In 1936, the fledgling Social Security Board sent a document to millions of Americans that read (from Chapter 9 of Amity Shlaes’ The Forgotten Man):
There is now a law in this country which will give about 26 million people something to live on when they are old and have stopped working.
… (the government would) set up a Social Security Account for you, if you are eligible (and into this account) you and your employer will each pay 3 cents on the dollar you earn, up to $3,000 a year.”
That sure sounds like a self-funded forced savings program and not a Bernie Madoff pay-as-you-go plan.
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Why is it that proposals to take just 2% of social security taxes and putting them into an IRA-like account is such a difficult sell?
Would there not be an incentive to promote a growing US economy and a prosperous world. Liberals could even have the option of investing in a family of government-run mutual funds that invested in solar shingles and high-speed rail.
The quote strikes me as a first rate 1936 sales job for political purposes. On one hand, it is sold as a transfer payment for the elderly poor. (I have no problem with that, we can dicker about how much and who qualifies, but at least it is honest.)
But apparently that alone was not enough to sell it politically in 1936, (I’d guess there were a lot of rugged individualists who voted back then). So they juiced it up (in the second quote) to present it as a savings/retirement program for everyone, you pay in now, and you will receive later, (so tell your Congressman to vote for it!).
So perhaps this was an enormous sales job, with a fundamental contradication, and the root of the problem we now face. Perhaps the solution is to radically downsize Soc Sec, but over time by raising the retirement age, (and eventually some type of means testing?) to change it to a social safety net for elderly poor people, and call it that, and let the rest of us save or consume as we please.
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