Social Security is a welfare program for the elderly.
This ought to be an obvious statement, except Social Security is cleverly set up to trick people into thinking it's like a private retirement plan, where people pay in, their money is invested, and it's paid back later with interest. Whenever people talk about a "trust fund," I feel like swatting them. The "trust fund" is a silly accounting gimmick. The government as a whole is in debt, and the debt is increasing every year.
Even a lot of otherwise smart libertarians have been tricked. They will say things like "I could do a lot better if I invested the money myself." I have no doubt. They'd also do a lot better if they invested the rest of their tax dollars themselves instead of it being wasted on stuff like education and the armed forces. They are talking about Social Security as if it's a retirement plan with a relatively low rate of return when in fact it's a welfare program.
There have been some comments left to the previous post about Social Security "going bankrupt," which is a nonsense statement because Social Security can't go bankrupt any more than the air force can go bankrupt or the State Department can go bankrupt. Of course the whole government could renege on its debts, but that's extremely unlikely to happen. I'm pretty sure that future Congresses will either lower spending or increase taxes rather than commit financial suicide.
Long before the imaginary "trust fund" runs out, it will become obvious that goverment expenditures have gotten too far ahead of government income, and Congress will be forced to enact one or more of the following options: (1) reduce Social Security benefits for some or all recipients; (2) increase the retirement age; (3) raise taxes.
Social Security is not a program I'm especially happy about. My income is being taxed, but given the demographic realities of the future, it's unlikely that I will enjoy the benefits of Social Security in the way the the current generation of recipients do. It seems unfair to me that old people with lots of money are collecting their Social Security checks while young people making the minimum wage have to pay FICA taxes in order to fund it.
If I had my way, I would change the name to Welfare for the Elderly and I'd eliminate the separate system of FICA taxation and combine it with the regular taxes. This would create a much more transparent tax code. The current tax code is set up to trick people into thinking they are paying less taxes than they really are. This is a sneaky way to overtax the American people. I'm surprised the anti-tax people aren't all over such an idea.
However, I'm against the various proposals to "privatize" Social Security, such as Tyler Cowen's 401(k) proposal. The only genuine privatization is to lower taxes and lower benefits. Then people can choose to spend their extra income, or they can choose to save it for their retirment. That's a true private choice and not one of those nonsense proposals in which "privatization" somehow requires a massive new government program, as if we already don't have enough massive government programs. And most of the specific proposals seem like a welfare program for the financial services industry.
Of course under a genuine privatization scheme, some people won't do the right thing, and they will become homeless seniors and starve to death. Some of the more right-wing people will say "ha ha, serves them right." The problem is, the liberals will say "look at all the homeless old people starving to death. We must spend government money to save them from their lack of retirement planning." That's how we wound up with this system in the first place, and the national mood has shifted a lot more to the socialist side since then. You are never going to convince more than a tiny minority of the people that we should let old people starve to death, even if they deserve to. It just isn't going to happen.
The funny thing about liberals is that, on the one hand, they get really mad if you point out to them that poor people are stupid and lacking in future time orientation. But on the other hand, they enact policies based on that very true fact. I'm afraid that conservative plans to somehow teach the poor people lessons in responsibility and wise financial planning just aren't going to work. These are the same poor people who take their checks to check cashing places and pay an unnecessary 5% transaction fee because they lack even the foresight to open a bank account. How do you expect people who can't even save money for the next week to save money for twenty years in the future?