Monday, May 21 , 2018, 6:00 pm | Mostly Cloudy 65º

 
 
 

Harris Sherline: The Day of Reckoning for Social Security

To keep it viable, the only solutions are to change the age for eligibility and/or reduce benefits

The failure of Social Security and with it the ultimate demise of the American Dream has been widely predicted, dating back many years. Unfortunately, the oft-quoted adage “Let sleeping dogs lie” continues to be the slogan of politicians and the public alike.

After all, what we don’t know can’t hurt us, right? Wrong.

Social Security may not be dead just yet, but it’s certainly moribund. It’s just that not everyone realizes it, especially the public in general, who have been lied to and misled by our political leaders for generations.

Demographics guarantee that America’s Social Security system will eventually fail — probably sooner than thought — unless, of course, some changes are made. And soon.

At this point, I suppose I should make the proper pro forma disclosure: I have been collecting Social Security for about 17 years. The check is automatically deposited into our bank account on the third day of the month, and I readily admit that we appreciate the additional income.

In 1998, Sen. Daniel Patrick Moynihan, D-N.Y., who was widely recognized as perhaps the Senate’s leading intellectual at the time, proposed a plan for the long-term survival of Social Security. His recommendations included, among other changes, increasing the wages subject to the Social Security tax (FICA), extending Social Security coverage to all newly hired state and local employees, taxing the benefits paid to recipients, adjusting the cost-of-living percentage, reducing the amount of the FICA tax and beginning to transfer a portion of the payroll tax into personal savings accounts.

Notwithstanding Moynihan’s credentials as one of the most liberal politicians in Congress at the time, his ideas were widely criticized by many legislators, especially his suggestions for privatizing the system.

The problem is that, politically speaking, Social Security has always been the “third rail” of politics, and those who attempt to change it do so at the risk of ending their own political careers. Furthermore, over the years, Social Security has been expanded into areas that have nothing to do with retirement.

In 1939, five years after Social Security was established, payments to families of workers who died and for the dependents of retirees, such as stay-at-home-spouses, were added to the program.

Disability benefits for workers were added in 1956, and in 1965 Medicare was established.

In 1974, welfare payments in the form of Supplemental Security Income (SSI) were established for low-income seniors and people with disabilities.

The program is now paying out more in benefits than it collects in taxes, and the shortfall is expected to become permanent in 2017.

About 23 percent of the program’s shortfall could be eliminated by changing the retirement age from 67 to 68, and almost a third of it would disappear if the retirement age were increased to 70.

The so-called Social Security “trust funds” have been raided by the federal government, to the tune of $2.5 trillion. In short, there are no trust funds, and the government soon will have to borrow money in the public debt markets to cover its obligation to retirees.

Foreign workers who live in the United States have to work and pay taxes into the system for at least 10 years to qualify for Social Security benefits, just as U.S. citizens do.

In 1950, there were 16 workers for every Social Security beneficiary. By 2015, there will be only three, and about 15 years later, in 2030, the ratio will be only 2.2 to 1. It doesn’t take a mathematician or a Ph.D. to see that the contributions of just 2.2 workers will not be sufficient to support one retiree.

So, what’s the solution? Reduce costs, which can be accomplished either by changing the age for eligibility or reducing benefits, or some combination of both.

There is no other solution, and chances are those politicians who are courageous and patriotic enough to take the necessary actions will quickly be turned out of office, but they will have done the right thing.

Typically, whenever Congress is forced to deal with unpopular issues, they try to give themselves cover by appointing a commission to do their dirty work for them, which generally makes recommendations that the politicians are not courageous enough to make on their own.

— Harris R. Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital who as lived in Santa Barbara County for more than 30 years. He stays active writing opinion columns and his blog, Opinionfest.com.

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through PayPal below, or click here for information on recurring credit-card payments.

Thank you for your vital support.

Become a Supporter

Enter your email
Select your membership level
×

Payment Information

You are purchasing:

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >