This month, I’ve been reading the usual rhetoric about how Social Security is in crisis. I only wish my 401(k) were in the same crisis. So it’s time to update an old column.
Seventy-six years ago this Sunday, President Roosevelt’s signed the Social Security Act into law. According to STATA’s date difference calculator, this is day 27,757 of the Social Security non-crisis. Meanwhile, my 401(k) has dropped by about twelve percent in the past month. Yeah I’m not happy about that. The only things that didn’t tank were my U.S. treasuries. At a scary economic moment like this, I’m glad my future retirement is backed by the full faith and credit of the United States. I’m glad that my parents and my disabled brother-in-law still reliably receive their monthly benefits.
Not to be goulish, but I’m also glad that Social Security will protect my family if something happens to me. The program provides the most generous life- and disability insurance policy most Americans will ever own. Most of us never even think about this—unless tragedy strikes, and we need it, as happened to my own family. It’s available to everyone regardless of race, religion, age, or health status from an insurer that will never go bankrupt or rescind your policy based on some fine-print sleazy thing. That’s the beauty of social insurance. No private insurer offers anything close to that. I doubt that one could.
No doubt–the program requires further tinkering to maintain long-run fiscal balance. This poses a political challenge, but the rhetoric of crisis is unfounded. I’d like to see some other changes, too, for example to raise benefits to low-income widows who need more help.
Reasonable tax increases and benefit adjustments can cover this shortfall. As Paul Krugman observes, the required Social Security fixes are much smaller than the increase in our defense budget after 2001. The Bush tax cuts and the fiscally irresponsible structure of Medicare part D cut much larger holes in the federal budget.
Social Security is probably the best thing American government has ever done for literally hundreds of millions of working people and their families. The program is going strong. I wish I could say the same about the rest of my portfolio….