As a way of introducing myself, I'm taking this opportunity to answer a question I'm fairly frequently asked by those who know my career background. I worked many years for the Social Security Administration, mostly in jobs related to computer systems (though I did have time, and fun, serving on "America's front porch" in a field office). Fairly early in my computer career I worked a lot with actuaries and statisticians, providing computer support for their analyses. I found actuaries particularly to be interesting people with vision not only for current issues, but for those way down the pike.
Back in the 1970's they were already looking at American society in the mid - 21st century. The vibes I got from talking with them and reading some of their journals was that, for both demographic and economic reasons, America is headed gradually toward a "multi-career" economy in which, for most individuals, 20 to 30 years of engagement in a particular occupation are interspersed with "sabbaticals" for retraining in another occupation and refreshment. In such a society "retirement" would come only by reason of frailty and extreme age, perhaps in the late 80's. Such change would not come overnight but would involve a lengthy transitional economy in which retirement age would come later and later, coupled with increasing societal acceptance and support of sabbaticals for retraining.
Which leads us back to current issues of what to do about Social Security and the Deficit issue, the question I am interrogated about at parties. First, given the long term vision, I find it entirely reasonable to raise the current Social Security retirement age to 70, possibly with an intermediate step to 68. But that raising of retirement age should be coupled with increased societal support for occupational retraining, as a precursor of things to come. Second, I'd like us all to remember what Social Security is and is not.
Social Security is NOT an investment program intended to provide individual savings. Back in 1936, the nature of Social Security was an issue raised to the Supreme Court, and their decision (from an at-the-time very conservative set of justices) was that Social Security is a casualty insurance program designed to partially replace income lost from retirement or death, funded by an excise tax on employers, and quite constitutional. That may speak also, by the way, to the "mandatory health insurance mandate" so worried about by some of our politicians today. Thus, I find the concept of private accounts not consistent with the basic rationale (and economics) of Social Security.
Third, I'm asked at parties, sometimes hopefully sometimes fearfully, about means testing of SocialSecurity benefits. As a personal note, my mother, like so many retirees past and present, accepted her Social Security check gratefully as a compenstion for her hard work over many years, but would have rejected anything she perceived as Welfare as being somehow shameful (at the low point following my father's death, she was offered Welfare and turned it down). Any means testing would probably quickly evolve into Social Security becoming a "poor person's payment" with the resulting stigma. Aside from that, Social security benefits are payments from a casualty insurance system, and to the extent any insurance-based income is taxable, they should be taxed as part of ordinary income. In a truly progressive income tax rate structure, that makes them"means-tested" enough
A basic part of the differences in points of view on these issues today comes from having lost sight of the true nature of government programs. Yes, Social Security is, economically, a major transfer program between the public and private sectors, but then so is the national defense budget. Yes, it is intended to provide income to those in need, but it does so as a casualty insurance benefit replacing lost income. There are enormous social costs from neglect of those who have retired or been widowed or ophaned. Before 1950, when Social Security achieved its "steady-state"operation, over 50 percent of people in this country over 65 were living in poverty. That Social Security has been able to reduce that poverty rate to less than 20 percent is a major, though incomplete, economic boon for America, and a well justified rationale for government action under the constitution. Beyond that, it's a human accomplishment in which we should all take pride.
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