Today we found out that University of San Diego are not easily deceived by the promises of Social Security. Today’s San Diego Tribune featured an excellent article by Professor Thomas Dalton, PhD who discusses his student’s perceptions of Social Security. This comes as no surprise to me, but will to some longtime supporters of the program:
Do you want to hear something scary? Each semester I ask at least one of my college level accounting classes how many believe that they will collect Social Security benefits someday. These are traditional students in their early 20s, quite intelligent and financially literate. Invariably, in a class of 40, at most one person might raise a hand in response.
On the chance that students are just reluctant to raise their hands in class, I turn the question around and then ask how many people believe they will never collect any Social Security benefits in their lifetime. All hands but maybe one or two instantly shoot into the air.
Why should they! Mass media has been inundating young Americans with the message that Social Security will not be there since the 1990’s. Anyone with a 10th grade education can figure out that the system is unsustainable. Is this ‘scary’? If you are a member of the AARP, a Social Security supporter or one of those shills from Social Security Works, then yes it should be scary. For the rest of us, as the students at the University of San Diego demonstrated, this is reality. We’ve grown up in a world where Social Security is not ‘promised’ to us.
That’s our real problem – not whether Social Security can be fixed (it can), not how long the Social Security Trust Fund will last (it’s fictional anyway) – but that a generation of citizens is being asked to pay into a system it believes is fraudulent. How long would you pay into a retirement system if you really believe the money will all be gone when you retire? And what does that say about our future when young people are convinced that their government is cynically lying to them to keep the Ponzi scheme alive? Folks, we are in trouble.
‘Trouble’ hasn’t happened yet. Younger Americans seem to be resigned to their fate of sending 6.2% of their personal payroll taxes (12.4% when including their employer’s matching contribution) to Social Security and receiving little to nothing in return. Trouble won’t happen until someone incites the cynical crowd. Lucky we don’t know any incendiary individuals like that around here.
The sad part is that Social Security can be fixed in a number of ways. We can start by being honest. There is no Social Security Trust Fund that can carry us years into the future.
The collection of excess Social Security taxes over the last several decades was not invested in mutual funds, or real estate, or even annuities. It was loaned to other parts of the federal government. In other words, the excess was lent to a federal government that is now 18 trillion dollars in debt as a whole. Think about that. The entity that holds your Social Security Trust Funds has spent all the money entrusted to it, borrowed trillions more, and spent that as well.
The only way to pay for Social Security benefits now is to keep younger workers paying into the system – a system they almost universally believe will collapse before they retire themselves.
The last sentence speaks volumes about the state of the program today. Shills like these clowns, and multiple media sites are keeping up the “Expand Social Security” propaganda at a feverish rate, with good reason. Because if enough young Americans here this message, they aren’t likely to question where their money is going, or why they aren’t going to see it all ever again. These cheerleaders only purpose is to confuse and inundate young Americans with the pro-Social Security message so that they will keep paying into the system.
Beyond being honest with ourselves, we can repair Social Security.
Now, for the professor’s claim that Social Security can be fixed… Yes, it can. But at what cost? And who will shoulder the burden of that cost?
There are a number of possible remedies (and none of them are pleasant): 1) extend the normal retirement age, 2) reduce future benefits, 3) extend the cap on earnings subject to Social Security taxes, 4) raise the Social Security tax rate, 5) reduce spending elsewhere in the federal government and divert the money to Social Security benefits – the list goes on. The common denominator of all these solutions is the underlying question of who will feel the pain. Who will get less than they were expecting, or what they were promised, or what they are entitled to? Everyone is in favor of a solution as long as someone else absorbs the pain. I’m as guilty as anyone.
Let’s take a look at who would be adversely affected by each possible solution:
Extend the normal retirement age: Generation X on down the line.
Reduce future benefits: The young, yet again.
Extend the cap on earnings: Anyone who makes over $118,500. While some readers may favor raising the taxes on the wealthy, if you were making $200,000 a year, your taxes would be $24,400 annually. But when you retire, you wouldn’t see anything close to that from Social Security. How exactly is that fair?
Raise the Social Security rate tax: Once again, the burden is placed on the young American wage earner. We are already responsible for “contributing” 12.4% total (6.2% from our personal payroll tax and 6.2% matched by our employers) toward Social Security. It’s already a bad deal. Now, in this scenario, we are going to make it an even crappier deal by increasing how much we put into the system. Remember, this is not going to affect retirees! Their days of putting money into Social Security are over. They are living longer than ever. Generation X’ers and Millennials will need to work longer to support them. Why should we be mandated to put more money into a broken system to keep it afloat?
Reduce spending in the federal government and divert it to Social Security: I’ll give you one guess… Reduction of spending will likely lead to slashing jobs in the federal government. This, once again, affects the younger American wage earner.
Answering those questions requires some maturity from all of us. We expect our elected officials to solve this issue, but let’s face it, solving problems is not their first priority.
It’s not that elected officials are opposed to solving problems. Most truly want to solve problems and make this a better world. It’s just not their top priority. Their top priority is getting re-elected so that they can continue receiving the perks of elected office. The rest of us are no different. Our first priority is making the house payment and feeding our families, not saving the world.
But when I look into the faces of my students and see the resignation and distrust of government developing, I realize that it’s time to step up a little.
These young people believe we are lying to them in order to induce them to pay for our retirement at the expense of their own – with no concern of how this will affect their lives. We’ve got to show them that we are better than that. We’ve got to show them that we care about their future as well as our own. And if they can’t always trust their government, they can at least trust their parents and grandparents to make it right.
The solutions won’t be fair. People will probably not get everything from Social Security that they paid for or deserve. Compromises are needed and we all have to be willing to shoulder some of the burden. If we don’t much of what we’ve worked for over the last 250 years may be at risk. Just ask my students.
The solutions won’t be fair. But any solution will be burdened primarily by the young, causing further unnecessary destruction of capital on a generation that enters a slumping job market with massive student loan debt.
I appreciate Professor Dalton’s forthrightness in his article. He is genuinely concerned for the long term financial well-being of his students, which is what inspired me to write my book. We need more people like him in higher education.
Are the students at the University of San Diego that much more attuned to economic and political trends than they are in other universities around the country? I doubt it. In Professor Dalton’s class, the overwhelming majority of them are clearly aware that the game is currently rigged against them. They probably don’t know that they can begin to do something to change this. My goal is to have students at University of San Diego and at colleges across the country let their politicians know, in no uncertain terms, that they want out.
-R.J. Renza, Jr.
Take a moment and sign the National Petition to Opt-Out of Social Security. The more signatures we gather, the more pressure we place on Congress and our political leaders.
This week marks the release of my first e-book “How Are You Not Angry Yet: How Social Security is Destroying the Futures, Finances and Hopes of Generations X,Y and Z and How We Can Put and End to it,” which takes on Social Security from the perspective of young America in a visceral and humorous way. “Angry Yet” breaks down the complex topic of Social Security into a way that most Americans can easily understand and find entertaining and is available here.