Are the free market critics of Social Security a shadowy “echo chamber” seeking to end the system for the benefit of the rich, or sounding a fact-based alarm that government and its supporters dispute and don’t want you to hear?
The video features U.S. Senator from Vermont Bernie Sanders, who describes himself as a democratic socialist. He describes Social Security as a federal program that has been “enormously successful,” so right away we need to take issue with Sanders. Social Security a success? If creating a system where millions of people are dependent on government for their retirement income is a successful program, the government has done just that. What has been the result? As George Reisman recently wrote: “Not surprisingly, in the conviction that the government was now providing for people’s old age, the rate of saving in the United States has declined precipitously over the years, falling all the way to zero in some years.”
We’ve transitioned from savers to government dependents. For a socialist like Sanders, that may very well have been his goal. He certainly can’t be unhappy with the results.
Right after this, the video shows images and names of think tank organizations that are funded in part by Charles Koch and/or David Koch, with Sanders claiming these organizations spread “disinformation” about Social Security. The information generated by these think tanks is truthful, however, and an important antidote to a huge whopper of a lie Sanders will spread later on.
(At this point one might be tempted to ask: What is the interest of the Charles and David Koch in reforming Social Security? John Hinderaker in his Powerline article A Less Than Magnificent Obsession answers this question when he writes: “… does it make any difference to the Kochs’ company, Koch Industries, whether the retirement age is 65 or 68? I can’t imagine why it would. Likewise, the brothers themselves are both billionaires. Whether Social Security is or is not reformed makes zero difference to them personally.” I would say, however, that Charles and David Koch have long advocated for liberty and economic freedom for everyone, and since Social Security is contrary to that, this could explain their interest.)
A huge focus of the video is raising the retirement age. It’s repeated over and over — so as to scare viewers. As John Hinderaker notes at Powerline, it’s been done before: “proposals to raise the age of Social Security eligibility have been a bipartisan staple of reform proposals for decades. … The bipartisan Bowles-Simpson Commission, which was appointed by President Obama, recommended increasing the age of eligibility.”
It’s important to note that the Social Security retirement age is simply the age at which one can begin receiving benefits. Contrary to the claims of Sanders in this video, it doesn’t mean that everyone has to keep working until that age. Over the course of a working career, isn’t it possible for someone to save enough to cover the several years between when they decide to quit working and when they’re eligible for Social Security? Or will we let the government — people like Sanders — tell us how long we must work?
Sanders also says that older people need to retire and get out of the workforce to make way for younger workers to take their jobs. This is an example of the fallacy — followed by nearly all on the political Left, it seems — of believing that the economy is a fixed size, and that one person can have income only if someone else gives up theirs.
Perhaps the most dangerous lie of Sanders is his claim that Social Security has a $2.6 trillion surplus available to pay future benefits. He’s referring to the Social Security trust fund. Here, Sanders is correct one on level: The system has collected that much more than it has needed to pay benefits, forming the balance referred to in the trust fund. That money has been lent to other federal government agencies, and they spent it all. So while Federal Agency X may owe the trust fund $50 billion, the only way that agency can repay the trust fund is by borrowing or increasing taxes. (Less spending might be another way, but that’s a difficult goal, and we’d be taxed the same for a lower level of services — a tax increase by another name.) See Social Security trust fund: a problem in disguise.
Sanders dismisses private retirement accounts as risky and dangerous: “You may lose all your retirement savings when you get old.” While true, any reasonable investment strategy designed for the long term has little chance of that happening. Unless, of course, one gets greedy and invests everything in a company like Enron — greed of that type being something Sanders rails against.
Saving on one’s own, however, isn’t what leftists like Bernie Sanders have in mind. Far better for him, Democrats, and big-government Republicans that people remain dependent on government for their retirement security. Once people save and gain some wealth of their own, they find that they can thrive very nicely without a nanny state government. They find themselves wishing they could have saved more throughout their working lives, rather than making forced contributions to a government retirement plan that’s now broke. Even if not broke, most people would be in a much better position if they could have kept their own and their employers’ payroll tax contributions for their own investment.
Finally, Sanders makes a major point of “huge campaign contributions” made to advance the interests of Charles and David Koch. Hinderaker chases down some of the actual numbers, and finds that contributions from Koch Industries PAC are sometimes less than what a single labor union has contributed.
In the end, I’m sure that Sanders said something that’s true in this video. But I can’t bear to watch it again to try and spot it.
Here’s my video response: