Social Security is a scheme that transfers wealth from young working people to older people. It is also a mechanism to replace private savings, individual investment, and familial support with government support.
These are not virtues, except to today’s Democrats, who have introduced a bill to exacerbate their damaging effects. The Social Security 2100 Act would decrease lifetime earnings of today’s young people and increase that of today’s old people while also reducing the amount of money people make from work in order to increase the amount they get from the government.
The proposal is not a “reform” of the system so much as a statement of what Democrats value, which is a system to reward powerful constituencies and increase dependence on government.
Charles Blahous, a former trustee for Social Security and Medicare, studied the bill and reported that if it became law, “Young workers’ lifetime income would be reduced by more than 2% of their career earnings because of Social Security.”
That’s because Social Security is similar to a Ponzi scheme. Today’s beneficiaries are paid from the pockets of today’s workers, who when they retire tomorrow will be paid by tomorrow’s workers. The Social Security 2100 bill increases benefits and “would accordingly worsen these young workers’ net income losses,” Blahous wrote. Some tax hikes on today’s workers would in theory mitigate this loss, but not fully.
The bill’s “alternative minimum benefit” would increase retiree benefits for those whose lifetime income is low. But another provision would hike Social Security taxes from 12.4% to 14.8%, and these taxes apply to first dollar earned, including by low-income workers. Blahous found “low-income workers’ payroll tax burdens would rise 19%.”
Why would you tax poor people more to pay poor people more? The net effect would be that workers got less money for their labor and more from the government. This is what the Left wants: increased government control over the economy and people’s lives. It’s an agenda that dampens entrepreneurship, the ethic of work, the human spirit, and happiness.
If Democrats want to tweak Social Security, and if they actually believe in helping poor people, they should exempt the first few thousand earned dollars from payroll taxes. But that would mean getting out of people’s lives rather than interfering more and more, and this would undermine the Left’s strategy of increasing dependency and limiting freedom.
Picking the pockets of young workers to give more dosh to retirees is politically attractive because retirees are highly active in elections and are also a swing population. Younger people, by contrast, vote at a significantly lower rate.
Social Security should be reformed so as to reduce dependency and fecklessness. That’s the opposite of what Democrats are trying to do. Their proposal deserves to be hurled aside with scorn.
