Voices for Reason - Like ObamaCare, Social Security Was Built on a Campaign of Lies | The Ayn Rand Institute

Like ObamaCare, Social Security Was Built on a Campaign of Lies

Peggy Noonan ably exposes the emptiness of the left’s triumphalism over Obamacare’s announcement of “7 million insured.” However, in the course of her comments, she praises Social Security by comparison:

Given a program [Obamacare] whose complexity is so utter and defeating that it defies any normal human attempt at comprehension, two things will happen. Those inclined to like the spirit of the thing will support it on the assumption the government knows what its doing. And the opposition will find it difficult to effectively oppose — or repeal the thing — because of the program’s bureaucratic density and complexity. It’s like wrestling a manic, many-armed squid in ink-darkened water.

Social Security was simple. You’d pay into the system quite honestly and up front, and you’d receive from the system once you were of retirement age. If you supported or opposed the program you knew exactly what you were supporting or opposing. The hidden, secretive nature of ObamaCare is a major reason for the opposition it has engendered.

There is no question that Obamacare is murky almost to the point of parody. But Noonan’s description of Social Security is wrong. Let us count the ways.

  • Would you really pay into the system “honestly and up front”? Not if you were part of the first generation of recipients, who paid virtually nothing and yet got to collect a lifetime worth of handouts. Ida May Fuller, the first Social Security recipient, famously paid $24.75 in taxes and received $22,888.92 over the course of her life.
  • How much would you pay in Social Security taxes? Here there were two major lies. First, the government split the payroll tax between the employee and the employer, to make it seem smaller to employees, even though the creators of the system knew full well that in practice the full cost of the tax would come out of the employee’s wages. Second, Americans were initially told by the government that the payroll tax would never rise above 6 percent. But it’s now 12.4 percent, and government will need to take half again as much in the next decade or to fund Social Security handouts.
  • The creators of Social Security were leftist intellectuals and politicians who wanted to transform America from a capitalist society into a welfare state. But Americans did not want a welfare state, and they did not want to be on the dole. So rather than create a means-tested system to give handouts to the poor elderly, the welfare statists concocted what they called a “social insurance” system, and assured Americans they were getting an earned benefit rather than going on the dole.
  • But it wasn’t really an earned benefit. As the Supreme Court found in Flemming v. Nestor, the individual who paid for their “insurance” had no contractual right to collect Social Security: the government could expand or contract his “benefits” at any time for any reason.
  • As part of its campaign to present Social Security as an “earned benefit” rather than a wealth redistribution program, the government misrepresented the nature of the program’s finances to Americans. Americans were led to believe that they were paying taxes into a “trust fund” from which they would eventually receive “benefits.” In fact, Social Security is nothing more than an intergenerational wealth redistribution program. The money taken from workers today is not saved and invested. Instead it’s handed over to current Social Security recipients and spent on other current government programs.

Social Security was not presented to Americans honestly — because its architects knew that Americans of the day would not have accepted it had they understood its actual nature.