Social Security Example of Government Rigor Mortis

Posted: Oct 04, 2010 12:01 AM
Social Security Example of Government Rigor Mortis

Keeping government limited is a practical approach to governing that opens the door to growth and prosperity.


Consider a fundamental difference between business and government. Any businessman operating successfully is in touch with reality, with change, and acts with speed to make adjustments necessary to survive.

Businesses are not democracies, so a CEO can execute what needs to be done on the spot.

Government is the opposite. It is allergic to change. They say government programs are like headless nails. Once in they’re impossible to get out. Programs produce interests who then fight change.

So it should be obvious that if we want a nation that is vibrant, in touch with reality, changing as it needs to in a timely way, the reach of government must be limited.

Consider Social Security.

With annual expenditures almost 5 percent of the U.S. total budget, it's the single largest government spending program.

With a program of this magnitude, that impacts practically every working American, you’d think it would be a priority to keep it healthy and in tune with the times.

But it’s just the opposite. It’s the so called “third rail.” Politicians don’t want to touch it or talk about it. They don’t want to upset anyone with the truth that the system is not just broken, but way out of touch with today’s realities.

Social Security passed in 1935. Although there have been changes in the way of tax increases and expansions of the program, Social Security is essentially the same system as was passed 75 years ago.

Can you imagine any business still using a system that is 75 years old?

It’s really older. If you go on the website of the Social Security Administration, it will tell you that the idea for Social Security originated with German Chancellor Otto Von Bismarck in 1889.

Here’s just a few ways that our world has changed since 1935:

Our population has aged. In 1935, there were 16 working Americans paying payroll taxes to cover each retired American. Today there are only three working per retiree.

Americans are retiring earlier and living longer. In 1950, the median male retirement age and male life expectancy were about the same - 66. By 2005, the median retirement age for men was under 62 and the median male life expectancy was over 75.

Work habits and attitudes have changed dramatically. In 1973, 50% of the private sector male work force had been with the same employer for at least 10 years. By 2006, this dropped to 35%. The percentage with the same employer for at least 20 years dropped from 35% in 1973 to 20% in 2006.

We live today in an age of the internet, global markets, and increased individual mobility.

And the promise we get from our leaders is that they will save and preserve a system that was conceived 120 years ago and enacted here 75 years ago. This is leadership?

Not only is our Social Security system unsuited to our times, it is bankrupt. It went into a deficit situation this year and its overall unfunded liabilities – the total amount promised less the total amount for which there is funding – is almost $20 trillion dollars.

In a recent Gallup Poll, 60% of working Americans said they don’t expect to get their Social Security benefits. And in a recent Pew poll, 58% favored the idea of individuals keeping a portion of their Social Security taxes and investing it in a private retirement account.

We’ll hear from Washington that to save this dinosaur, we must pay more taxes and retire later. In other words, we’d have a better deal keeping our taxes and putting them in our mattress.

Wake up Washington. It’s not 1935. It’s 2010. If we don’t get leaders who’ll look reality in the eye, tell us the truth, and retrofit out nation for the time in which we live, we won’t have a nation.