By 2015, Social Security will begin paying out more than it takes in. By the time the parents of the Generation-X crowd and their juniors hit the Denny’s circuit in full force, the payer-payee ratio won’t be sustainable.
That means the government will need to take more from young people’s paychecks or cut benefits to seniors and dependents — an easy choice for any politician. In short: the system will fail. If not sooner, later. It’s likely young workers will be asked to pay more into the system — and more likely they’ll see little or none of it later.
Still, we young people don’t seem to mind. Even inside the Beltway, where young political and policy junkies migrate from all over the country, Social Security just doesn’t buzz from the Capitol Hill bars the way, say, abortion or free trade do.
Of course, Social Security is rather bland to begin with. There’s lots of math involved. Percentages and whatnot. What’s more, Social Security is one of few social programs where the beneficiaries are politically active — old people vote. And, conversely, the suppliers of those benefits are apathetic — young people don’t vote. What self-preserving politician is going to upend a program that benefits voters at the expense of nonvoters?
But there are sinister forces at work here too. By its very design, Social Security fosters apathy. Social Security taxes are withheld from our paychecks, a convenient way to draw attention from what we’re paying. One wonders how content taxpayers would be with the current system if, instead of having the tax preemptively withheld, we were asked to write a thick check to the IRS every April to cover our "contribution."
There’s also the matter of the "employer contribution." As the myth goes, we employees pay 6.2 percent of our earnings into the program, and our employers pay a matching 6.2 percent. To borrow from the current Social Security generation: Poppycock.
The dot-com phenomenon aside, businesses exist to make money. No employer ever did or ever will absorb the "employer contribution" out of good faith. He’s going to pay everyone 6.2 percent less. This of course is very clever. Again, you don’t directly see or feel the phantom 6.2 percent employer contribution. Again, the system fosters apathy.
And what of the syntax employed by the current system’s cheerleaders?
The feds would have you believe that rather than being "taxed" for Social Security, you make a "contribution." Really? Since when are "contributions" mandatory? Charities and philanthropies, also funded by "contributions," are governed by boards of directors. They’re also overseen by local, state and federal watchdog agencies.
Where’s the oversight on our Social Security "contributions?" Put simply, the Social Security withholding is a "tax," not a "contribution." The money goes to Congress, who dip willy-nilly into the surplus as they please.
But doesn’t "contribution" sound better?
Similarly, the whole system is referred to as a "trust fund." That’s just deceitful. Trusts too are set up voluntarily. Trust funds have proprietors, who determine who gets the interest payments and who ultimately gets the principal. With Social Security, Congress decides who gets what. Die before retirement with no dependents and you lose everything you’ve paid in. Social Security is a tax, levied for the privilege of working. Money is taken from workers and given to retirees.
But doesn’t "trust fund" sound better?
At best, young workers can hope for a 2% lifetime return on our "contribution." The worst 20-year period in the stock market’s history — which includes the Depression and the crash of 1929 — still gave a 50 percent better return than that. Given ownership and control of that 12.4 percent "contribution," the average 25 year old could increase his monthly retirement earnings fourfold over what he’d get from the current system — assuming the current system remains viable. We should care.
But it’s also obvious why we don’t care. The system and its proponents intended it that way. Social Security isn’t sexy. It’s big and confusing. It’s dry. It’s beneficiaries and their voices in Washington are a potent political force. It’s surreptitious. It’s covert. And its advocates are masters of political syntax.
Federal programs — even the "temporary" ones — are savvy survivors. They’ll adapt, scrap and scratch their way into the next budget. And, as the granddaddy of all federal programs, it’s of no surprise that Social Security has sunk roots into all of the important political aquifers. It will take political vigilance from young people to buck the apathy this behemoth has laid over us.
Radley Balko is managing editor of www.cato.org, and a marketing manager at the Cato Institute.