How to kill Social Security: Be ignorant about it

I’m writing this in response to a few of the comments my recent Social Security article attracted. It seems that despite years of public discussion — from the Bush push of 2005, to Obama’s suspected embrace of a Peterson cat food future — many of us still don’t know what Social Security is and how it’s been used.

And that’s how they’ll kill Social Security — by turning our ignorance against us. So in the interest of actual information, a few basics:

1. You don’t contribute to your own retirement. You never did. No one did. Your parents’ money went to your grandparents. Your money goes to your parents. Your kid’s money goes to you. It’s an inter-generational contract. It always was.

This is not a program that’s designed to manage your money for you. It’s a program that’s designed to do “good works” — every generation keeps its parents off of cat food. Period. That’s the whole goal.

Why is it important to understand this?

  • If you repeat the lie around the water cooler that you’re contributing to yourself, you’re advancing the frame that that will kill the program — the frame that says, “Let’s find out how to manage your money better.” That frame hides the huge gift you’ve given to others, and that you expect to receive back.
  • That frame also stimulates the RandGekko gene in you and everyone else, the gene that wakes up each day screaming Gimme mine. That gene is deadly — it confuses good people and ennobles the petty. It will kill this nation if we let it.
  • And if you repeat the frame that the problem is money management, I’ll bet you four cans of Snuggles Delight that the big stash will be given to the best bankers in the world to manage for us. Oh look, there they are now — drooling.

2. You already “fixed” Social Security, in 1983. In that fix, Ronald Reagan and the Greenspan Commission (yep, Alan Greenspan) recommended increasing Social Security taxes on the middle class, but not on the Big Boys, the wealthy. The declared goal was to put tons of cash into the Social Security Trust Fund — create a huge rainy day stash — for when Boomers started retiring. (If you click the Trust Fund link, watch what happens to the last column, the total amount, starting in 1984.)

Why is it important to understand this?

  • Everyone making less than $100k per year has been paying for that fix — every working day since 1983. They robbed you once, so they wouldn’t have to do it twice. Want them to do it twice?

3. Reagan used that earlier “fix” to hide much of his massive deficit, to make it look smaller. That was the real goal (or if you’re feeling kind, the other real goal) of beefing up the Trust Fund.

But do you think either of them cared two twits about fixing the future, a future in which they themselves would be dead? The facts show just the opposite. What they really cared about was destroying the future — “starving the beast” in politer terms — while making it look like the beast was partially fed. They were also seriously into looting. Good little Randians are.

So it worked like this: The Reagan tax cuts steadily lowered the rate on the top dollars earned (keep that “top dollar” point in mind; mere mortals never saw those rates) from 70% to 50%, then to 28%. Those tax cuts, plus his massive spending, made the deficit rocket skyward. Mission accomplished; beast starving.

But how to make that deficit look smaller to the easily fooled? Simple. Grab a huge pile of cash from the middle class, invest that cash in Treasuries, and declare those Treasuries off-budget. Voilà — beast looks partially fed. Since the Trust Fund keeps growing (the 2008 number is $2.4 trillion), both the debt and the deficit have looked smaller ever since.

Why is it important to understand this?

  • Since the first fix, you’ve been shoveling your money to the Big Boys for most of your life. You pay for their tax cuts with payroll tax increases. But it’s never enough. So the next fix will cut the benefits you were supposedly “buying” with the earlier fixes. You’re already paying extra for those benefits. You’re not supposed to connect the dots. Reagan taketh, and Obama taketh as well. (Reagan? Reagan who? The John Edwards girl, right?)

4. The real goal of this fix is to hide the looting of the last fix. Just like the last time, the goal isn’t Social Security itself. The last fix hid the mounting deficit in off-budget Treasuries. But soon those Trust Fund Treasuries might actually get cashed. Since the government would have to borrow to replace them, that transfers the off-budget numbers back on-budget. Oops.

Folks, the deficit hawks aren’t worried about spending the last dollar of the Trust Fund. They’re worried about spending the first dollar. They’re searching for what they can take from you, the impotent many, so that no dollar of the Trust Fund gets spent.

So watch — that becomes the mark, the tell. Show me a guy who doesn’t want any of the Trust Fund spent, I’ll show you a guy who got rich stealing from it. (Mr. Peterson, come on down. Bring your friends.)

Why is it important to understand this?

  • Every time you repeat the lie that Social Security is running out of money, you help the Big Boys hide the Reagan era crime. And you get the bill for the cover-up. Is that what you want to do?

BONUS POINT: Reagan personally created the era we’re in, the Gordon Gekko era, by removing the great disincentive that kept CEOs from looting their own companies.

That disincentive was already discussed — it’s the Eisenhower and Nixon era tax rates on the top dollars earned. Suddenly, CEOs and hedge fund managers weren’t taxed at 92% (1953), or 70% (1971–1980), on their upper tranches (heh). Reagan’s shiny new tax caps of 50% (1982) and 28% (1988; his parting gift) made earning the monstrous millions actually attractive.

As soon as CEOs discovered they could benefit more by raking company profits into their own sweet hands — instead of plowing them back in the company — the modern era was born. We haven’t looked back since.

  • Want to end this horrid modern era with one stroke? Reverse the Reagan tax cuts. The era will die in a flash.

Hope this helps,

GP


Gaius Publius is a professional writer living on the West Coast of the United States.

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