The Way We Think About Social Security Is Really Stupid

Proponents of Social Security (which is basically everyone), have done a really good job marketing the program these last 80 or so years. Nearly every American feels they or their spouse “earned” the benefits that they receive. It’s like if you put money into a retirement account for decades, and then you got a monthly withdrawal from that account to help live off of. That’s YOUR money after all.

Except it doesn’t work like that. For one, in the case of retirement accounts, the money can run out. In other words, you can’t take out more than that you put in + what your contributions have earned as interest, gains, or dividends. It’s actually your money. With Social Security, people who take money out keep doing so until death, even if they end up taking more than they put into the program after adjusting for inflation, and any earnings from government bonds that money may have been invested in. Conversely, those who put in more than they take out get fleeced. Their children, or other chosen heirs, won’t inherit that money as they would have with a privately held account.

Here is where the Huffington Post writer starts slamming on his keyboard to point out that most seniors don’t have strong retirement accounts to lean on, and would be in deep trouble if they didn’t receive their Social Security benefits. Thanks hippie, that’s exactly my point.

You see, Social Security is really just a welfare program that most people are eligible for once they reach the proper age. Some people don’t need it, while many or most do. It’s welfare for seniors, because the money wasn’t initially theirs. It comes from people who are currently paying taxes, just as the seniors’ tax money went to people who were retired back when they were working. It’s largely just a transfer payment.

“But what about the fund huh? It’s not like normal transfer payments because there’s a large fund that earns interest, just like a large retirement account.”

Yeah, except that fund can’t invest in anything besides Federal securities. Securities backed up by who? Oh yeah, the taxpayers. So taxpayers pay for Social Security in two ways: 1) Directly through payroll taxes, 2) interest payments taken from income taxes and additional borrowed funds.

Just imagine a world without Social Security, where many seniors are in great need of assistance. A politician proposes raising taxes on incomes to pay for elderly living. The new program is established, taking money from those working and giving to those past a certain age. This would function the same as Social Security currently does, but there would be no confusion about what it is.

Actually, that program would make more sense, because it likely wouldn’t give payments to wealthier seniors who don’t need it.

Social Security’s sky-high approval ratings are entirely the result of a very successful marketing campaign that the right needs to learn from. People get VERY upset when they feel something is being taken from them. It’s why taxes are unpopular, but also why Social Security is popular. It’s all in the mindset.

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