Back to Social Security

There are two arguments that seem to be being made about Social Security right now. Argument number one is that the Social Security program is heading for an iceburg and so needs to be fixed now. Well, that turns out not to be entirely the case. Certainly there are some course corrections that could be made, but they aren't grabbing the wheel and turning it 180 degrees so we are going back the way we came.

The second argument, the one that President Bush is hoping that we don't have, is the one about whether or not Social Security in it's current form should exist at all. President Bush and Karl Rove and others would prefer to duck that issue because it would rile up the seniors and create an uproar among many others as well. College students not so much (it's hard to care all that much about something you've been told your whole life you won't get anyway (even if it turns out that was, more or less, a lie)). But a lot of Americans know people who depend on that Social Security check, so President Bush is happy not to have that particular discussion.

Still for those of you who question the value of Social Security, I'd point you to this article at the American Prospect.

The elderly used to be an age group with an especially high rate of poverty. One of the signal achievements of Social Security, hardly noticed today, is that poverty has fallen dramatically among Americans over age 65 to just 10 percent, lower than the 12-percent rate for the population as a whole. For millions of the elderly who would otherwise be poor, Social Security is the single biggest source of income, the ?nancial bedrock of their lives. Indirectly, their working-age children are bene?ciaries of the program because the elderly no longer have to move in with them. People under age 65 also bene?t from two other elements of Social Security that often get forgotten: bene?ts during long-term disability and survivor bene?ts for dependents if a worker dies before retirement. These are also important anti-poverty programs that don’t carry the stigma of welfare.

Social Security was never expected to be the sole source of retirement income for the middle class, who ideally also have employment-based retirement plans and personal savings. But if one thinks of these various sources of income as making up a “portfolio” of retirement assets, Social Security’s distinct value is even clearer. While other assets typically erode or become exhausted with advanced age, Social Security pensions keep their value because they have an annual cost-of-living adjustment. Moreover, as many employers convert from pension plans with a de?ned bene?t to 401(k) and other plans with uncertain payouts, workers are already bearing more risk for retirement. In that context, Social Security provides a valuable hedge against the ?nancial markets.

I have to admit I hadn't thought of the potential finanical drain of the elderly on many families if Social Security didn't exist. Anyway something to consider.