Social Security was a bad, big-government mistake. As argued in The Deficit Delusion, a much worse, much bigger big-government mistake would be to lower its annual cost by pushing the retirement age up to 70, 75, or name the higher number. Skeptical? Please read on.
The Social Security hysterics claim the federal retirement program faces “insolvency” in 2035. No, it doesn’t. The surest sign it doesn’t face insolvency can be found in all the nailbiting about its looming insolvency. It implies that the Social Security Administration has all along been stockpiling funds to pay present and future beneficiaries. Nonsense.
More realistically, all past overages that came into Social Security were quickly shifted to general revenues, where they were spent by Congress. Call Social Security what it’s always been: an extra tax on income, and by extension an extra source of spending sustenance for Congress.
Assuming a day in 2035 when Social Security “runs out of money,” the same Congress that formerly spent the overages will meet any shortfalls in the difference between what Social Security collects, and what it must pay out. Which is why Social Security, though it was and is a horrible idea, has good qualities as a barrier to more federal waste. Think about it.
The more that Americans live long, and in living long account for a growing share of federal outlays that exceed what Americans pay into Social Security, the less that Congress can allocate funds to other programs, or much worse, new ones. Which hopefully vivifies Social Security’s essential role as a barrier to government growth.
While it’s no longer credible to suggest it’s the “third rail,” Congress appears loathe to tweak its benefits, retirement age most notably. Good. Social Security is a costly mistake that began small and is now big, so let it account for more and more federal spending as a way of substantially handcuffing the members of Congress dreaming of all new programs to cruelly foist on the American people.
All of which calls for a little bit more commentary on why the Social Security retirement age must not be raised. Let’s for fun imagine that “reform” of this kind saves Congress hundreds of billions, and even trillions. What a disaster if so.
See yet again what Congress has done in the past with overages collected by Social Security: it’s spent them. Which is dangerous.
While Medicare began as a $3 billion annual program in 1965, today it’s ballooned to something like $1 trillion annually. Consider the latter through the prism of entitlement reform, and it’s popularity with allegedly limited government Republicans in Washington. They must be stopped.
Billions and/or trillions saved won’t be returned to the people, or used to pay off debt that will merely expand Treasury’s already enormous borrowing capacity as is, the money saved will once again flow to Congress followed by it being allocated by Congress. Trillions in fresh powder for Congress to grow government with? No thanks. Not a chance.
Which is why the government limiting solution to Social Security is for limited government types in Congress to do nothing. Let Social Security swallow ever greater amounts of the federal budget so that Congress can’t so easily introduce new line items to the budget.
The only way to limit the growth of government is to limit flow of tax dollars to Congress, not cut its spending. There’s a difference. Lost on the well intentioned is that no amount of government spending cuts shrink government. Most will expand it. Pray taxpayers doesn’t learn this truth the hard way.
Originally posted to Real Clear Markets.
