A Prudent Approach To Social Security’s Future
During Ronald Reagan’s 1980 presidential campaign, the Republican Party ran a striking advertisement on television, depicting a man closely resembling House Speaker Tip O’Neill puffing a foot-long cigar while driving a large car. As the auto sped along, the other passengers in the car recurrently warned the Speaker that the car was in danger of running out of fuel, to which the Speaker chuckled arrogantly and accelerated. Run out of gas? Never! The commercial concluded with the car sputtering to a halt, to the bafflement of the white-haired driver. A voice-over intoned that for years concerned voices have warned that Social Security is going bankrupt, and that it is high time to address the continued health of that program.
And that was the last time anything was mentioned about prospects for reforming Social Security funding, until the privatization suggestions put forward by George W. Bush. During the nearly two-and-a-half decades since the famous “Tip O’Neill in a car” commercial, Social Security has been regarded as the “third rail” among American political issues: touch it and die. Let any well-meaning political figure suggest any sort of reform and he knows that he risks the end of his career in public service, at the hands of senior voters inflamed by political demagogues. Let any well-meaning social critic or economist publish suggested reforms of Social Security and he knows that he will be instantly castigated as a heartless cad who wants to throw America’s grandparents out into the winter snows, bereft of the “earned right” and “insurance protection” for which they had worked so hard. Factor into this hazardous maze of issues surrounding Social Security reform the fact that many (perhaps most) conservatives both recognize the program as a vast Ponzi Scheme inaugurated by deceitful means during mid 1930s—and want to ensure that they get their own slice of the pie upon reaching retirement age.
And now the time is fast approaching when it will be time to pay the piper. In Social Security: False Consciousness and Crisis, the late economist and social critic John Attarian strides purposefully into the arena, not to cut and thrust at the system’s purpose and existence, but rather to calmly examine the truths about which Social Security came into being, the assumptions by which it is sustained, and the comfortable lies that make its coming alteration or demise certain. “The brutal truth,” he has written elsewhere, “is that Social Security’s prospects are so bleak, and we have evaded reality for so long, that a cheap, painless solution is not possible. Beneficiary or taxpayer suffering is inevitable and necessary. Our first task here is to look reality in the face. That means admitting that you can’t get something for nothing.”
As Attarian notes in the work at hand, “Social Security’s depiction and financing mechanism, and the sense of entitlement that they foster, [have] created a powerful and pervasive false consciousness about Social Security.” The term false consciousness is an analytical tool used by the author to indicate a disconnect between understanding and reality. It is a term Marxian in origin, but refurbished and put to work by Attarian to outline the nature of many Americans’ false understanding of Social Security’s realities. Succinctly stated by Attarian, the false consciousness that governs the state of Social Security, entails many things: “its nature (insurance), revenue source (premiums or contributions), funding mechanism (with trust funds), the character of one’s claim (immutable earned right, guaranteed by law), and the arrangement the program reflects (compact between generations, implicit contract).”
Attarian addresses each of these misconceptions in turn, marshalling an impressive array of statistics drawn from both private and public sources and a relentlessly logical answering of each perception. In doing so, he coolly defenestrates the hollow defenses that Social Security’s stand-patters have erected over the course of many decades. In short order, these myths are holed at the water-line, with Attarian showing that Social Security, contrary to the received wisdom, is not an insurance fund, a contract, a trust fund, or a pension fund hermetically set aside for future needs; that benefits are not an “earned right”; that retirees who have paid into the system do not own their own benefits; and that any correspondence between what one pays into the system and what one is paid in benefits is entirely tenuous and arbitrary. Worse yet, as the author demonstrates, any steps taken to “solve” the problems facing Social Security will not be small or painless. Minor tax increases will not serve, nor will benefit cuts, nor will a combination of the two. In short, there is little security in the future of Social Security, what with members of both major American political parties unwilling to take a long, hard look at the system while playing a classic game of keeping up appearances.
As Attarian notes, the Social Security program, which taxes incomes on a “pay-as-you-go” basis to fund benefits to retirees, their survivors, and America’s disabled citizens, faces an undeniable crisis. This will occur—and has, in fact, begun—as the large generation of Baby-Boomers retires and collects benefits, supported by the smaller generation of taxpayers born after the mid 1960s. Simply put, as the number of ratepayers that support each Social Security beneficiary dwindles, tax rates mandated under current law will not suffice to pay the full benefits also mandated under current law. The prospects for those citizens looking forward to collecting benefits is grim, with reliable estimates indicating that by 2041, Social Security will be unable to pay full benefits on time. The program will be able to cover only 73% of projected costs. To which the Tip O’Neills of both major American political parties, as well as their constituents, chuckle condescendingly, in scornful disbelief—with some denying this will happen, and others openly declaring that because they themselves will be deceased by 2041, the challenges of Social Security will be someone else’s problem.
What can be done about the future of Social Security? In response to this question, Attarian offers as his final chapter “A Modest Proposal.” Here, he notes that any prospect for reform is contingent upon a change in belief and character among American taxpayers, who have by and large, embraced the religion of what might be called Economism: the belief that man is an essentially economic creature—not a spiritual being, with concerns beyond the present age—and that the chief end in life is an existence marked by economic plenty, a comfortable retirement, and the avoidance of work and community as distractions that vex the autonomous self. In contradistinction to this, Attarian writes, “We must radically rethink our beliefs about life, reality, and our purpose and destiny. We must accept limits on what life can feasibly give us, and demand less, consume less. A way of life grounded in self-restraint, perspective, and checks on appetite is not only moral and psychological wisdom, but in a limited world, political and economic wisdom as well. The only sound answer to insecurity, suffering, and mortality is to accept them as our lot, and learn the truth divined by William Blake:
Man was made for joy and woe;
And when this we rightly know,
Thro’ the world we safely go.”
Exactly so. E. F. Schumacher would smile in recognition at this statement. Much as we in the United States would like to believe otherwise, life was never intended to be a painless affair, devoid of hard decisions, peaks and valleys. In this conclusion and throughout Social Security: False Consciousness and Crisis, Attarian has crafted an entirely spot-on analysis of the problems facing Social Security and suggests hard but sensible remedies not for ending the program but for mending it—beginning with repeal of the Social Security Act of 1935 and its replacement by a tightly administered program paying Social Security’s benefits to current retirees and Baby Boomers based on presumed need, with benefits for better-off beneficiaries cut or eliminated. Other well-argued strategic points are outlined as well, among them a recommendation to abolish payroll and self-employment taxes, financing the foregoing benefit with general revenues instead.
Attarian is to be commended for standing in the breach and declaring truths that may well be ignored by the wise of this world but are urgent nonetheless—and for carrying off this task with clarity, style, honesty, and imagination.
James E. Person Jr. is the author of Russell Kirk: A Critical Biography of a Conservative Mind (Madison Books, 1999) and Earl Hamner: From Walton’s Mountain to Tomorrow (Cumberland House, 2005).
Posted: March 21, 2007
Intellectual Courage and the Bitter Truth
James V. Schall, S.J.