John Attarian is an independent scholar and writer with a Ph.D. in economics from the University of Michigan. An adjunct scholar with the Midland, Michigan-based Mackinac Center for Public Policy and an Editorial Advisor for the quarterly Modern Age, he lives in Ann Arbor, Michigan and writes on many topics in economics, public policy, and culture.
"A deep root of this predicament is a crucial but underexamined aspect of Social Security: the misleading manner in which the program has been depicted to the public from 1935 on. Specifically, Social Security is 'retirement insurance' under which taxpayers pay 'insurance premiums' or 'contributions' to 'buy' protection from destitution in old age, with their 'contributions' being 'held' in a 'trust fund' which will pay 'guaranteed' benefits which, being 'paid for,' will be theirs 'as a matter of earned right,' as America keeps its 'compact (or contract) between the generations.'
The entire previous sentence is demonstrably, documentably false. Sometimes Social Security officials even admitted as much. . . .
The promotion of this false consciousness, and its acceptance by retirees, politicians, and the public, decisively shaped the actions taken when Social Security faced financial crisis in the seventies and eighties. The 1977 and 1983 rescue legislation relied on tax increases and reductions in future rather than current benefits. These measures spawned rising disaffection with Social Security among taxpayers. Meanwhile Social Security's long-term financial outlook steadily deteriorated from 1983 until recently. Successive Social Security Boards of Trustees warned that the program is not in long-term actuarial balance, and asked Congress to take remedial action. However, Social Security's continued high popularity with its thoroughly gulled but politically formidable constituency precluded corrective action, let alone radical reform, and still precludes it now.
Social Security is therefore trapped between the imperatives of politics, springing from a deliberately fostered false consciousness, which force policymakers to act as if Social Security's myths are true, thus locking Social Security into a rigid position regarding current benefits, and the imperatives of economics, which require the program to be flexible so as to adjust to changing conditions." --from the Preface
" . . . even before the 'trust funds' are exhausted, Social Security's financial weakness will be creating simultaneous fiscal crisis and economic calamity. Since this point is too seldom grasped, it bears driving home: The lurking menace in Social Security's economics is not the bankruptcy of the program, but the wreckage of our public finance and our economy. Moreover, these outcomes do not require Social Security bankruptcy. Mere substantial partial liquidation of the 'trust funds' will suffice. Under intermediate assumptions, OASDI's assets will shrink from $6.0 trillion in 2025 to $1.7 trillion in 2035 -- a liquidation of $4.3 trillion over just ten years. That large an addition to publicly held national debt in that short a time cannot fail to be disastrous." --from Chapter 2
" . . . many Americans today harbor the utterly inaccurate but infuriating belief that Congress has been looting the Social Security 'trust fund.' In the event that the bankruptcy and affordability crises described earlier come to pass, this widespread misunderstanding, the product of the government's own clever public relations gambit, is a recipe for political crisis: scapegoating, recrimination, and discrediting the institution of Congress as a pack of scoundrelly trust fund riflers." --from Chapter 6
"We should recall that Social Security's goal is, after all, security -- providing a floor of protection so as to prevent poverty in old age. Security ends where speculation begins. Greater returns mean greater risks, meaning greater insecurity. There are fit objects for bold experimentation and risk taking, but retirement income is not one of them." --from Chapter 11
"Popular thinking is still dominated by the false consciousness, which is spawning new myths, for example, 'robbing the trust fund.' In order to revise or reform Social Security soundly, we must first see Social Security as it really is, with vision unclouded by rhetoric, so we can act on the basis of facts, not fictions. Therefore, dispelling the false consciousness about Social Security is imperative." --from Chapter 12
" . . . there must be an admission that any reform will have heavy costs. Put anothter way, many of Social Security's promises will have to be broken, and the public must be told so, frankly." --from Chapter 12
"Social Security's experience confirms Wollenberg's contention that a large government benefit program simply cannot lock itself into a system iof immutable guarantees or rights. To avert fiscal crisis, Congress simply must leave itself free to make changes as necessary. Unforeseen, unforeseeable changes in circumstances will eventually break in and force modifications. This is a reality that must be faced and acknowledged by policymakers and public alike." --from Chapter 12
