Simpson and the Sacred Cow

The reaction to the former senator's comments on Social Security shows he's right.

Alan Simpson violated a taboo last week when he likened Social Security to "a milk cow with 310 million tits." But contrary to the dictionary-deprived critics who accused him of sexist vulgarity, the former Wyoming senator's transgression had nothing to do with his use of a perfectly acceptable synonym for teat. Simpson's real sin was "belittling a bedrock program," as the AARP put it—i.e., showing insufficient reverence for a sacred cow.

To Simpson's detractors, it is self-evident that a man who supports entitlement reform has no business serving on, let alone co-chairing, a presidential commission devoted to fiscal responsibility. But anyone who takes an honest look at the federal budget can see how crazy that position is.

Just three entitlement programs—Medicare, Medicaid, and Social Security—account for two-fifths of federal spending, representing 10 percent of GDP. Without reform, they are expected to consume half of the budget and about 20 percent of GDP by 2050.

It's true that the fiscal outlook for Social Security, which has about $18 trillion in unfunded liabilities, is not nearly as bad as the fiscal outlook for Medicare, which has a long-term shortfall five times as big. Simpson's controversial comments nevertheless reflect some important truths.

First, Social Security is neither a pension fund nor a means-tested assistance program for the needy. It is a pay-as-you-go system of transfer payments that takes money from relatively poor workers and gives it to relatively affluent retirees.

Second, despite all the talk of a "$2.5 trillion surplus," Social Security is indeed "in trouble," thanks to a shrinking ratio of workers to retirees and repeated raids on its revenue by legislators looking for easy spending money. The year of reckoning is not 2037, when the program's imaginary "trust fund" is expected to run out; it is now, since the cost of benefits already has begun to exceed annual revenue. There is nothing in the trust fund but IOUs from the federal government, which can be redeemed only through cuts in other programs, more taxes, or more debt.

Third, entitlement reform, including Medicare cuts as well as changes to Social Security, will be fought tooth and nail by the AARP, the National Organization for Women, and other denialist defenders of the status quo. That much was confirmed by the reaction to Simpson's complaints about charges of "ageism" and "sexism," which were cited as further evidence of his ageism and sexism.

Yet this self-hating senior citizen, who turns 79 this week, is right to question a retirement age that was set at 65 in 1935 and has been raised by only two years (for people born after 1959) since then. Meanwhile, life expectancy at 65 has gone from about 13 more years for men and 15 for women to 17 for men and 20 for women, and those numbers are projected to continue rising.

Simpson is also right to point out that Americans receive Social Security (and Medicare) benefits regardless of how wealthy they are. You might think progressives would welcome means testing. But as Trudy Lieberman explained in the Columbia Journalism Review, they worry that targeting benefits to people who actually need them would undermine "the program's social solidarity."

Translation: Voters love middle-class entitlements, but they hate welfare. That's why progressives were so upset about Simpson's cow comparison, with its implication of unseemly dependence. Sen. Bernie Sanders (I-Vt.) and Rep. Peter DeFazio (D- Ore.) claimed to find the simile "beyond comprehension" but nevertheless concluded that it was both "false" and "demeaning."  

Transforming Social Security into a true pension program by letting workers invest part of what they now see disappear in payroll taxes is likewise anathema to the "social solidarity" crowd, since it would let people go their own way instead of forcing them to participate in the government's Ponzi scheme. Simpson is not suggesting anything nearly so radical, which makes the silly, sanctimonious storm over his comments all the more depressing.

Jacob Sullum is a senior editor at Reason and a nationally syndicated columnist.

© Copyright 2010 by Creators Syndicate Inc.