Forty-six percent (46%) of U.S. voters believe working Americans should be allowed to opt out of Social Security to provide for their own retirement planning, an idea not likely to gain much traction with Democrats more strongly in control of Congress.Of course, the whole bit about the idea not being "likely to gain much traction" in the current Congress--or in any Congress for the foreseeable future--is absolutely true.Thirty-eight percent (38%) are opposed to the idea of opting out, and 16% are not sure in a new Rasmussen Reports national telephone survey.
And I can explain right now what their reasoning would be: current Social Security outlays are paid from current Social Security taxes. That is, working people today pay the taxes that are distributed to retirees today. It is not the case that your S.S. taxes are invested on your behalf for when you need them some time in the future; your taxes go to today's retirees, with any surplus being treated by Congress as just another income stream to pay for defense, education, pork, etc. If people were given the option of withdrawing from the system, and if too many people took that option, there wouldn't be enough cash flow from S.S. taxes to pay off current retirees, and the rest would have to come out of the Treasury--thereby worsening the deficit.
However....
So far as I'm concerned, none of this means that the desire to opt out of Social Security is immoral. The fact is, Social Security is a badly designed program. Like any program that attempts an inter-generational transfer of funds, it only remains solvent as long as people keep having lots of babies. But between declining birthrates, and lengthening lifespans, and S.S. benefit levels that keep getting bumped up every generation or so, the program as designed is simply not sustainable. It's going to go into deficit--and thus, start draining money out of the Treasury--within the next few years. This deficit is going to expand year after year, putting a bigger and bigger burden on the government (and thus the taxpayer) over the next few decades. And the program is projected to go completely bust (i.e., drain its "trust fund" down to nothing) not long after my wife and I reach retirement age.
In Washington, the term "Pay-As-You-Go" is considered wise, responsible. But in business, pay-as-you-go is not only understood to by highly irresponsible, it is often downright illegal. A company's financial officer that tried to tell the regulators that its pension system was being funded on a pay-as-you-go basis would be laughed out of the boardroom and directly into the pokey. Pay-as-you-go means huge unfunded liabilities. And our government's unfunded liabilities are absolutely colossal.
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This is why I see the results of this poll as potential good news. It means that there is a significant plurality of the U.S. population that actually recognizes that the Social Security program is a raw deal, and wants something better. That 46% appears to trust the ability of the average American to take care of his or her own retirement needs better than the Federal Government can.
Frankly, I had no idea that there were so many people out there who agreed with me on this point! For some time I'd been mulling over the thought: wouldn't it be nice if I could just opt out of Social Security? But I'd been thinking that I was only one of a very, very few out there who harbored such subversive thoughts. Turns out, there are more of us who think this way than who think the opposite way.
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Of course, the question then becomes: how would this get turned into a political solution? After all, the current crop of retirees (and those who soon will retire) have counted on the current Social Security program when they planned their retirements; If we just said, "everyone who wants out can get out now!" the resulting stampede would collapse the program and mess up a lot of people's retirements.
I'm suspecting that any solution to allow people to opt out would first have to establish private accounts; we'd have to switch from a system in which today's tax receipts go to current retirees, to one in which today's tax receipts go primarily into the accounts of people who pay them (with adequate provisions so that people unable to earn income still get something so they don't starve when they can no longer work). This transition from pay-as-you-go to save-for-the-future will, of course, require a huge amount of up-front capital.
And, um.... quite ironically, the resulting system would look a lot like the one President Bush suggested early in his last term, which was thoroughly demonized by his opponents and the press.
So I'm not hopeful, at least in the short term, that our elected officials will be able to summon the wisdom or political courage to move in the direction of a Social Security where the people can choose to opt out.
But when such a big chunk of the electorate wants this kind of fundamental change, it can eventually move the Congress--one seat at a time. My hope here is that as the inherent flaws in Social Security become more evident and more unavoidable, that 46% will start to grow and become more assertive. Congress will of course attempt to bridge the budget gap by increasing Social Security taxes (since for them, that's the easiest solution), and they will attempt to label anyone who opposes them selfish, heartless scrooges who are willing to abandon their grandparents. It's just that, as they attempt to boost the S.S. tax rates, that 46% is likely to grow. After all, more than 12% of our income is already being slurped up in S.S. taxes, and it's still not enough to guarantee the long-term solvency of the program. The higher this rate goes, the more people are likely to look at their W-2s and think, I could do a lot better than this, if they would just let me.
And you know, they would be right.
So, there's hope. It's just a glimmer at this point, but that's something.
3 comments:
You touch on a point on which I grow increasingly discouraged, Tim, even though generally I am growing more and more optimistic as I get older. Regarding our government, however, I am increasingly convinced that they will not, cannot, or opt not to to anything until a crisis is not only staring us in the face, but jumping up and down on our throats yipping like a hyenna. Then when our government flags its arms in every direction shouting "get this thing off me!" it turns to us and says "see? I'm doing something!" And we're supposed to be thankful.
In other words, I have no expectation either of ever receiving anything Social Security or anything ever being done to save it. And that's a truly tremendous tragedy. Rather than trying to shift burdens now, we are literally going to leave millions of elderly people penniless when the system- and likely, our financial security as a nation- goes belly up.
Oh, and if you think Social Security is bad, take a look at Medicare. It makes Social Security look like a shining beacon of fiscal conservatism by comparison.
Actually, President Bush's plans for the privatization of SS was not demonized by his opponents. As a matter of fact, politicians from both sides of the aisle were working on this issue and came up with some interesting ideas on how to develop, implement, and manage the privatization of SS, but none of the ideas ever came to fruition. What did happen is that President Bush was proposing ideas that were not well thought out and that he himself admitted would not work. His plan would had never allowed anyone to opt out of paying SS taxes, his plan only would have allowed taxpayers to eventually pay up to 4% of their income to "voluntary private investment accounts". Which really weren't all that private because the government would have had a lot of control over them. Also, the amount that taxpayers could invest themselves was going to start out at a much lower amount and would not have reached the 4% mark until 2016. By that point it would have been too late for many middle aged people to be able to invest enough money to make the private investment accounts worth it.
Now, what you are proposing is something that I could get behind, even as someone who generally supports the more liberal side of things. You are completely right that the system is broken and with the way it is currently set up there is a huge chance that the younger generations are not going to even have SS, despite paying SS taxes all of these years. I would much rather that my husband and I could invest those funds ourselves rather than having them go to the government, where they are being improperly managed. (Which is the fault of both sides, as while both sides agree that the system needs fixing, no one will actually do it.) That said, we would still need to have some sort of SS system in place in my opinion, just on a much, much smaller scale.
I really think that the key to start getting things done and changing our broken systems (SS and otherwise) is that both sides need to start making a real commitment to working on these issues and fixing things. Maybe what it will take to get things started is for citizens from all sides of the political spectrum to come together and begin a movement of change, one built on mutual respect and a desire to make our country a better place to live. It is clear that our politicians aren't getting the message about what needs to happen, so they need us to tell them what to do. I truly believe that it can happen. But, of course, that is completely off topic and a whole other tangent. ;-)
I can't help it....I can't read the title without Star Wars theme music running through my head.
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