With Social Security now on course to run out of money in 2037, one of the great puzzles is why so many in Congress seem so determined to let benefits run dry for millions of Americans who have contributed to it for a lifetime.

Under current law, Americans are not protected in any way from a decision by a future congress to deny benefits to those who have contributed to it. Indeed, the written statement sent to all Americans every year makes it clear that future benefits are subject to the whims of a future Congress which will have the power to reduce or eliminate them. 

As baby boomers retire and U.S. demographics are drastically altered, few doubt what will happen in the future when there are only two or three working Americans supporting each retiree instead of ten or more. A younger generation in Congress will not accept payroll taxes of 40% or more for working Americans in order to support an older generation which selfishly refused to address the reforms that would have enabled social security to survive.

The idea behind “privatization” is that workers could guarantee their future benefits by putting their retirement funds into government-supervised private accounts which would then be protected from confiscation or reduction by the Due Process Clause of the U.S. Constitution which forbids the federal government from taking property without due process of law. It is a mystery why the president has now gone on record as being against such a reform that would guarantee future benefits.

Although opponents to privatization conjure up the spectacle of private accounts being subject to the vagaries of the stock market, this is surely a red herring thrown into the debate since any privatization reform could require that all funds placed into private accounts be invested in U.S. securities backed by the good faith and credit of the U.S. government. The only difference between privatization and what we have now is that under privatization retiree benefits would be guaranteed and not subject to the ravages of confiscation or reduction by a future Congress, whereas under the present system, government is free to revoke or reduce benefits at its whim.

In recent years, a selfish older generation has pretended to fund social security by means of promissory notes rather than actual cash or investments—notes which are essentially meaningless since they are, unlike U.S. securities, subject to revocation by a future congress. In other words, under the present system, a worker’s contributions are not set aside for that worker, but go immediately to pay off earlier investors. Accordingly, few now fail to recognize the present social security system as a giant Ponzi scheme which would be the subject of criminal indictments if administered by any entity other than the federal government. And as any student of economics is aware, the only uncertainty about Ponzi schemes is when they will collapse, not if they will collapse.

Certainly a system which guarantees future benefits would be far superior to other alternatives proposed, such as merging social security into a giant welfare system in which a worker’s contributions are not set aside for that worker but rather to fund a welfare system based not on actual contributions made, but on revocable promises.

Robert Hardaway is Professor of Law at the University of Denver Sturm College Of Law and the author of seventeen published books on law and public policy.

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Robert Hardaway is Professor of Law at the University of Denver Sturm College of Law, author of "The Great American Housing Bubble" (ABC-CLIO, 2011), and eighteen other books on law and public policy.