Red White & Blue Hens

College students in Delaware who think right is right, and left is wrong. We study hard, party hard, and play hardball.

Saturday, May 07, 2005

Social Insecurity

Democrats complain about the Bush plan making Social Security insecure, but you are not legally entitled to any benefits anyway.
From the CATO Institute:
Social Security is a payroll tax on the one hand and a set of transfers from the government on the other. The two are connected in the way David Blaine levitates: He doesn't; they aren't; it's illusion.

Despite the fact that your payroll taxes are called "federal insurance contributions," they are nothing like insurance policy premiums because there is no policy, no contract, and no legal claim benefits. Your payroll taxes are nothing special, just taxes. They're spent right away on checks to current retirees and items in the general budget, like the war in Iraq and subsidies for mohair producers.

The money that comes out of your paycheck buys you nothing, not even a right to retirement benefits. That's the upshot of the 1960 Flemming v. Nestor (search) Supreme Court decision. Whether you're going to receive a Social Security check from the government at all depends entirely on the good grace of folks like Tom Delay and Ted Kennedy. Social Security provides no "guarantees." Every serious plan to make Social Security solvent involves higher taxes, smaller benefits, or both. You may feel that you've earned a right to Social Security benefits by paying all those taxes all those years, but all you've really got is a feeling, because the right, legally speaking, ain't there. Social Security is not secure.
Personal retirement accounts, however, would give each worker genuine property rights to his or her retirement savings. The money that goes into a PRA goes straight from your paycheck into an account that you own. It's not a promise; it's property. Instead of paying taxes for missiles and mohair, you get a tax cut that allows you to save and invest for your own retirement. And because what you save is yours by right, you can, unlike Social Security, pass it on to your loved ones when you die. With PRAs, you literally own the source of your retirement security, and it cannot be held hostage, whittled down, or bargained away by future Congresses


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