.” Today, and especially after the dismal failure of the Bush administration’s efforts to even partially reform Social Security with PRAs (Personal Retirement Accounts), I no longer believe that. I think that most of the people you describe are in fact “hoping for a hand out,” and that this is a significant factor in their complacency about accepting such an insanely unjust and unsustainable system without question for so many decades.

      Individuals in a free society have an obligation to exercise a basic level of civic responsibility, and cannot claim to be innocent victims if they do not do so. Not to put too fine a point on it, but understanding that a retirement system based on a pyramid scheme is a blatantly unjust and unsustainable form of ripping off the next generation is not rocket science. The fact that several generations of Americans looked the other way, and didn’t pay enough attention to realize what was going on right under their noses, demands explanation. And the explanation that I see is the same culpability attributable to anyone who invests in a scheme that’s “too good to be true” without looking at it carefully and critically enough to realize that it is such.

  29. Keith Weiner

    Anyone who says it would be better to keep paying current and near-future retirees had better admit to himself and everyone else one fact. To keep paying retirees means to keep looting workers (who will never be paid).

    Why do Generation X and Y people deserve to lose 16% of their income for their whole careers–to pay for someone else’s retirement–while saving separately for their own, but Baby Boomers and those older deserve to be paid?

    I think you hit the nail on the head. People have not paid “in”. There is no “in” in which to pay. They have paid out. The money they paid was spent, consumed or wasted or malinvested years and decades ago.

  30. RepealTheBailouts Post author

    Henry: thanks for your comment! I certainly understand what you’re saying, since as I said I’ve had mixed thoughts on this subject for a long time. And means testing and a phaseout would certainly be far preferable to trying to preserve and sustain such a doomed and evil system.

    Regarding whether it would be “a better plan,” though, I have to ask: better for whom? The retiring generation, who might otherwise have to face severe consequences for their irresponsibility? Or the young people of tomorrow, who face a lifetime of indentured servitude to pay the bill for it? We need to remember that even phasing out these programs will cost tens of trillions of dollars.

    I have trouble with the idea of looking into the eyes of today’s teenagers and telling them that they will have to forfeit much or most of their income for decades to bail out their parents’ and grandparents’ generations. In any event that decision won’t be up to you and me; it will be up to them.

  31. Henry Solomon

    I cannot agree that those people living on Social Security and who are dependent on it should be simply be cut off and forced to seek priviate charity. Noone can guarantee that they will find it and there could be dire consequences in some cases. A better plan, as suggested by Peter Schiff, is to have a means test for all people on it, and to cut off everyone else. This would result in less hardship for the people who really depend on it, and significantly reduce the ongoing cost. Of course, there would have to be a phase out period for new members so that no new dependents can be created.

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