Crash course: Social Security is crashing faster than you think

National Review, Nov 7, 1994 by John Attarian

It's time to think the unthinkable and do the undoable. The other answers are no answers. And inaction means we will soon have no good options left.

Outrage over radical reform is predictable, but it has no moral or empirical basis. Most "thinking" about Social Security is a tissue of myths such as:

1) Social Security is a retirement insurance program. It's a redistribution from taxpayers to beneficiaries; the insurance terminology--"beneficiary," "insurance," "trust fund," "contributions," etc.--is misleading.

2) You just get back what you paid in. Your taxes went to previous retirees; in any case, beneficiaries get many times what they paid.

3) Social Security is a contract between generations. No such contract exists.

4) I have an earned right to my benefits; that money belongs to me. In the 1960 case Flemming v. Nestor, the U.S. Supreme Court ruled that paying into Social Security confers no property rights to benefits.

5) Social Security has a big surplus, so it's sound. Not so, as we have seen.

6) We had a surplus, but the politicians stole it. There never was any money in the "trust funds," only government debt, by design. And my generation (I will be 67 in 2023, when OASI is projected to go broke under pessimistic assumptions) has no moral right to put such crushing burdens on the young coming up behind us.

So far, politicians of both parties have turned blind eyes to this onrushing menace. They have ignored repeated warnings from Social Security's trustees. Beginning in 1985 (nine years ago), the trustees' annual reports have voiced concern that the rapid increase in disability beneficiaries could exhaust the Disability Insurance trust fund. The trustees have repeatedly asked Congress to reallocate tax rates between the OASI and DI trust funds to divert money to Disability Insurance. Their 1994 report noted that "it is even more urgent now that such action be taken." Similarly, Medicare's trustees have repeatedly described HI as "severely out of financial balance" and stressed that "prompt, effective, and decisive action is necessary."

Yet our politicians refuse to act. In his 1992 State of the Union address, George Bush said, "I will not tamper with Social Security." He repeatedly exempted the program from proposed entitlement caps. Last year Jack Kemp, the former HUD secretary and aspiring GOP presidential candidate, proposed limiting entitlement growth to beneficiary-population growth plus inflation. But he, too, exempted Social Security. Candidate Clinton promised that "we're not going to fool with Social Security." Characteristically, he fibbed, but his benefit tax hike is, as we saw, more pesky than helpful. Representative John Kasich (R., Ohio), author of the House Republican alternative to Clinton's deficit plan, wrote later that "Social Security was off limits. Republicans believe that Social Security represents a fundamental agreement between the Federal Government and the American people--an agreement that must be preserved.... Republicans would achieve their deficit reduction without cutting benefits that American senior citizens have come to consider a sacred trust."