Let's (Actually) Talk About Social Security

The entire Social Security system is one of the key reasons why we are trillions of dollars in debt. The government uses a fraudulent, incompetent accounting method that hides the true actuarial costs.

They record Social Security payments as an expense. But what we need to be accounting for is what we are promising in the future! The promises that we’ve made in the past — what we are paying out today — should never be included in the expenses of this year. Those are old liabilities. Unfortunately, the gimmick accounting will never change unless begin to change the way those Social Security revenues are received and perceived.

One step in the right direction would be to treat Social Security as a true retirement plan, and not as a wealth transfer system that it currently is. This could begin with reclassifying the payroll tax. The majority of the payroll tax covers Social Security costs. Just call it that! If we treated it like a pension payment for the future, we could then make the argument that taxes were less — because the revenue collected as part of the payroll tax-turned-social-security-payment would be required to fund just that (once again) instead of the general revenue fund.

One small trick could be employed to help reform the massive debt system. Your employer pays half of your payroll tax, while you pay the other half. What if the part you paid still went fully to your retirement, while the other part (in part) went toward defraying the past obligations that are coming due. If we had done such a thing 25 years ago, we could have fixed the broken system. 25 years ago, we could have done probably all the employee’s play plus half of the employers pay (50% + 25%) could have gone toward Social Security, and the other 25% on past obligations — and that probably would have caught us up on our liabilities. Even 10 years ago, if we had done a 50/50 arrangement, it possibly would have been enough; that is, your payroll tax portion to your retirement and the other half to the past debt. Unfortunately, if we tried something like that now, we’d face an overwhelmingly lopsided payment structure — probably 25% could only go toward your retirement fund and 75% would be needed to pay off past debt. It’s that dire!

Let’s stop treating Social Security like welfare or wealth transfers and start treating it like a retirement system. It’s our money anyway, even though the government wants to act like it's being generous when it gives us back our money. This would lessen the loose-and-fast accounting gimmicks that contribute to the fiscal mismanagement of Social Security anyway — and may save it from the impending insolvency.