Yglesias

You Don’t Make Social Security More Solvent By Eliminating Its Funding Base

Television hosts who like to ask Republican Party members politically charges questions about Social Security (you know who you are) really ought to take 10-20 minutes to think about how Social Security works, so that when faced with a superficially plausible answer, you can evaluate whether or not it actually makes any sense.

So to review, roughly speaking we have two kinds of people in America. We have people who are paying Social Security taxes and we have people who are receiving Social Security benefits. For the past several decades, the quantity of tax revenue coming in has exceeded the quantity of benefits being paid out. That is projected to flip around, creating the need to either redirect some additional financial stream into the Social Security system in order to repay the rest of the government’s debt to Social Security or else to reduce Social Security benefits or else to increase Social Security taxes. The choice among these options is what the Social Security debate is about, if the Social Security debate is about funding Social Security.

Oftentimes, however, I see people on your television programs or your televised debates making reference to the idea that “younger workers” should divert some of our payroll tax money into some kind of private retirement accounts. At this point you, the national political reporter, absolutely must ask them how we’re going to pay current benefits of this happens. What privatizers want to say is that current retirees will keep getting benefits and future retirees will be okay despite our lack of benefits because we’ll have private accounts. But current retirees can’t get benefits if my money is in a private account. And my account can’t be funded if I’m paying benefits for current retirees.