Bruce Bialosky

Most Americans are worried about whether their pension money will be available for them when they retire. The 80% of workers who are reliant on Social Security doubt its long-term viability. This fear is validated by Congressional squabbling. Government workers look at what is going on in cities like San Bernardino, Stockton and Detroit and wonder whether they will receive the retirement money they were expecting. To get some clarity, we discussed the future of our retirement system with Sylvester J. Schieber, a former Chairman of the Social Security Advisory Board and author of The Predicable Surprise – The Unraveling of the U.S. Retirement System.

Mr. Schieber’s book serves not only as a primer on the Social Security/retirement system in the United States, but as a blue print for where we are heading and what we can do to change things. It is a very readable book, but at the same time you must bring your thinking brain with you --- this is not light reading. Schieber told me he wrote this book because he thinks the misinformation people are given and misconceptions they derive needed some clarity.

For example, one of the biggest debates we have about the social security system remains the pay-as-you-go-method. Many argue (including this column’s author) that the system really has no assets and that all that exists in the Social Security Trust Fund are pieces of paper that promise future payments – in effect IOUs. Schieber makes clear that, from the inception of the program, there was a debate about pay as you go. Apparently, President Roosevelt (FDR) was highly concerned about a pay-as-you-go system. He felt it would lead to future struggles for the Congress to cover the planned necessary payments to program participants. It seems FDR was clairvoyant as our Presidents and Congress have been discussing (or avoiding discussion) of overhauling the system for more than a decade. We all know President (George W.) Bush made it a priority of his second term and got nowhere.

The people who ran the system in the 1930’s were also pretty good at predicting the future. The actuaries who calculated the rates projected that in 1980 the combined employer and employee contribution rate would be 10.68%. The rate was 10.772%, The actuaries in 1939 fairly well projected the aging of the population that continues today. What they did not predict was the inflationary period we went through in the 1970’s and that benefits would be tied to the inflation rate. Thus, benefits and costs soared much more rapidly than could have been anticipated.

Bruce Bialosky

Bruce Bialosky is the founder of the Republican Jewish Coalition of California and a former Presidential appointee. Follow him on Twitter @brucebialosky or contact him at