The “third rail” powers trains on a railroad track. It is so charged with electricity that it usually kills anyone unlucky enough to touch it. Politicians and pundits call Social Security the third rail of American politics. Candidate who touch it get zapped into political oblivion quicker than you can say, “Don’t mess with old people.” Does anyone believe the American President will demonstrate the fiscal courage necessary to push for Social Security reform? Doing so would help save future generations from an insurmountable debt. Still, don’t expect much from Congress in this regard.
Social Security first served as a program protecting the neediest retirees from poverty. Now it acts more as a national retirement service financed by the lower and middle classes. Government has raised the payroll tax dozens of times to keep the program solvent. It is steeply regressive and not set up how people imagine it to be. Called the “Old Age, Survivors, and Disability Insurance Program,” officials have managed it less like an insurance fund and more like a Ponzi scheme. They send money out of workers’ paychecks directly to retirees. The officials assume that a new batch of retirees will be ready to pay their dues once the present crop of workers retires.
This system worked when only a fraction of the population was old enough to receive benefits and weren’t expected to receive them for very long. But a basic problem led to the third rail. When President Franklin D. Roosevelt signed the Social Security act into law, the average American’s life expectancy was 61 years of age. Now, it is 78.8 years old. Then as now, one started receiving benefits at 65, so in Roosevelt’s era, most potential recipients were already dead.
Nowadays, Social Security is one of the largest outlays in the federal budget, next to Medicare / Medicaid / CHIPS and the Defense Department. The ratio of workers paying into the system to retirees drawing from it is dropping fast and expected to plummet. The Boomer generation is populous, healthy, and will be drawing a long string of checks well into the foreseeable future.
But there’s more. Many have heard of the mythical “surplus.” This is the buffer of cash that Social Security built up some time ago. Back then, the economy was roaring and the elderly were few and frail. Well, the surplus is gone. Actually, it’s part of the national debt—a good chunk of it, as a matter of fact. The government certainly owes more money to Social Security than it does to China. You see, legislators in charge of the budget saw the stupendous pile of cash generated by Social Security. Naturally, then, they elected to modify the law so they could borrow the money. In essence, they sold the Social Security Administration U.S. Treasury Bonds, took the money, and spent it.
Due to inevitable demographic shifts, Social Security will probably stop running a surplus soon. The money “saved up” should carry the program until 2037—well before I retire, but an eternity as far as the four-year election cycle is concerned. Eventually, the difference will have to come out of general revenue, and we won’t have a trust fund to borrow from this time around.
The forecast is gloomy. Over 50% of registered voters are over the age of 45. They also maintain the highest voter-turnout rates. The eighteen to twenty-something crowd averages around 14% voter turnout in off years. Why off years? Put simply, the President has no authority over the economy and very little authority over domestic and budgetary policy. The media wants you to believe otherwise. Congress determines fiscal issues. As long as they and their constituents are old, guess whose interests they will best represent?
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Michael Greenker is a writer from the Colorado Springs area.
