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One case for Social Security

By Jennie L. Phipps · Bankrate.com
Wednesday, September 21, 2011
Posted: 10 pm ET

I love talking about retirement and retirement planning with Merton Bernstein, retired law professor and expert on Social Security.

He's gotten grumpier and grumpier about some current attitudes toward Social Security. He thinks many politicians just don't understand the issues. "It's stupid politics by my judgment," he says.

Bernstein, 88, who has been a recipient of Social Security since he was 70, after he retired from teaching at the Washington University in St. Louis School of Law, says, "The argument against Social Security in the 1990s was 'You aren't making enough money on the money you were putting into it. If only you had a chance to invest in the market. ...' Since then, the market is a mess. I know all kinds of people of modest means with 401(k)s who can't retire because the value has disappeared. The gloss is off that plan to the extent that there ever was any."

That means Social Security is "far more important than it ever was," Bernstein says.

"But the thing I really don't understand is the lack of business support for Social Security. Social Security will pay the living expenses of 56 million people this year -- one of every six Americans -- a total of $800 billion, which used to be a lot of money. (Drug stores, grocery stores,) wouldn't you think their top executives would sit up and say, 'If you cut Social Security, it's going to cut into our business?

"Business is heavily dependent on Social Security. If it's cut -- even they just trim the cost of living adjustment -- what are people going to buy food and medicine with -- food stamps?

"Businesses don't have to be idealistic. They just have to recognize that when people are prosperous, they make better customers."

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3 Comments
Guy Berliner
October 24, 2011 at 9:29 pm

Where's the gun to your head, Cody? If you don't like paying Social Security, you could just renounce your citizenship and pick up and move to some country where they have no Social Security. How about Chad, say?

What you fail to recognize is that insurance companies go broke, like AIG, A government that can pay its debts in its own currency cannot go broke. I'd a helluva lot rather hold an IOU from Uncle Sam than any private company.

Also, while you might do better investing the same money in savvy stock market investments, you might also, as events have shown recently, do a helluva lot worse.

Fundamentally, Social Security is a program based on intergenerational solidarity: I pay into it now so that my elders will be able to enjoy a dignified existence in their retirement irrespective of the vicissitudes of the economy, knowing in turn that later, when I retire, I will also enjoy the same favor in return from the younger generation.

Our collective ability to sustain such a commitment to this kind of social solidarity into the indefinite future does not depend on some kind of extraordinary genius or luck. It depends mainly on the agreement of the majority of our people that it's a good thing to do, an agreement you evidently don't share. So I sincerely hope the majority of people never come to embrace your cynical attitude. In fact, come to think of it, let's talk some more about your Chad adventure: I'd be more than happy to take up a collection to finance a one-way ticket for you and your ilk.

Cody
September 22, 2011 at 2:10 pm

Really? Who do you think pays into the SS system as it is? Employers have to pay 1/2 of all FICA taxes paid into the system. SS was sold on the idea that it was insurance. If anything, it looks NOTHING like insurance. Insurance takes premiums and uses them for investments into bonds and equities. When excess money was being put into SS is taken by the congress and spent; in return you got an IOU (Gov't debt). Right now, more money is taken out then being put in, and the earnings from the young today are taxed and used to subsidize the elderly. It’s a pass through system. It’s a tax on work. When SS started, most individuals didn't live past 70, now, people are living to their 90's. That means we have to carry people for 20 years longer. This puts an unrealistic strain on the system.

If I started an insurance company, sold you an annuity and set up exactly how SS currently works.. I would be going to jail. It’s only the ability of gov't to force taxation from a barrel of a gun that allows this type of program to exist.

Mary
September 22, 2011 at 4:16 am

There is talk about raising Medicare by $6500. I don't even get that much in Social Security. How can I pay that? There is no way unless I work or borrow from friends or someone. I draw SSD because of a severed spinal cord. I can not work, I'm on constant opiates to control my pain, there is no way I could survive. It scares me to the point of being unable to sleep because I close my eyes and wonder what will become of me and others like me. Please, don't take away my only means of support and medical care.