March 31, 2008

Congress and the Brinks Job on Social Security

I confess that, as weird and wonky as it might seem, I have always been fascinated by the looming bankruptcy of Social Security and all of the moral and actuarial drama which surrounds it. There is something deliciously insightful about this tale -- the ideas of institutional irresponsibility, of blame aimed at a moving target, of the essential and ineradicable short-sightedness of human behavior. If you pay enough attention to it, you can learn everything you need to know about the political process.

Social Security began under FDR. It is, to its core, a socialist program. The idea, spawned during the Great Depression, was that Social Security would provide an old-age benefit to ensure the dignified retirement of America's citizens - not really a luxurious stipend, of course, but a means to avoid living under a bridge and eating food from discarded cat food tins. That it has survived all these years owes to the genius of its money-in, money-out format. Current workers pay in, retired workers are paid out. While we have a Social Security number, this "account" is solely for computing our eventual benefit; the SS Administration does not actually maintain bank accounts for individual citizens.

Conservatives have always hated Social Security, of course, because of its aura of European Socialist decadence. The government should not help people. The government should run the prison system and wage war. Nevertheless, the plutocrats tolerated Social Security because (a) they had to, because of its popularity, and (b) because its funding was a stand-alone system powered by the FICA tax. This tax, a regressive, off-the-top levy which hits the lower classes much harder than the rich, allowed the government simply to act as a paymaster. Money in, money out, and all of the precious revenues not attributable to FICA could be spent for the wet-dream fantasies of the military-industrial complex.

Actually, it was better than that. The Baby Boom generation, which accounts for so much in the history of the United States over the last 60 years, foresaw a problem with their own retirement This foresight motivated Congress in the early 1980's to "fix" Social Security by increasing the FICA tax to create a surplus for the years between 1983 and 2008 so that the system would remain solvent. The Baby Boom Bolus, pushed by pythonesque peristalsis down the alimentary canal of snake-time (don't try this language at home), would one day reach the asshole of retirement. Plans must be laid or that turd would stink to high heaven.

It was curious, in a way, that the increase would occur during the first Reagan term, when the federal government was developing its hate-itself self-image and doing everything it could to reduce taxes. What made it palatable was that the surplus (which was supposed to be saved) could be swiped by Congress and invested in the military-industrial complex. More money for lobbyists! We like this FICA increase! The stolen money was replaced by an IOU, a special intra-governmental Treasury note with an interest rate and everything.

As an analogy, suppose you were funding your own retirement by putting money in a bank. Each year you put away $1,000. However, you like shiny cars and flat-screen TVs so you "borrow" the money each year, spend it and replace it with a promissory note to yourself plus 5% interest. At the end of forty years, you have $40,000 in notes, plus all that accrued and compounded interest, and you take your notes down to the bank so you can retire. The bank says that's fine, but the payor of the notes will have to pay up before the withdrawal can be honored. The payor of the notes is you. In order to honor your promise to yourself, you get a job. After a few months at your new job, you realize something was wrong with your retirement plan.

This is, without any serious difference, the current situation with Congress. Congress currently has about $80 billion in yearly surplus it can steal from Social Security, an amount which will decline precipitously between now and 2017, when the fund will "go negative." At that point, Congress will look exactly like the shlub with his clutch of promissory notes. We call that pile of worthless stationery the "Social Security Trust Fund." As David Walker of the GAO says, it is "without accounting significance."

Conservatives (such as W) attempted to "reform" Social Security a few years ago by "privatizing" the system. They needed to do so to avoid a fate worse than death; if Social Security isn't abolished, the "general fund" is going to have to "pay back" the money it stole. To do that, those precious non-FICA revenue sources will have to be tapped and misdirected from God's intended beneficiaries, the fat cats of the Military-Industrial Complex. America will become simply another Socialist Republic.

Whom does one blame for this fiasco? A sleepwalking American electorate? All those Congresspeople who have come and gone in the last generation? At what object does one focus his impotent rage? That's what makes the situation so subtle and insidious. So ripe for self-laceration. Lying deep within the mystery of the Social Security crisis are the very clues to the untenability of mass, impersonal democracy. The human frailities of cupidity and irresponsibility play out in a system of such complexity and unaccountability that while the whole system crashes, we cannot find a single person on whom to vent our wrath.

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