Last weekend, Forbes on Fox focused on the record number of workers who don’t have enough money to retire. According to host David Asman, this proves “why we need to ditch Social Security” for younger people.
Elizabeth MacDonald said, “It would help. It would put the money right back into their hands and not Congress’ hands because right now, since the 60’s,Congress has been spending that money.”
Rick Ungar was the lone voice of sanity – for a time anyway. “Good heavens, no!” He said. “You know where that money’s going to go? That money’s going to go into the hands of Wall Street where they’re going to invest it in phony-baloney securities. They’re going to invest it in investments that they’re betting against.”
Asman sneered, “Unlike the government by the way that never invested in anything phony.”
Ungar continued, “They’re going to invest exactly as they did the past 10 years that got a lot of people broke. You cannot turn this over to Wall Street until Wall Street shows us that they’re prepared to do the right thing.”
Asman asked panelist Mike Ozanian, “(H)as the government ever showed that us it’s ready to invest wisely?”
Predictably, Ozanian said, “No.” But he didn’t leave it there. “In fact Ben Bernanke and his counterpart… counterfeiter-in-chief I call them, Obama and Bernanke, they’ve been robbing us of our savings. I like what E-Mac is saying, David. My 401k has badly outperformed Social Security returns during the life of my working career, and I think that all Americans should enjoy that.”
Morgan Brennan was asked if Social Security would be there when she retires. She said, “No, not necessarily, which is why I am all for reforming Social Security, but I don’t think we should be scrapping it altogether. …People aren’t saving money because they don’t have money to save. We still have 12 million Americans unemployed, we have 10 million homeowners who are still underwater on mortgages, cost of gas, cost of everything has essentially gone up while our median salaries have gone down since the recession.”
John Tamny was the worst. He said, “Social Security is an abomination on its very best day,” and nobody challenged him. He added, “But I will point out that we did make promises to people who are nearing retirement, so I think the idea should be to make them whole, and then give those who are younger the opportunity to opt out of the system. Rick says that Wall Street invests money poorly, how could Wall Street do remotely worse than what the government has done?”
Ungar replied, “Government doesn’t bet against your investments.”
Asman jumped in, “Oh wellllll a lot of people would argue with that one.”
Steve Forbes’ recommendation: “Allow younger people to have the bulk of their payroll taxes, David, go into their own personal accounts for sensible rules and diversification. As you get older, more into short term so you don’t have to worry about stock market crashes. Three counties in Texas, for example, pulled out of Social Security …in the 1980s,they didn’t put one penny in the stock market, went into interest rate contracts or sound insurers, those folks are retiring 50%-200% more benefits than they would’ve had with Social Security.”
“I actually love that idea,” Brennan said about her boss’ suggestion. “But I don’t think we should be scrapping it (Social Security).”
Even Ungar now spoke in favor of the principle of privatization. “In a perfect world, I completely agree there should be a choice. …We’ve got to see that the people who handle these investments who take this money in and we know who they’re going to be who are going to make a lot of money are going to treat people fairly. Then, I’m with you all the way.”
What nobody mentioned? Social Security ended 2011 with a $2.7 trillion surplus, and lifted 20 million people of all ages out of poverty. E-Mac and Tamny shouldn’t take a penny out of Social Security when they retire if they hate the system that much.
Update: The original post incorrectly suggested that Ungar's final comments signaled he was in favor of the privatization most others were endorsing.
We usually hear the same mantras: that Social Security will be broke in a few years, that Social Security is already broke, that everyone should just invest some money privately, that Social Security is a Ponzi scheme, etc.
What is it really about? Some rich backers of the GOP and their pundits don’t like the fact that a fraction of their taxes goes into a retirement plan for people who have less money than they do. The whole point of the system was to make sure that when people retire after working for upwards of 40 years, they don’t just wind up with nothing. For many people, they don’t make enough money to save much for investment or anything else. For some people, they did invest their money, but the investments didn’t pan out, or they wound up with something like the Bush Recession wiping out almost all of their investments and savings. (And if Bush had succeeded in privatizing Social Security in 2005, millions of seniors would have been ruined by that recession.)
Also, these pundits conveniently forget that under the Ronald Reagan presidency, right wingers predicted that Social Security would go under, which led to a slight change in the withholding and one or two other tweaks, which resulted in the system being viable under that criteria for an addtional few decades.
Under today’s system, if there is a concern about the payout ability of the system, the easy fix is to remove the cap and have people making more than 106K (or so) continue to pay into the system. They could also adjust the withholding amount by a very small percentage. And they could gradually raise the eligibility age to 67 for people who are younger than 55 right now. That’s the most likely scenario we’ll see. The rash thought of “Just get rid of it!” is not a solution at all.
And any politician, GOP or otherwise, who actually tries to take steps to get rid of Social Security would simply be asking to find out why it’s usually referred to as “the third rail” of politics…