For much of the 20th century, Americans sought security in the form of guarantees from large organizations. The federal government would provide Social Security benefits for workers and their dependents. Large corporations would provide defined-benefit pension plans promising specific payments to retired employees. The assumption was that experts at the top of these big organizations could use scientifically obtained knowledge to take better care of us than we could take care of ourselves.
Now there's reason to challenge that assumption. The experts, it turns out, are fallible. The Social Security system faces rising gaps between revenues and promised benefits starting in 2017 and an exhaustion of trust fund assets in 2041. Meanwhile, large corporations -- the latest is United Airlines -- have defaulted on their defined-benefit pension plans and passed them off to the government-sponsored Pension Benefit Guaranty Corp., which does not pay all of the promised amounts.
The Social Security system's problems are, in large part, the product of increases pushed through Congress by House Ways and Means Chairman Wilbur Mills way back in 1972 and signed by President Richard Nixon, who was running for re-election. The increases had the good effect of wiping out poverty among the elderly. The experts of the day argued that they would be paid for by the offspring of the baby boomers then reaching adulthood.
But the baby boomers didn't produce a second baby boom. In 1983, legislation cutting benefits and raising taxes solved the problem for a time. But now it looms squarely ahead.
Not to worry, say opponents of George W. Bush's proposal for personal retirement accounts. The federal government guarantees the benefits. But it doesn't. In 1960, the Supreme Court, in Flemming v. Nestor, ruled that there was no right to Social Security benefits. Social Security, wrote Justice John Harlan, "was designed to function into the indefinite future, and its specific provisions rest on predictions as to expected economic conditions, which must inevitably prove less than wholly accurate, and on judgments and preferences as to the proper allocation of the nation's resources which evolving economic and social conditions will of necessity in some cases modify."