By John Tamny
John Tamny is editor of RealClearMarkets, Political Economy editor at Forbes and Founder of the Parkview Institute.
This article was orignally published at The Parkview Institute
Let’s start with the obvious, now and in the future Social Security payments aren’t remotely imperiled. It’s said here over and over again, but rates saying once again, that the surest sign that present and future Social Security payments (including COLA increases) are safe and sound is the certain lack of a “lockbox” or “trust fund.”
In the past, Social Security collections that weren’t sent out to retirees were predictably spent by politicians who exist to spend. In the future, shortfalls in Social Security collections relative to outgoings will be paid for by general revenues flowing into Treasury.
Which is why reform of Social Security, reduced benefits, or delayed retirement age promoted by the various Social Security alarmists and scolds would be such a bad idea. Yes, you read that right. Reform of Social Security would be an awful idea precisely because it would lead to bigger government. Outlandish? Not really. Stop and think about it.
In thinking about it, let’s be clear that Social Security, like Medicare, was itself a bad idea. Really bad. The very notion that we need or needed government to provide for retirement in a world and nation dense with all manner of financial services firms eager to put our savings to work in pursuit of retirement nest eggs insults foolish. Just think how much bigger all of our retirements would be if the U.S. Treasury hadn’t been the recipient of so much of our earnings each paycheck, not to mention the equal amount contributed by our employers.
Still, if there’s a positive to Social Security it’s that what’s a bad idea has the potential to account for a growing share of federal dollars flowing out of Washington. The latter worries the Washington Post’s Catherine Rampell, along with libertarians like the Cato Institute’s Romina Boccia, but this situation should cheer those who prefer erecting roadblocks to government growth wherever we can find them.
Rampell and Boccia worry about the federal government not having enough money to spend as Social Security accounts for a growing share of federal outlays, but perhaps at least Boccia could be convinced that this is a feature of Social Security’s allegedly looming “insolvency.” As is argued in my upcoming book The Deficit Delusion, the bigger the take of Social Security from general revenues, the fewer opportunities for politicians on either side to dream up new ways of spending our money.
The simple, economy-sapping truth is that most government programs start out small, only to grow big. The growth is an effect of every program having at least one constituent on both sides of the aisle in Congress. Once sponsors can be found on both sides, it’s hard to kill what shouldn’t have been given life to begin with.
So, while Social Security remains a bad idea, it’s a bad idea that we all know, and that most of us have worked around. See the earlier comment about the density of financial service firms. Rather than give the political class new dollars to dream up new programs, it’s better to simply allow Social Security to “crowd them out.” So-called “insolvency” can’t come soon enough.
