There are recurring themes in American politics of which perhaps the most cynical and tiresome involves Social Security and Medicare. Historically, whenever Republicans pointed with alarm to the coming fiscal apocalypse of the federal government, arguing that something must be done to prevent disaster, Democrats have accused them of plotting to eviscerate “our Social Security and Medicare.” Time and time again, this stratagem has derailed proposals for fiscal reform. The entitlements train was allowed to roll on, gaining speed every year. That it will inevitably jump the tracks is an unwelcome reality that politicians of both parties have expended a good deal of energy to ignore.
From the perspective of politics, the problem is admittedly a difficult one. For years and decades the American people were allowed to believe that Social Security is not an entitlement program but an investment scheme. People approaching retirement age had put their money into Social Security; why should they not reap the benefits of that wise investment? It would have been inconvenient to explain that their money was gone, and that the Social Security payments they were due to receive would be funded out of current payroll tax receipts. The Social Security Trust Fund has always been a fiction. Its assets consist of government securities; that is, pieces of paper obliging the federal government to reimburse itself. In effect, the government appropriated past payroll tax surplus for its general fund, depositing IOUs in the Trust Fund.
In the good old days, when payroll tax receipts exceeded payouts to Social Security beneficiaries, this did not appear as a problem. Nor would it have been, but for the dismal science of demographics.
Fiscally speaking, the post-1945 Baby Boom generation proved to be a ticking time bomb. It saddled the United States with a huge generational cohort, whose members would reach retirement age over a relatively short period of time. And meanwhile, the US birthrate was dropping—or to put it another way, the country’s population was ageing. Year by year, there were fewer working people paying taxes, more people retiring, and more Social Security checks being cut. Changes to the Social Security program, e.g. the expansion of Social Security Disability entitlement, helped to speed this process along. In the fullness of time, yearly payroll tax receipts were no longer sufficient to cover yearly Social Security payouts, and the government was obliged to make up the difference by liquidating some of the government securities in the Trust Fund.
At this juncture it’s as well to mention that Medicare, which is also funded by the payroll tax, is in a similar fix thanks to the same demographic factors and the rising cost of technologically sophisticated healthcare. But for simplicity’s sake, let’s keep the focus on Social Security.
Despite their professed devotion to “the Science,” progressives aren’t good at math and it’s hard for them to grasp what all this means. But the problem’s a simple one, really: Payroll tax receipts no longer cover Social Security payouts, the Trust Fund is nothing but the government’s promise to itself to pay itself back, and the only way to get that money is by borrowing. If you’ve ever wondered why the national debt is $31 trillion and counting, that’s why.
From time to time, proposals have floated for drastic reform of the Social Security system. Raising the retirement age, means-testing benefits and raising the payroll tax cap have all been proposed. Such measures would certainly postpone the evil day of insolvency, but they wouldn’t solve the underlying problem. In 2005, President George W. Bush tried to do so with a plan to transform Social Security into a real retirement savings program that would enable people productively to invest their payroll tax payments. The reform was to be introduced gradually, with current and near-term future benefit recipients kept under the existing system. Bush got clobbered, of course, with assorted nitwits in the Democratic party screaming that he was plotting to throw old people out in the street so fat cats could steal their money. Later on, Paul Ryan got the same treatment. Not for nothing have Social Security and Medicare been dubbed the third rail of American politics. Considered purely as a partisan political issue, it has served Democrats and the broad Left exceedingly well.
And they’re still screaming about it now, with our ridiculous president leading the chorus. When Top Secret Joe’s not busy stuffing classified documents in the glove compartment of his Corvette, he’s denouncing “MAGA Republicans” for conspiring…to throw old people out in the street so fat cats can steal their money. Yes, those evil right-wing extremists in the GOP House caucus are scheming yet again to gut “our Social Security.”
But don’t blame Donald J. Trump! The one thing he and Biden agree on is that Social Security and Medicare are not to be touched. Trump’s solution is to stop spending on “woke programs” and eliminating “waste, fraud and abuse” generally—in other words, to scrape up some pocket change and call the problem solved.
Over in the leftie fever swamp, the solution is what it always is: Tax those wicked, greedy corporations, and put the squeeze on “billionaires and millionaires.” But alas, comrades, if you relieved the usual suspects of every dollar they own, the problem outlined above would not be solved. With people like you in charge, the government’s finances would only deteriorate faster. The Left’s problem is that when you add up the costs of the items on its wish list, there aren’t enough taxpayers in the Galaxy to fund them. Medicare for All, the Green New Deal, free daycare, free community college, student loan forgiveness—as I said, progressives aren’t good at math. And perhaps, just perhaps, in some corner of their constipated little collective consciousness they realize this. What else explains their idea that all our problems could be solved if the Department of the Treasury would just mint a $1 trillion coin? That sound you hear is the squeal of a rat, trapped in a corner.
There are plenty of people in Congress and in the Executive Branch who realize that America is riding for a fiscal fall and that Social Security and Medicare, though not the whole problem, constitute a big part of it. But they also realize that the political risks of proposing urgently needed reforms are formidable. Why should Senator A or Representative B blow up their careers for the sake of a fool’s errand? That leaves the field clear for blowhards like Trump and Tucker Carlson and Bernie Sanders and the harpies of the Squad, who are more than happy to use the issue as a political cudgel. And if there’s any justice left in the cosmos, after the crash come, they’ll be the ones riding in the tumbril…