Conservative Social Security Critics Have Been Insisting 'The End Is Near' For Decades
You know those cranks in the park with signs warning "the end is near"? The ones who respond to the passing of their target dates for the end of the world by simply picking a new date? The ones nobody takes seriously, in part because they've been insisting the world is about to end for as long as anyone can remember? They have a lot in common with Texas Governor Rick Perry.
[I]t is a monstrous lie. It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you're paying into that program that's gonna be there. Anybody that's for the status quo with Social Security today is involved with a monstrous lie to our kids, and it's not right. [...]
If Vice President Cheney or anyone else says that the program that we have in place today, and young people who are paying into that expect that program to be sound and for them to receive benefits when they reach retirement age, that is just a lie. And I don't care what anyone says. We know that. The American people know that. More importantly those 25- and 30-year-olds know that.
Sound familiar? Maybe that's because 25-and-30-year-olds have been hearing it as long as they've been alive. Conservatives, and cynics who fall for their alarmist rhetoric, have been insisting for decades that Social Security is a house of cards about to collapse any day now.
Let's start by looking back about 15 years. Here's The Cato Institute's Ian Vasquez writing in the August 13, 1995, edition of the Washington Times:
In a 1967 Newsweek column, economist Paul Samuelson praised Social Security because retirees could collect benefits that exceeded their contributions. That is true of our pay-as-you-go pension system — in which current workers fund current retirees-only as long as the work force and the economy expand. Although Mr. Samuelson recognized that the system "is actuarially unsound," he celebrated the fact. "A growing nation," he wrote, "is the greatest Ponzi scheme ever contrived."
Tomorrow, the Social Security System turns 60 years old, and as the ratio of workers to retirees continues to fall, the system looks like any pyramid scheme: untenable. The government estimates that the system will go broke in 2030. In fact, since the government has already spent much of the money in the Social Security Trust Fund, the crisis will begin anywhere between 2005 and 2012 when the baby boomers start retiring.
On July 14, 1994, the Chicago Tribune ran a column by Cato president Ed Crane:
And so it goes in the offices of the Social Security Administration, home of the world's largest Ponzi scheme. Sold originally to the American public as a program to care for the indigent elderly, then as a "national pension plan" into which we pay "insurance premiums," Social Security has always been a fraud, a pay-as-you-go slush fund for politicians to dip into at election time by promising the moon.
And a December 1994 Jeff Jacoby column that ran under the headline "Social Security is a pyramid scam to end all pyramid scams" in the New Orleans Times-Picayune:
Not being a politician, I can say anything I like about Social Security — even the truth. And the truth is that Social Security is an immense Ponzi scheme that is slowly bankrupting young Americans in order to enrich their elders. The truth is that people in my age group — under 40 — will never get back in retirement benefits what we are paying in Social Security taxes, while those now retired are collecting far more than they (and their employers) ever contributed, interest included. [...] the gravy train is slowing and will soon screech into reverse. Those of us still 25 or 35 years away from retirement will not recoup even what we pay in.
Let's go back even further. Here's Citizens for a Sound Economy chairman and former Reagan administration OMB director James Miller, writing in the June 14, 1989, Arkansas Democrat-Gazette:
Social Security is basically a Ponzi scheme. I don't mean this pejoratively, but as a technical description. A Ponzi scheme can work as long as you have a burgeoning base of workers making payments into the system. But when the base narrows relative to the top, and the top, in effect, lengthens because people are living longer, you are in real trouble.
And a Don Bauder column from the May 20, 1984, San Diego Union Tribune:
Now let us consider Social Security. As in a Ponzi scheme, everything going in the front door goes out the back door — what you pay in today for "your" future Social Security goes directly to someone now receiving Social Security benefits. There is no pot building for you. The only difference between this arrangement and a Ponzi scheme is that Social Security is called an "intergenerational transfer" — the young are passing money on to the old. Of course, the young are not told they are doing this — they are told that they are putting away money for their own retirement. Our young people are wise to the ruse: A full 75 percent of them consistently tell pollsters that they have no confidence they will ever receive Social Security benefits.
The "young people" in 1984 who were certain they would never receive Social Security benefits are now the 50-year-olds who hear from conservatives that they'll get their Social Security benefits, but today's young people won't. And the goalpost keeps moving.
It's important to understand that these rolling predictions of imminent collapse don't come from people who are concerned by the long-term fiscal condition of Social Security. They come from people who are concerned by the existence of Social Security. If they were simply worried about the program's solvency, they'd take heart in the fact that occasional small tweaks have kept the program running effectively for nearly a century, and recognize that small tweaks will continue to do so indefinitely. They'd focus not on variations in the number of workers per retiree, but on the more basic question of whether America can afford to provide a safety net for retired workers.
And the answer to that question is a resounding yes: After all, simply lifting the cap on income subject to payroll taxes, so that the richest Americans pay into the system at the same rate as the rest of the country, would keep Social Security solvent for 75 years. That the sky-is-falling crowd ignores the fact that small tweaks have kept the Social Security running in the past, and can continue to do so in the future, makes clear that their real objection is to the very concept of a publicly financed program that provides guaranteed retirement benefits to all Americans.
Like the crank in the park insisting the world is about to end, proclamations that Social Security is a Ponzi scheme teetering on the brink of collapse seem to be little more than wishful thinking.