Guest Writer Rob Sussman, Delaware 105.9
It’s not something that you will ever hear an honest politician say, and you won’t hear a lot of pundits say it either. It’s not a popular idea, but it’s going to have to happen sooner or later. No amount of shrill doomsaying about how “Rob Sussman wants to kill all the worlds grandmothers and loves to watch senior citizens starve and die in the streets” will change the absolutely inevitable:We either abolish or reform Social Security on a fundamental level now or we watch as it crashes, burns, and takes us all with it. You pick.
When Social Security first came into being with the Social Security Act of 1935, it came in with three major assumptions about the future:
1. That people would die either before or within a few years of retirement (average life expectancy was just 61 in 1935. It’s 78 today.)
2. That the United States would always have a robust and expanding manufacturing sector that would be capable of employing a large percentage of the country into perpetuity.
3. Perhaps the worst assumption the program relies on: the next generation will always be larger than the one preceding it.
Let’s go in reverse order, starting with #3. It took exactly one generation for this assumption to completely fall apart. According to Pew Research, the Baby Boomer generation contained a whopping 76 million births. The generation that followed, Gen X, contained just 55 million. Millennials as group are larger than Gen X, but Generation Z, the post-millennials, is slightly smaller than the Millennials. Oh, and birthrates are continuing to fall across every demographic in the country.
The worst thing about this assumption is that Social Security inherently rests on the idea that newer payers will pay for the older payers, thus requiring a constant and steady influx of new workers in order to adequately function. Notably, this is functionally indifferent from a Ponzi Scheme. Bernie Madoff went to jail for doing just this.
Now lets talk about #2. US manufacturing has been on a steady slide since the 1960s on every quantifiable level. It’s dropped as a percentage of GDP. Manufacturing employment has dropped to historical lows. With the advent of automation, it’s expected to drop even further. In 1935, with war in Europe and riding the apex of the industrial age, the folks who drafted the Social Security Act completely lacked the perspective necessary to forsee anything like this. They aren’t at fault for it–we are; for refusing to do anything about it even when the trends were clear.
And for #1. In 1935, the average life expectancy was actually before retirement age–it was 61. Retirement age was 65. It was likely that you would die before you ever pulled social security. If you did live to that magic age of 65, it would have been somewhat unusual for you to live much further past that.
Now, it’s 2018, and the average life expectancy is 78–a full 13 years after retirement age. Now, the average SS recipient will be pulling checks for over a decade or even more. That’s long past the time period that the authors of the Social Security act could have imagined.
These three fundamentally wrong assumptions are at the core of the Social Security program–and these chickens are coming home to roost. In 2017, the annual Social Security report indicated that Social Security paid out $27 billion more in benefits than it generated in tax revenue. That’s billion, with a B. Cash-flow deficits over the next decade will total $1.4 trillion. It’s anticipated to be completely insolvent by the mid 2030’s.
No, it’s not having solvency problems because the government is stealing from the fund. No, there isn’t a magic fix we just aren’t doing. This failure is because the Social Security is flawed on a deep, fundamental level.
So how do we fix it? We don’t. We can’t. The entire program has to be scrapped. Can we replace it? Sure. We can work on that while we work on progressively phasing out Social Security. It is the only responsible thing we can do.
“But I paid in all my life!” Yes. You did, and that is a horrible injustice to you. Lets start the groundwork right now so that our grandchildren won’t have to suffer as we have.