June 12, 1974

Need To Rethink Social Security Concept

"Don't panic," says James B. Cardwell, commissioner of Social Security, "the system will hold together for five or ten more years at least."

It's like the captain of the Titanic assuring passengers the ship will float at least another hour.

Official recognition of Social Security trouble came this month in the annual report of the three-member board of trustees to Congress.  There must be a major overhaul of the gigantic pension system within the next decade or Social Security will be bankrupt.

Congress last year gladdened the hearts of our old folks by substantially increasing benefits and promising automatic increases as the cost of living goes up.

Very humanitarian, on the face of it, and a great vote getter.

But a cruel hoax on middle alters who will never see the promised land and a rip-off of our youth who will be expected to work harder for a lower standard of living.

Though a "trust fund" of $50 billion backs up Social Security - about a year of benefits - actual payouts come from current income.  At present, there are 10 weeks of reserve between pay-in and pay-out.

Even this reserve will disappear shortly as the number of persons going on Social Security tops the number of young people entering the work force.

Zero Population Growth - a long sought goal of environmentalists - is now a reality in the United States.  Population will continue to go up slowly for awhile longer, thanks to the World War II baby boom.  However, the rate of growth is steady.

Heretofore, Social Security was based on the chain-letter syndrome which required an ever accelerating number of newcomers.  Now, the moment of truth has arrived, and the truth is that there is no such thing as a free lunch.

Originally Social Security was designed to take people out of the work force in order to provide opportunity for younger workers with larger families.  It was still expected that each citizen would provide for his own old age through a life-time of saving, privately funded pensions and family assistance.  Social Security was to be a "supplement" to old age assistance, and that by regular insurance payments.

In time, an enormous sum of money had accumulated in the Social Security insurance fund.  Then, as World War II piled up a huge national debt, the cash in Social Security, became an irresistible temptation.

Finally, Congress appropriated the "surplus" Social Security cash by the specious reasoning that "we owe it to ourselves."

It was a "something for nothing" philosophy that launched us on the inflation sky rocket.

Every election year the politicians attempt to help buy another term with a new mortgage against the earnings of our children.

During the first years of Social Security, 27 workers contributed to a single pensioner.

Today, the ratio is three workers to one Social Security beneficiary.  Just ahead is the one-to-one situation wherein one working citizen supports one other non-working citizen at nearly the same standard of living.

Social Security taxes now amount to more than the Federal income tax.  The total of all U.S. taxes - federal, state and local - now amount to 31 percent of our gross national income.

Historically, civilizations collapse when non-productive consumers exceed the producers.  Great Britain and Sweden are approaching the half-way mark.  Government, Social Security, Medicare and welfare have the United States well down the same road.

Certainly there is a place for national planning and assistance to mitigate the hardships of life.  Pensions and health care, to the extent they are pre-paid by the users, are wise and desirable programs.  To borrow against the earnings of workers yet to be born, and who may be either unable or unwilling to accept a debt not of their choosing, is national suicide.

As usual, the answer to this problem is not easy.  We can continue to fund social services at the expense of something else.  Great Britain and Sweden stay afloat economically by maintaining token armed forces and fitting their national aims to those of the super powers.  Russia would be delighted if we would do the same.

We can hope that American industry will continue to increase production through technology as it has since World War H.  This will require a higher level of profit than our social planners think proper and a degree of enlightenment of the general public.  This issue is in doubt.

We can all work harder and do with less so that the fruits of our sacrifice can be passed on to those in greater need.  The young people entering the work force today profess a sharing attitude.  Now begins their real test.

We can return to the original concept of Social Security as a supplement to individual efforts and give up the currently held belief that government should provide us a living.  This puts a premium on personal thrift and family loyalty lately in short supply.  Can the age of the credit card and nursing home rediscover the advantages of pay-as-you-go and grand parents in the kitchen?

These are basic concepts that Congress must rethink in the next few years.  A hike in the basic Social Security tax probably is possible in the short run, and generous subsidy from the federal general fund is a middle-range solution.

To avoid ultimate bankruptcy, however, Social Security must be tailored to production instead of need.

Personally, I opt for greater production to meet greater need, and re-establishment of Social Security as fully funded insurance.

If this translates to old-fashion free enterprise, individual responsibility, and hard money, then make the most of it.

Author: Lindsey Williams