Cartwright—I’m not suggesting we end benefits for children who are under eighteen and currently receiving survivor benefits until they are eighteen. I don’t think that’s the point of the question. However, I do favor telling people under eighteen that they will not have social security when they reach retirement age and encouraging them to start saving on their own at an early age. There’s no doubt that the current Social Security system is broken and unsustainable. Let’s remember that Social Security wasn’t intended to be a long-term programme to supply for everyone when they reached retirement age. Somewhere along the way the idea of personal responsibility got put by the wayside in favor of another big government, socialist entitlement programme. I recognize that it’s helped a lot of retirees over the years; it’s helped relatives of mine who wouldn’t have been able to survive in retirement without it.
At the same time, I think the Social Security programme has been a tremendous moral hazard. Working people have abandoned the idea of personal responsibility in saving for their retirement. If they had known that they were going to have to rely solely on their own savings for retirement, would they have made different choices in life? Would they have bought a new car every few years? Would they have taken all those vacations or but all those things they didn’t really need? Would they have bought more house than what they needed simply so they could keep up with the Jones? I wholeheartedly believe that people would have made different choices in life if they had know that they were going to have to provide for their own retirement. If you happened to work for a company that provided you with a pension, good for you; you probably had the ability to spend more than you really needed to if that pension was going to take care of you in retirement. But those pensions went by the wayside a long time ago and successive generations have continued to exhibit little financial responsibility for planning for their retirement.
Now, I know what the first reaction of the naysayers is: It’s hard to save money. Each and every one of us in this room and in America can find ways to save a little money. Maybe these people should have thought about that before they had one, two or three kids. Society has brainwashed a lot of people that you need to get married, have kids, and buy the house with the white picket fence. All well and good, but does anyone ever stop to ask if they can afford it or how that’s going to impact their finances now and in the future? No. But even with all this, there are still ways for people to save money. Maybe you go out to eat less or don’t get a new car every five years or don’t get the biggest house that will fit in your budget or cut back on other discretionary expenses. If anyone thinks they don’t have discretionary expenses, they’re living in a fantasy world. Cell phones with big data plans are discretionary. The internet is discretionary. Cable and satellite are discretionary. Everyone can save a little bit here and there, and it all adds up in the long run.
So how would this plan work? By ending Social Security as we know it for anyone under eighteen, we can estimate more accurately the funding needs for the Social Security Trust Fund for those who remain eligible to participate. Their participation isn’t going to change and their benefits aren’t going to change. We’ve simply put an end to the infinite funding needs going forward. Unfortunately, we’ve put twice the burden on people under eighteen—they are still going to be paying payroll taxes to sustain promises made to existing participants and those eligible for future participation and they will be required to fund their own retirement savings. Would suck to be them, but someone has to take one for the team. Better them than us, right?
But we can also minimize the burden on those young people and future generations. Much of the funding problems with Social Security can be resolved by getting more people working. The more people who work, the more taxes flow into the Social Security Trust Fund. When the trust fund has sufficient resources to fund current and future retirees, the payroll tax for future generations can be reduced or those funds could be diverted into personal retirement trust accounts. We can also help minimize the impact on future generations by ensuring that the Congress quits looting the Social Security Trust Fund by taking the cash to spend and replacing the cash with nearly worthless IOUs. Not only should the Congress be barred from taking any cash from the Social Security “lockbox”—isn’t that a bit ironic?—but the Congress and the Treasury should be mandated to start returning cash that has been robbed from the Social Security “lockbox” until the trust has converted all the IOUs to cash. This is going to be a painful process that will require the federal government to cut back on its spending in other areas, which is what I prefer over the alternative tax hikes.
It’s not going to be easy for young generations or the federal government, particularly the pork spending Congressmen and women, but it needs to be done. This in conjunction with promoting a strong, healthy, vibrant economy where we have maximum sustainable employment and a higher labor force participation rate can help to start solving the Social Security problem. We all have to recognize that the current system is not sustainable forever and that we need to shift the burden of retirement from the taxpayer to individuals for future generations.