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:
- 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.
- 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.
- 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.