Selling Snakeoil, Part 5

Hyman comes through with a couple of classic propaganda chestnuts in the final installment of his Social Security “benefit” series.

Hyman

Benefit #9 - A self-sustaining Social Security investment fund with personal
retirement accounts could include retirement options such as earlier retirement
ages with graduated benefits. A worker would not necessarily have to wait until
age 67 but could instead opt to retire at, say age 60, with reduced benefits. A
worker with a terminal illness who will never survive to age 67 and is unable to
work could opt to begin drawing benefits earlier if it would ease his final
years.

You might notice that unlike most of his other comments, Hyman doesn’t make a direct comparison here between the “benefit” of private accounts and Social Security. That’s because there’s virtually no difference between what Hyman suggests and the current system. Not only does the retirement age of 67 only apply to the youngest of today’s workers, but anyone can retire early and still receive Social Security benefits. You can retire as early as age 62 and receive benefits. Although your monthly payouts will be slightly less, you will more than likely get as much in benefits because you’ll be collecting for more years.

Hyman

Benefit #10 - Revamping Social Security today would avoid the punishing fixes
our children or our children's children will have to endure in the years ahead.
Left unchanged, Social Security will go broke.

This is a classic scare tactic, and one that is 180 degrees removed from the truth. In fact, the data shows that we will pass on a huge debt to the next several generations of Americans if a privatization scheme is instituted. The reason? Shifting money into private accounts would take away money that is owed to today’s retirees. The trust fund would be depleted far more rapidly than it would if left alone. While the current pay-as-you-go system would still keep a healthy flow of money coming into the system from workers to provide benefits to retirees, a privatization scheme would dry up much, if not all, of this revenue stream. The result would be a dramatic cut in benefits and/or huge tax hikes or deficit spending to make up the difference.

Additionally, the collective national debt that such a move would produce would slow overall economic growth, becoming an anchor around the American economy. Not only would Social Security (or whatever it might be called) suffer, but the fiscal health of the nation would take major hit.

But such period would be brief and would soon be a thing of the past given the huge revenue that private investment accounts would create, right?

No. In fact, even Business Week (generally a proponent of conservative economic policy) acknowledges that it will take a century before the supposed benefits of private accounts would have a chance of making up for the shortfalls in the system that such a change would require. The president’s privatization scheme essentially asks Americans to sell out their children, grand children, and great grandchildren for hypothetical benefits to be reaped by their great-great grandchildren.

And to repeat just one more time: Hyman’s premise (which he restates at the end of the commentary) that Social Security is going broke is a lie. Social Security (as Hyman himself notes) is a pay-as-you-go system. The surplus that’s been built up by the baby boomers entry into the workforce will eventually be paid back to them in the form of Social Security benefits, but even when this happens (around the middle of this century, or so), incoming worker contributions will still be available to provide benefits to the next generation of retirees.

Make no mistake: there IS a Social Security crisis. But the crisis is in the attempt of those who embrace an “every man for himself” ethos to undermine perhaps the most successful government program in the nation’s history. What needs to be privatized is not the Social Security system, but the lives of the now public officials who are willing to lie to the American people in order to create a dystopian culture of selfishness and greed that they (in their bizarre analysis) think of as the epitome of a moral society.

And those are the Counterpoints.

Hyman Index: 2.84

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