Monday, November 19, 2007

Ron Paul on Social Security

Ron Paul, in his campaign for president as the "most Constitution-loving candidate" often refers to a desire to allow young people to opt out of Social Security. It is never made clear exactly what this would entail for the Social Security system. He also makes the constantly-debunked claim that SS is in dire straits and needs rescuing...despite us being 40 years away from any crisis.

First, a definition of the SS program via Wikipedia: the Social Security Act encompasses Federal Old-Age, Survivors, and Disability Insurance, Unemployment Insurance, Temporary Assistance to Needy Families, Health Insurance for Aged and Disabled (Medicare), Grants to States for Medical Assistance Programs (Medicaid), State Children's Health Insurance Program (SCHIP), and Supplemental Security Income (SSI). The everyday meaning of "Social Security" refers to "benefits for retirement, disability, survivorship, and death". The original Social Security Act was signed by FDR in 1935 and was implemented because poverty rates amongst seniors was over 50% in the Great Depression.

Ron Paul has a page on his website dedicated to Social Security. He cites three bills filed regarding SS: the Senior Citizens Tax Elimination Act (HR 191) which prevents taxation of SS benefits, the Social Security for Americans Only Act of 2007 (HR 190) which prevents SS benefits being paid to immigrants, and the Social Security Preservation Act (HR 219), which makes money paid into SS only available for SS benefits. The 1st and 3rd of these aren't too complicated, let's set them aside. I have found an excellent description of the effects of HR 190, which is more interesting:

Here is a good example of why I don't like Ron Paul and why I think Ron Paul is anti-immigration.

He has sponsored a bill this year called "Social Security for Americans Only Act of 2007." It prevents any wages earned by people who are not American Citizens after the end of this year from being included in any calculation of any future social security payments made to them. It has two primary impacts on immigrants:

1. Taxes that immigrants pay into the social security system before they become citizens, such as while they are living in the United States on visas, or green cards, are essentially forfeited. The US Government takes that money but does not pay any benefit on it.

2. The US has reciprocity agreements with a number of countries so that people who live some of their life in one country and some of their life in another country can access social security upon retirement based on their payments into both programs. This rule would end those agreements for everyone except people like me who have been dual citizens from a young age.

My father lived about a third of his working life in Canada, a third as a US immigrant on visas, and a third of his working life in the US as a citizen. We could not have immigrated to the United States if such a rule were in place in the 1980's, as the financial impact on his ability to retire would have been prohibitive. If such a rule is made retroactive, as many in this movement would like to see, it will have a huge financial impact on my family, because my mother's future social security earnings will be substantially reduced. It may result in her moving back to Canada.

This isn't anti-illegal immigration. It is anti-immigration. It is not fueled by genuine fiscal libertarianism or any concept of fairness, as it involves taking taxes from people without offering benefits and marooning American Citizens who live abroad by undercutting reciprocity agreements. Its fueled by the "blame the Mexicans" xenophobic scapegoating that became popular just as soon as people realized that there wasn't going to be an emotionally fulfilling military victory in Iraq.

I will not support this. This hurts me and my family.

Ah, so preventing SS payouts to immigrants isn't as simple as Ron Paul's campaign claims...and I thought legal immigrants were the ones we were supposed to be helpng! Illegal immigrants of course receive no SS benefits, although many DO pay into the system since they use bogus SS cards to get jobs.

So what about allowing young people to just opt-out and put all their money into a 401k? Sounds great, don't it? The problem is this: SS is a pay-as-you-go system, in which current tax revenue is turned around and paid to the retired, disabled, and bereaved. If enough young people start opting out, then SS will go into a death spiral as workers retire and there aren't enough incoming revenues to support them. Opting out as a policy position is a sneak attack on the whole SS structure, not some sort of benefit for the young. You see, if you mismanage your 401k you can get screwed and have nothing, if you die your children do not get paid 401k benefits to help them live, if you are disabled your 401k had better be in real good shape to last the rest of your life. Social Security does all these things - it provides a basic safety net for everyone. And considering Wall Street's latest hijinks, do you really want people who can't even handle mortgages correctly handling your entire financial future as well in a SS-less world?


Anonymous said...

You are severely mistaken on the inner workings of social security.

Cod Peace said...

You are severely mistaken on the inner workings of social security.

The deftness of your argument overwhelms me. Bravo!