Senator Reveals False Consciousness About Social Security

A while back I wrote my Senator, Carl Levin (D-MI) to let him know I have a book out about Social Security, enclosing various flyers including a page of advance praise from such prominent people as Peter G. Peterson of the Concord Coalition, so he could order a copy if he had a mind to. Figured that he might want to learn what an economist among his constituents had to say about such an important national issue.

On April 28 I got back what was obviously a canned form letter. Two highly disturbing things about it leaped out immediately from the page. First of all, it made no mention whatsoever of my book. There was no sign that whoever wrote it had paid the slightest attention to what I’d sent them. Not even the fact that the founder and president of one of our most important deficit-fighting organizations, along with historian Neil Howe and former Chief Actuary of Social Security Haeworth Robertson, had warmly endorsed my book made the slightest impression or got mentioned. Makes me wonder how attentive and competent Senators’ staffs are in handling their constituents’ mail. Can they read?

The second troubling thing about this letter was that it is simply a long harangue about Social Security, loaded with falsehoods, misleading statements, half-truths, and flat nonsense – in short, revealing that the good Senator (or whoever on his staff it was who ghosted the letter) has what I call (snitching a piece of Marxist terminology) a “false consciousness” about Social Security: a set of beliefs which are false but which are taken as true and govern conduct. It casts a grimly illuminating light on what the pashas in the Senate think is true about Social Security. The text of the letter follows, with comments by me inserted in square brackets.

Keep in mind that this fellow, along with 534 others, most of whom probably know what he knows and believe what he believes, has the power to decide how much Social Security tax you and I are going to pay, and how much you and I are going to get in the way of benefits. So it really matters for your future and mine whether or not the good Senator has his facts straight. As will quickly become clear, he doesn’t. Either that, or he’s telling a lot less than he knows. Here goes:

"April 10, 2003 [my street address deleted]

“Dear Mr. Attarian:

“Thank you for contacting me about the Social Security trust fund. [That’s not what I wrote about, and it’s simply a Treasury account, not a trust fund, as every honest student of Social Security knows.] The trust fund is important to current retirees and younger workers alike, and we must maintain not only the long-term stability of the Social Security program, but also the public’s confidence in it. [The so-called trust fund is of no importance whatsoever. Its only assets are unmarketable IOUs issued by the government to itself. The idea is that these IOUs will be liquidated to cover future Social Security revenue shortfalls. To pay them off, the Treasury will undoubtedly raise taxes and borrow from the public – by the same amount as they would have had to raise the Social Security payroll tax if the “trust fund” did not exist. Since all tax revenues and borrowing from the public are extracted from the same source – the private economy – the existence or non-existence of this bogus “trust fund” makes no economic difference whatsoever. The only people who believe this “trust fund” makes any difference are economic illiterates. Looks like my Senator, or whichever staffer did this letter over his auto-pen signature, is an economic illiterate.]

“During its more than sixty years of existence, the Social Security system has served its purpose well. [It sure did, Senator. It gave the Democratic Party a lock on millions of votes and a sure-fire stick to wallop conservative Republicans with, forced the GOP onto a permanent defensive, calamitously increased the dependence of the American people on the federal government and the government’s power over the people, and created a mighty new engine for extracting resources from the taxpayers.] Social Security is, first of all, a retirement program. Its primary goal is to replace a portion of each worker’s lifetime earnings through monthly payments. [Its primary goals are surveyed within the previous set of brackets. This publicly professed goal may be for real, but it’s also the sucker bait which made attainment of the other goals possible.] Millions of senior citizens have been kept out of poverty because of the support Social Security offers. [Fact, but the support comes from the hapless taxpayers.]

“Social Security is also an insurance program. [Horse feathers. There is no contract; no policy; no forward funding to meet obligations; no true risk pooling because the taxes have no relationship whatsoever to the taxpayer’s risk and the benefit levels are set politically; and no true risk transfer to the insurer, because Social Security assumes no speculative risk whatsoever, Congress can always simply raise taxes to cover revenue shortfalls, and all the risk is therefore assumed by the taxpayers, not the alleged “insurer.”] It offers workers the guarantee that if they are disabled or die, their families will receive compensation. [Nonsense. Congress has always reserved the right to modify the program, and the Supreme Court ruled in Flemming v. Nestor (1960) that there are no accrued property rights to benefits. Congress removed Social Security’s original money-back guarantee in 1939, and in 1983 raised the retirement age, cut the early retirement benefit, and introduced a stealth means test in the form of taxation of benefits. But notice the slippery language he uses, leaving a wide-open loophole for benefit cuts. He says Social Security offers a guarantee of “compensation.” Now, that leaves things plenty vague, and the Senator is undoubtedly a good enough lawyer to know it. He says nothing about how much compensation it “guarantees.” A certain specific level of “compensation” may be written into the law when you pay your taxes, but Congress may have replaced it with something entirely different by the time you start collecting your “compensation.” They’ve done it before and they can do it again. There is no guarantee.] This safety net aspect of the Social Security system is important and must be considered when one examines the effectiveness of the program as a whole. [A long-winded bloviation that says next to nothing.]

“The Social Security system has undergone many changes since its inception in 1935. For example, benefits have been extended to the disabled and the blind. [Benefits have been cut or even eliminated, too – why don’t you mention that?] Additionally, changes have been made over the years to increase the Cost of Living Adjustment (COLA) and to raise revenues in order to keep the system solvent. [The 1983 legislation also postponed the 1983 COLA to January 1984. And one of those changes to raise revenues was taxation of benefits – proof, if anyone cares to grasp the clear implication, that the “guarantee” is as malleable as mercury.]

“Significant demographic changes have affected the program, as well. Life expectancy has risen from 61.7 years in 1935 to 76.7 in 1998. [Meaning that when Social Security was set up, with the earliest age for collecting retiring benefits fixed at 65, the politicians figured that most people would probably kick the bucket before collecting the benefits their taxes had “paid for.” Foxy fellow, that FDR. Social Security’s “primary goal” is to replace worker earnings. Yeah, right.] Furthermore, the ratio of working age persons to retired persons has decreased. In 1950, there were 7.2 workers for every retired person. By the year 2030, that ratio will be 2.8 workers for every retired person. [And the liberals who worship at the altar of Social Security also believe in libertine sex morals, sex education, condoms in public schools, and abortion on demand, all of which drive down the growth of the younger taxpaying population. Senator Levin is on record as being pro-choice. Can’t those clowns connect the dots? So much for their vaunted intellectual superiority over benighted right-wingers like me.]

“Currently, the system is run very efficiently. Only one percent of the contributions are used for administrative purposes, meaning ninety-nine percent of contributions are returned to the public in benefits. [Contributions, my eye! They’re taxes! This Orwellian doublespeak about Social Security has been standard since 1935, and got written into the law in 1939, when the taxing provisions of the Social Security Act were relabeled the Federal Insurance Contributions Act (FICA). And “returned to the public” is a crass piece of misleading hooey. Your – ahem! – “contributions, dear reader," will never be returned to you. They went out as soon as Uncle Sam got his hands on them, to pay the benefits of total strangers. Your own benefits will be paid with “contributions” squeezed out of somebody else, who will get benefits paid by still younger strangers. Visualize an intergenerational sodomitical daisy chain, the oldsters sticking it to the youngsters, and you will see how “contributions” really get “returned.”] Despite excellent management, the program will face some long-range problems as the ‘baby boom’ retires. [Ah, the power of the understatement!] The Social Security Trustees estimate that unless changes are made, the Retirement and Disability trust fund will be insolvent by the year 2032. [The poor guy – or his staff ghost – can’t even get the name straight. It’s Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Fund, Senator. Says something about how well politicians do their homework.] At that point, the Social Security Trust Fund’s resources [What resources? It’s nothing but a pile of IOUs one organ of the federal government issued to another. Its only “resource” is Uncle Sam’s ability to tax and borrow – i.e., Joe Public’s willingness to be on the receiving end of the aforesaid daisy chain!] will have been depleted and revenues going into the fund at the current tax rate will be insufficient to pay the expected benefits. [Expected? Thought they were “guaranteed.” Hmmm . . . ] Thus, it is important that we consider long-term solutions when working to ensure the solvency of the Social Security Trust Fund. [How about converting Social Security into a means-tested floor of protection for current and imminent retirees, repealing the Social Security Act, abolishing that godawful tax, and phasing the thing out? Now there’s a long-term solution that will keep Social Security from breaking us. Too bad it’s one “we” will not “consider.”]

“In recent years, there has been considerable interest in privatizing the Social Security system. [Maybe the youngsters want off the daisy chain, their grasp of reality and ability to think being stronger than a liberal’s.] Supporters of privatization have suggested that this is the best solution for the program, allowing younger workers to invest some of their Social Security payroll taxes [Not “contributions”? Truth in labeling at last!] in the stock market as a means of increasing national savings and promoting economic growth. [No, the idea is to get a better return on the “contributions” than offered by OASDI’s so-called “insurance.”] However, I believe doing so would erode the social insurance element of the system. [The socialistic redistribution element, you mean. This is the one thing about “privatization” I actually like!] The stock market is unpredictable, as evidenced by this past year [so is Congress, as evidenced by the removal of the money-back guarantee in 1939, and the benefit cuts and stealth means test voted in 1983], and a prolonged downturn in the market could have a disproportionate affect [sic] on some of the most financially vulnerable beneficiaries [what does he think a payroll tax increase does to financially vulnerable taxpayers?] if Social Security funds were invested in the stock market. [why?] Also, allowing individuals to invest in private market accounts diverts valuable resources away from the Social Security Trust Fund [Translation: stop those taxpayer dollars! They’re getting away!] and speeds up the date at which the trust fund will be unable to meet the needs of beneficiaries.

“Reforms are needed, but in doing so we must consider the needs of both current retirees and future workers. [Since Social Security is a coerced intergenerational transfer, the old one’s gain is the young one’s loss. It’s a zero-sum game. Reconcile the needs of both. I dare you.] Our long-term fiscal situation, which just a few months ago appeared so bright, has been harmed by a slowdown in the economy and an expensive tax cut that largely benefits the wealthiest among us. [Maybe so, but what of it? Whose money was it to begin with?] The tragic events of September 11th have negatively impacted our fiscal situation further, forcing us to reevaluate our budget priorities. In light of these changes, it is unclear how Congress will address the Social Security issue. However, I want to assure you of my deep commitment to the strength of the Social Security system. [Put another way, of his deep commitment to continuing to tax young people like me black and blue, the ability to tax and collect being the only strength Social Security ever did have, has now or ever will!!] As I continue to examine ways to strengthen Social Security to meet the challenges of the 21st century [the only way to do it besides tax increases is benefit cuts, especially on current beneficiaries – or did I say something I wasn’t supposed to??], I will keep your views in mind. [Maybe you’ll get around to reading my book, too, and from the sound of your letter you’ll get an education on Social Security at long last, but I’m not holding my breath.] Best wishes. [Same to you, Senator Levin. If I have to point out your wrong-headedness about Social Security I might as well be polite about it.]

“Sincerely, “Carl Levin”

If this is typical of the mentality of Democrats in Congress on Social Security, we’re in big trouble.

May 8, 2003

John Attarian (send him mail) is a writer in Ann Arbor, Michigan, with a Ph.D. in economics. His book Social Security: False Consciousness and Crisis, which treats the myths and realities of Social Security in detail, has just been published by Transaction Publishers.