Echo Opinion: Social Security: a contract born of compassionate values

I didn’t choose the fund, nor did I manage it. As a matter of fact, I’m not sure I really ever knew the name of it. I let professionals handle that part of it. I just read the quarterly statements, which brought joyous news. Until, of course, the news got ugly.
Upon the recommendation of the professionals, I sold my shares at a loss, and, following further counsel, I bought into another fund. It proceeded to tank. And so I sold it last year, and now have another loss to report to the U.S. government come April 15.
Welcome to the future of retirement savings, if some Washington politicians have their way.
President Bush in particular seems intent on pursing what he calls a “reform” of Social Security. Others might call it the “repeal” of Social Security, one of the great government programs in history.
Bush and his allies want Americans to be able to direct about a third of their Social Security contributions into private funds — like the ones that treated me so well in recent years. He and others believe this is the only way to save Social Security as millions of Baby Boomers begin to retire in the coming years.
The current system’s critics point out that by the year 2040, there will be only two workers to support every retiree. Half a century ago, there were more than eight workers for every retiree receiving Social Security benefits. Those numbers seem pretty dismal.
Did you know, however, that Social Security actually has billions in surplus funds? That there’s enough money in reserve to pay full benefits to everyone until 2042, and most of the benefits for people who retire 50, 60 or 70 years from now? You may not think so, considering that Bush has said that Social Security will go broke in 2040. But nobody, save the president, thinks that is true.
There does seem to be a consensus that reforms are necessary. But it is one thing to tinker with a system that has worked so well. It is another thing to blow it up and take a huge risk with something as volatile as the stock market.
What’s more, proposals to privatize Social Security seem part of a more insidious rollback of the security net put in place during the 1920s to the 1960s — a security net that reflected the values and philosophy of Irish-Catholic politicians and thinkers, among others.
Before Al Smith came along, before Irish-Catholic operatives like James Farley and Thomas Corcoran helped implement the New Deal, this country’s politics reflected Anglo-American values of rugged individualism. Government played little or no role as a mediator in society. If you needed help, well, God help you. There was always private charity. And the workhouses, of course, were still in operation (not literally, of course, but you Dickens scholars get the idea).
One of the great untold stories of American social history is the way in which the Irish-Catholic political machine, wrongly stereotyped as merely corrupt and venal, challenged the Anglo-Protestant social order. The ruling elites of the late 19th and early 20th Centuries saw no role for government in regulating business or promoting social welfare. Every man for himself, and let the buyer beware.
The people who ran Tammany Hall and other machines probably didn’t get around to reading the apostle of rugged individualism, Henry David Thoreau. But they certainly knew that life on the Lower East Side and other urban neighborhoods wasn’t quite like camping out by Walden Pond. Their instincts, traditions, faith and beliefs told them that we were our brother’s keeper.
They executed that vision, born of the streets of America’s growing urban neighborhoods, and won the hearts as well as the votes of generations of immigrants and their children — and not just the Irish.
Social Security was a natural expression of the ways in which politicians like Al Smith, Charles Francis Murphy and other Irish-Catholic leaders changed America once they attained real power. They believed in civil society, in our obligations to each other, and in government’s responsibility to alleviate poverty and suffering where and when it could. Before Social Security, most elderly people were poor. That is no longer true.
Could that change if workers are allowed to gamble — do you think Wall Street is anything more than a crapshoot? — with money that is now directed into a secure fund? Of course it could. And what if the market collapsed, as it has been known to do, or if it stagnates like it did in the 1970s, or like it has since 2000?
The Bush Administration estimates that it may have to borrow as much as $1.5 trillion to fund the privatization plan over the next 10 years. Even in Washington, that’s real money. And even in Washington, that kind of borrowing has to be considered irresponsible.
As luck would have it, there actually is a simple solution, or at least a partial solution, to the non-crisis in Social Security. Eliminate the earnings cap, which currently means that workers stop paying into the fund once they have earned $90,000 in a single year. Most workers in America do not make that much. But many make quite a lot more. The extremely high earners, then, are paying a minuscule percentage of their earnings into the fund. The rest of us, however, are paying the full 6.2 percent of our income.
Given my dismal record on financial matters, I won’t try to claim that eliminating the cap will solve Social Security’s problems.
But it can’t hurt.