The left’s scare tactics on Social Security
Commenter “fullmoon” asks a question (the first part of the comment is a quote from a post I wrote):
“[Biden] hammered on the idea that Social Security is threatened, something Trump and other Republicans have denied over and over again. But this is a message that Democrats have been pushing from even before the election with some success; I personally know people who believe Trump is intent on taking away their Social Security, and who have been in a panic about it ever since November.”
This really is amazing to me. When I was too young to know what social security, or a republican was, my grandma worried about republicans taking it away.
How in the world can anybody old enough to be collecting still believe that? Boomers have been hearing that lie their entire lives, and many still believe it.
It’s a good question. I think the answer has to do with the fact that so many Democrats long ago swallowed certain ideas about the right that are at this point so deeply held that they are unquestioned. The first is that Republicans, or anyone on the right, are bigots. The second is that Republicans are always trying to take benefits away, either through frugality and/or through sheer cussed meanness. There are other ideas about Republicans – such as that they are stupid “bitter clingers” and science-deniers. But it’s the second one that’s functioning in the Social Security story being told.
It’s not as though there is zero evidence for it, either. For example, especially around the year 2000 but at other times as well, the GOP has expressed concern about the Ponzi scheme nature of Social Security and how long it can go on, saying something must be done. That “something” would of course be a proposal for a solution that would preserve it as best as possible, but it would involve change.
Some Republicans have at times talked about the possibility of raising the retirement age, for example, as a cost-saving device which would reduce total payments but not affect anyone currently getting Social Security. That makes a lot of people nervous. And although DOGE’s efforts to reduce waste and fraud should be the sort of thing everyone can get behind, the left stirs up distrust in a group already extremely distrustful of Trump and the right, characterizing the whole thing as having nefarious intent.
Here’s a typical press release from the Democrats. It starts this way:
As Donald Trump and Republicans in Congress attempt to advance legislation to give massive tax breaks to billionaires and undermine Social Security …
I would wager that if I were to poll most of my Democrat friends, the majority – and perhaps all – would believe that Republicans would like to take away their Social Security.
NOTE: See also this.
I think Trump should borrow a “far right” idea from France’s National Rally: that entitlement programs (including Social Security) should be restricted to American citizens. Period. No benefits for non-citizens, and certainly not for illegals. It’s an idea that would make the left’s collective heads explode, while being popular with 2/3 or more of the voting public.
BTW, does any other country give pensions, welfare benefits, free health care, etc. etc. to non-citizens?
But it is the Democrats that are the friends of the ultra rich, not the Republicans.
There is a fair bit of interesting history and factual issues surrounding all that.
First, FDR was in favor of the SS Act and signed it into law in 1935. Of course, the Dems in power wanted to hand out goodies immediately so they structured it as a “pay as you go” system. Later, FDR stated misgiving about the pay-go system and said he would rather see it structured as more of an annuity system for sustainability. Too late pal.
The other not so minor detail is the interplay between the SS retirement (or payment onset) age and life expectancy. What was the average life span in 1935? About 60 years. So most people weren’t going to collect anything, back then.
https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Fuf0ie1fjc3i91.png
Since SS’s solvency is a perennial issue, it’s only logical that it should be adjusted for increased life expectancy, which is about 79 years now. Oh…, but that would be touching the “third rail” of political discussion. Some GOP pols have done it, hence they have given a shred of legitimacy to the notion that “they want to take it away from you.”
@TommyJay:What was the average life span in 1935? About 60 years. So most people weren’t going to collect anything, back then.
I’m afraid this is a misconception. The “average” life span includes child mortality, which isn’t relevant to how retirement is funded.
What you want is the number of years that working age adults will live past retirement age. The working age adults are “paying in” (actually, paying the people retired while they are working) and the retired ones are “taking out”.
For example, if 90% of people died by age 15 but the rest lived to be 90 you’d still have a problem funding Social Security even though the average life expectancy of this example would be less than 22 years.
Anyway, if you start with the cohort born in 1910, which turned 20 in 1930, and you look at their cohort life table, you will see that for every 100K men and 100K women:
163,278 men and women out of 200,000 made it to age 20.
117,641 of those made to age 65 (72%).
At age 65, they had an average of 16.7 more years of life.
By age 77 about half of those who’d made it to age 20 were dead; the other half lived an average of 9.8 years MORE.
So, for the 163,278 people who’d made it to age 20, assuming they worked from then to the earlier of death or age 65, they had collectively experienced 6.6 million man-years of working life, and they experienced 2.0 million man-years of retired life. So this population spent about 23% of its man-years being retired and on Social Security, even though their average life expectancy at birth was only about 60 years.
You could structure an annuity around those numbers, but that was not done. Social Security was funded by population growth.
The post-war “baby boom” was a bump on top of a total fertility rate that had been falling for decades. In the first years of Social Security there were a dozen people working for every one retired. Only a growing population makes that possible. In 1910 there had been about 3.5 births per woman. By 1935 it had fallen to 2.2–still growing but barely. The post-war baby boom put off the day of reckoning, not falling to 2.2 again until after 1975. Currently about 1.8, and about 3-4 people working per retiree.
Every year we reduce the supply of babies and increase the supply of old people. Funding Social Security is not the issue, so much as who is going to produce the goods and services old people expect to consume while retired? You could put all the money into Social Security, but there would be nothing for those Social Security checks to buy. You can stockpile money, but not goods and services. (True you don’t have to move out of your house you bought in your 40s, but your food, utilities, medicine and other goods and services need to be provided by working people.)
As I periodically need to keep reminding an acquaintance of mine who really, actually buys into all the left agitprop . . .
Seniors vote in large numbers, and any politician who even sideways hints at taking away Social Security benefits, is committing political* suicide.
* (these sorry days, it may even be literal suicide / murder)
THEY’RE LYING TO YOU.
(deaf ears)
@M J R:Seniors vote in large numbers, and any politician who even sideways hints at taking away Social Security benefits, is committing political* suicide.
For now, but if the system collapses because the seniors don’t allow Social Security to change, what happens to those seniors utterly dependent on working-aged people for everything–and now you know why Canada and Europe are so big on euthanasia.
Might consider investing in pillow manufacturers.
From what I have read, there IS a sustainability issue with Social Security. SS is not collecting as much from workers as it is spending on retirees. Demographics. Something will have to be done.
That being said, it is rather deceitful of Democrats—but what else would you expect of them— to phrase it that Republicans want to gut SS.
The institution of cohort-specific retirement ages would suffice to generate a ratio of beneficiaries to workers which bounces around a set point. Had we instituted such a system in 1980, we could have added 60 days to the retirement age per cohort beginning with the 1919 cohort and concluding with the 1955 cohort instituting a solitary retirement age along the way. We would not have had to make payroll taxes more onerous than they were in 1980.
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Another issue is the increasingly porous definition of disability. One thing we can do is to stop awarding disability benefits for ‘anxiety disorders’ and ‘mood disorders’. About 1/4 of SSDI awards are for one or the other.
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We could have done these things. The Democratic Party has been a source of malicious demagogy and the Bush-Ryan Republicans got sidetracked promoting private accounts.
My husband and I saved throughout our younger years on the theory that by the time we got old, Social Security would be gone. It isn’t, and we are drawing a tidy sum every year. We also thought that if it weren’t gone, benefits would be capped for higher-income retirees. That second scenario might still happen someday, and would be easier to sell than taking away benefits from old people who are barely scraping by (which I agree would be breaking faith with people who counted on it).
Cleaning up the disability claims to cover only the genuinely disabled and removing benefits from illegals would help.
Niketas,
Good points. I realized that my one statement was only technically true, and not exactly on point. However, your cohort born in 1910 is considerably younger with better longevity than the group immediately collecting SS benefits when it was enacted, which was my reference. Those born in 1870 or earlier.
I don’t think infant mortality is terribly high in the USA, though I’m sure things like WWI take a toll.
The overall point, as can be seen in the chart, is that longevity has increased greatly.
@Tommy Jay:Those born in 1870 or earlier.
Those people had never paid in, so every dollar they took out was unfunded. They too, had a higher life expectancy for their age than you might think.
For this we go to the period life expectancy table for 1930, which is a snapshot of everyone alive in that year whenever born. People aged 60 in 1930 had an average of 14.7 years to live, so in 1935 you’d expect to be paying them for about ten years. 2025’s 60-year-olds have about 50% more years to expect, 21.4 on average.
Interestingly in 1900 the life expectancy at age 60 was not that different from 1930.
The biggest gain in overall life expectancy is from reducing child mortality, but people at every age can expect to live considerably longer than they did in 1900 or 1950.
@M J R: Seniors vote in large numbers, and any politician who even sideways hints at taking away Social Security benefits, is committing political suicide.
Niketas Choniates (5:41 pm) said:
“For now, but if the system collapses because the seniors don’t allow Social Security to change, . . . .”
I agree and without reservation. In fact, I have often tried to point out to this obstinate acquaintance that the system is unsustainable after a certain year, and that year, which once was safely in the distant future, is now closing in on us — therefore something is going to *have* to be done. It will have to involve people born after a certain year, or something to that effect — not out of accounting necessity, but out of political necessity.
It ain’t gonna be pretty.
But for now, the gaslighting and panic warnings are, in fact, naked scare tactics. It’s going to take someone who will talk plain sense to the citizenry. I would not at all count on Trump to do that, but I am hopeful that Vance could do that, if he ever gets to be in a position to make it happen.
@ Neo > “I would wager that if I were to poll most of my Democrat friends, the majority – and perhaps all – would believe that Republicans would like to take away their Social Security.”
“You cannot reason people out of an opinion they were not reasoned into.”
Or, more briefly, you can’t fix stupid.
Yes, I know many of them are otherwise intelligent, but this is a matter of math and statistics and economic realities that they refuse to even look at, although adjusting the system will benefit everyone in the long run.
And that is stupid.
I agree with all that’s being said here.
I just think it’s funny that the TDS crowd refuses to understand the one fundamental thing about his political views: he’s a populist. Not a Nazi, not a fascist, not a white nationalist, not a conservative, not a craven billionaire just trying to make more for himself and his friends – a populist. He won’t sign off on any plan to cut social security.
Once objective reality is rejected, whatever is wished for or feared becomes believable.
In case anyone is interested I did some noodling on what Social Security would look like as an annuity.
The original payroll tax for Social Security was 2%. Back in 1935 when it was new, a 20-year-old who would make it to retirement age could expect to live on average 12 years after retirement. Assuming a constant real salary and a 3% real return, that would only fund a retirement income of 18% of working income. (The constant real salary is not a super-good assumption and the 3% real return is the average of a highly variable number, but provided we’re content to be somewhere in the ballpark I think this is okay.)
I don’t know what level of income people try to retire at, but I see retirement advisors online suggesting 70% as a rule of thumb. To hit that number, the 1937 payroll tax would have to have been closer to 8%. Today’s number of course is 12.4%, which if you were taking your payroll taxes and funding your own retirement would get you about 90% of your income (provided you chose your death date carefully and were living only 17 years after retirement).
It’s hard to compare then and now because the expenses of older people are quite different, with modern health care and Medicare in the mix.
But with regard to Social Security, the SSA website has this to say:
Had the payroll taxes been left in our own hands, we could all have been funding our own retirements at a high percentage of our own incomes. But Social Security doesn’t try to do that; the amount it pays is not directly derived from the amount you “paid in” or the amount of your own income. Some people would undoubtedly be much worse off, even if they made wise choices about retirement, if they were saving their own money. Part of what Social Security does is redistribution.
@ TommyJay: my understanding is the 1939 Congress passed the “pay as you go scheme” and FDR tried to veto it, but his veto was overridden by those feckless vote buying [expletives deleted].
Many years ago I was at a party and discussing some of this with a social worker, who pointed out part of the rationale around SS was to not insult the “dignity” of the retirees who had not saved or been able to save enough for retirement*. Thus it was sold as “insurance” rather than a form of welfare.
MJR: I agree I do not see Trump as advancing correctives for SS; and I also maintain some hope that eventually Vance might.
It is kind of surprising to me that the “responsible voices” aiming to reform SS do not focus more on protection of grandchildren by grandparents making selective and reasonable sacrifices in their current SS levels as part of avoiding the generational battle that could be brought to bear.
Also, while the numbers discussed end up all over the place, I understand that in the 2030-2034 span when SS “runs out of money” it will require reducing payouts by about 20% to retain/ regain solvency. That could impact some people pretty severely, but many others would be able to take that “hit” in stride. In other words, even at its worst, perhaps the system is not going to zero dollar payouts – as is often implied by the Dem’s ??
*If or when they finally come to using means testing as a way to reduce SS payouts to the better off, I will be really pissed if they use the criteria of a retiree’s current income in retirement rather than his income over (say) the last 5 or 10 years of his working life. If he had a good income and squandered it on less frugal living rather than investing and saving in a reasonable way, I don’t want my frugality to end up supporting his profligacy.
And NC, thank you for your “noodling”.
That is the type of analysis that for whatever reason I struggle to think through properly.
And as you point out, even then there are a number of simplifying assumptions being made to keep the results tractable; and avoid all the weeds of special cases and situations, etc.
I know some self-employed skilled tradesmen who fudged on reporting income to IRS–and thus to Social Security. As self-employed, you have to hand out 15% of your income to SS—both employer and employee portions—to Social Security. They didn’t want to pay out 15%. (I was self-employed for about 10 years, and paid the required 15% to SS.)
Unfortunately, they found out that because they didn’t pay much into SS, they won’t be getting much back: only about $700 per month. They thought they were beating the system, but it turned out they beat themselves.
You get what you pay for.
Everyone pays both halves. The “employer” portion is compensation you never see. It is considered indirect compensation.
@Chases Eagles:Everyone pays both halves. The “employer” portion is compensation you never see. It is considered indirect compensation.
I agree with about half of that. If the “employer” portion were abolished tomorrow, higher wages would probably capture some of it, but not all. Would depend on how tight the labor market was.
Easy to see why. The employee may say, hey, raise my wages 6.2%, it costs you nothing. The employer says, I want to keep your wages the same, it’s not like you’re losing out. The win-win position is a compromise between the extremes: the employee gets more and the employer spends less.
@Gringo: the required 15% to SS.
It’s never been 15%. It’s been at most 12.4%, Maybe you are throwing in Medicare taxes; employee + employer portion is 2.9%, which would make SS and Medicare together 15.3%.
Unfortunately, they found out that because they didn’t pay much into SS, they won’t be getting much back: only about $700 per month. They thought they were beating the system, but it turned out they beat themselves.
Only if they wasted the money instead of using it to save for retirement. If they saved it themselves they could be getting a lot more than the difference in the SS checks.
I don’t think the government has any business taking away dumb choices from adults, though. Plenty of people disagree and think we should put ourselves in the hands of our betters, though.
I think some of that is a side effect of the well known fact that the Social Security system is on an unsustainable path. That’s been well known since I was a kid long, long ago.
It’s basically a case of musical chairs…everyone knows that the music’s going to stop eventually and they’re deathly afraid that they’ll be the one looking around while everyone else is sitting.
I’m the same way. I’m rapidly approaching retirement age. I’ve been putting money into retirement plans for a long time now, under the expectation that Social Security would eventually go away or at least be radically altered…but I’ve been waiting for that my entire adult life and, in the meantime, I’ve been paying my social security taxes every month for going on 50 years now.
It wouldn’t surprise me in the least to never get a penny from the program but that’s a hard pill to swallow considering how much I’ve paid for the well-being of the retirees that have gone before me all my life, to not get the same consideration when I age out of the workforce would be…um…disappointing.
I agree that it’s unsustainable, and I’d love to see it phased out for the good of the country, but if it happens, it will hurt me personally. Not life threateningly, but it will hurt.
For those already collecting checks and depending on them, I’m sure the prospect of it going away terrifies them, so the argument carries water.
Oh…but the Republicans say they aren’t going to end Social Security, just eliminate the fraud and waste…because everyone knows how much faith you can put in what a politician says right?
Not saying they’re right and I actually that something’s going to have to give or the whole house of cards is going to come down all at once…which is an even scarier prospect to me; but I imagine the terror that someone who depends on that check coming in every month for their survival would feel at the prospect of being cut off. I would imagine that even being told there’s a possibility of it happening would carry a lot of weight.
Taxes paid on the employee behalf are part of total compensation. Boeing was quite explicit about that every year when giving out raise notification. Every tax, every benefit.
We generally acknowledge that if SS payroll taxes had instead been invested in personal accounts, even if starting or ending at “bad” investment cycle stages, the retiree would be significantly ahead over the existing SS scheme. With that in mind, while I don’t like the idea of government mandated actions, given the variety and foibles of human nature, I could end up accepting such mandated savings option/ obligation. It might be restricted to only wage/ salary income or even some level of income from whatever source.
The little thinking I have done on this suggests some form of investment goals geared to lower risk as the saver ages. So early on they are heavy into riskier growth, mid career a balanced goal, and near retirement a wealth preservation plan.
One concern about this is the banking and investment/ financial firms salivating at all that money under their control, thus the need for careful regulation for this portion of a saver’s portfolio. But if an older saver has been forced to allocate (say) 80% of his 12% wage income into a conservative IRA type situation, nothing keeps us from treating this 12% as the core foundation for retirement money, with any extra above that invested more aggressively if the saver feels so inclined and judges market conditions warrant that approach.
It is clear several people here have a much better handle on such thinking than I do, so I welcome alternative ideas or clarifications about possible issues I have not mentioned above.
That could include more ideas about just how we transition from the current scheme to this “mandated” one, possibly based on age cohort fractional allocation/ sharing, or whatever ???