Government Reform

People Under 55 Favor Individual Retirement Accounts, Lower Social Security Taxes


The Hill reports:

House Republicans on Friday introduced legislation that would allow workers to partially opt out of Social Security immediately, and fully opt out after 15 years.

Rep. Pete Sessions (R-Texas), who chairs the National Republican Congressional Committee, and several other Republicans introduced the Savings Account for Every American (SAFE) Act. Under the bill, workers would immediately have 6.2 percent of their wages sent to a "SAFE" account each year.

That would take the place of the 6.2 percent the workers now contributed to Social Security.

Another 6.2% is sent to Social Security by employers. Under the Sessions bill, employers would continue to make this matching contribution to Social Security, but after 15 years, employers could also send that amount to the employee's SAFE account.

Cue the predictable attack:  

"Seniors who have paid into Social Security through a lifetime of hard work shouldn't end up in a risky privatization scheme to gamble their retirement on Wall Street," [Democratic Congressional Campaign Committee Chairman Steve] Israel said. "The public has rejected this kind of Social Security privatization in the past and will again."

Has "the public" really rejected this? Or is it just seniors who will reject it because they are, predictably, protecting their own interests?

The recent Reason-Rupe poll found Americans under the age of 55 support lowering Social Security taxes so that they can invest that money in their own retirements.  Democrats will be counting on young people to vote in big numbers in 2012. But even Obama-voting young people know Social Security probably won't be around for them: 52 percent of Americans between the ages of 18 and 29 support lowering Social Security taxes to invest in their own retirements, just 31 oppose.

Reason-Rupe Poll Social Security Individual Investment by Age

Forty-five percent of voters between the ages of 30 and 44, and 47 percent of those between the ages of 45 and 54 support lowering Social Security taxes and investing in their own accounts. Unsurprisingly, opposition to the proposal spikes dramatically with the people already collecting Social Security checks and those nearing retirement.

Here's what the Reason-Rupe poll asked:

Please tell me whether you would strongly support, somewhat support, neither support nor oppose, somewhat oppose, or strongly oppose this proposal: "Reducing Social Security taxes and allowing individuals to invest in their own retirement instead?"

Strongly Support 25%
Somewhat Support 16%
Neither 10%
Somewhat Oppose 13%
Strongly Oppose 32%
Don't Know 4%

Overall, the old-young divide results in 41 percent of the public supporting lower Social Security taxes and individual retirement investment, and 45 percent opposing it.

If Americans are lucky, debate over the future of Social Security may even take place as the Republican presidential primaries unfold. In an effort to differentiate himself, GOP candidate Rick Santorum is tooting his own horn and talking up Social Security reform:

"In an election year, I went out to the floor of the United States Senate with [South Carolina GOP Sen.] Jim DeMint and started arguing for reforming Social Security. Not even Paul Ryan and his budget now, in the face of trillions of dollars in deficits currently, had the temerity to step forward and say we have to do Social Security."

NEXT: Miami Police Shoot Man to Death, Attempt to Steal/Destroy All Video Evidence of Shooting Man to Death

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. If I had every penny confiscated from me and my employers for the past 35 years to pay for this Ponzi scheme – not even counting interest/growth on the money – I could be on a beach in Panama ogling chicas and sipping drinks with umbrellas in them for the rest of my life.

    1. Nope, not a Ponzi scheme. There are relevant dissimiliarities.

      For example, Ponzi didn’t hold guns to peoples’ heads or menace them with imprisonment if they refused to (ahem) invest in his scheme. In fact, the people taken in were those eager for quick profits but who declined to investigate well his business, if we can call it that at all. They were ensnared through their own vices, and they cooperated in being ripped off in a way that differs from SS.

      Contributing to SS, however, is more like a calculated choice between two evils: pay, which is evil, or don’t pay, and risk being assaulted, battered, etc. Granted, there’s still an element of collaborationism present when paying. People who’ve paid for, say, 35 yrs calculated which choice best suited their self interest, usually choosing the former, i.e. payment. Further, they don’t deserve refunds from anyone but beneficiaries who’ve been paid already and, of course, from the individuals who ran the racket. Unfortunately, many in each group have since died and had their assets dispersed to heirs.

      In fact, it’s not even employees who pay. In other words, the 6.2% deduction from an employee’s paycheck is evidence of a tax imposed on the employer’s wealth, not the employee’s. It just so happens that employers have a convenient deal with the government to shelter theirselves from lawsuits for breach of contract. Thus do we find them courageous enough to collaborate in the racket and, furthermore, courageous enough to pass through their own cost of doing business via breach of contract committed in a brazen and open manner.

      If the Republicans were adults, they’d demand that obstructions be removed so that employees can sue employers to get back the shortpayment of 6.2%. As for whether employers continue to pay that, well, **** ’em. It’s their business problem, and they need to learn to stop collaborating with government to convert their problems into other peoples’ problems. So, the people who owe you for SS withholding are none other than your own former employers. (Employers are owed by the recipients, i.e. old people, and the racket’s managers.) Alas, Republicans still suffer from their perennial, self-induced allergy to fair treatment for laborers.

      When Americans wake up they will send the following hint to their employers: “Plan on not withholding that 6.2%, or stop planning for the future of your business. Your choice.” Now, earlier I wrote that Ponzi ensnared people through their own vices. In a very real sense, this is true of American businesspeople, also, at least those who are declining to pay their employees what they owe them. I think it’s fair to recognize them as the rotten apples of commerce who are willing to play ball and who have driven out those who won’t. It should therefore suprise no one if capitalism is dirty almost everywhere in America.

      Anyhow, unlike a Ponzi scheme, the SS racket is set up for almost everyone (governmental people being the main exceptions) or for no one. Those for whom the racket cares hold everyone else hostage. Early investors in Ponzi’s scheme, however, didn’t hold later investors hostage through voting. Of course, SS recipients deserve to have benefits terminated immediately and without notice. Given the essentially aggressive nature of the racket and their awareness of this fact, they have less claim to benefits than Ponzi’s investors did to repayment.

      Finally, Ponzi, who was much less criminalistic than any person ever involved in the SSA, ran an undemocratic scheme. But, “Jeffersonian”, the SSA is democratic.

  2. The largest and longest pyramid scheme perpetrated could have only been invented by the government.

    Can I opt out now before 30 years of wages have been taken? I won’t even ask for the money back.

    1. I won’t even ask for the money back.

      I will.

      1. Even though you know it has already been spent and must be “appropriated” from someone else at the point of a gun?

        1. They can pay me out of what they would have sent to the Dept. of Education SWAT team.

  3. Also, who the fuck are those 31% of 18-29 year olds who apparently can’t balance a checkbook. They need remedial finance courses fast!

    1. No, I was roommmates with one of them. He was a hippie enviro I roomed with in college (bad decision- didn’t realize he was an annoying cuntwad until we had all tricked him in to paying most of the rent).

      His whole argument was, “But we pay into social security! We should be able to collect it later.” He shut up real fast when I pointed out that he did no such thing- he was an awful debater, but refused to change his views about anything.

      1. we had all tricked him in to paying most of the rent

        Way to take the moral high ground.

  4. Maybe we should look at a graph of voting turnout rate from those age brackets for a clue as to which side is going to win.

    But according to our resident principled nonvoters, the younger folks are right not to vote and give legitimacy to Social Security policy, even if it means forfeiting the ability to change it.

    1. How exactly would these principled non-voters have a vote on a bill in Congress when they are not members of Congress?

    2. True, they should vote for the guy that is going to reform or eliminate Social Sec… oh, I see, you were making a joke.

  5. Can I opt out altogether? Please? I won’t ask for any money.

    1. I already asked. The mean lady behind the counter barked “no.”

      1. I retract my request. I know her, and I don’t want to go there.

  6. This is nice and all, but I’m getting tired of the Republican house passing symbolic measures that stand no chance of getting through the Senate.

    Stop wasting our time.

    Not that I’m advocating “compromise” per se. But it would be good to engage the other side in some kind of political process whereby serious issues get seriously addressed.

    Get the Democrats to put a proposal for dealing with entitlements on the table. Otherwise, they can just sit there and play the game of saying Republicans want your grandma to starve and take away her medicare.

    They need to force the Democrats to make a counter proposal.

    1. On the brighter side, when their wasting time on meaningless, symbolic gestures, that’s time they could be spending on fucking us down the road all the more.

      1. Gah. their=they’re

        Zod damn you, John.

    2. Hazel- how are you going to do that? Sticking your head in the sand and denying reality means old people voting for you. They don’t want to hear that Social Security is bankrupt in 2036- most will be dead. Medicare in 2021 is maybe, but the problem is, the ones who pay attention to politics, according to all poly sci literature, are already partisan nuts.

      The Republicans are doing it because it plays to their base. But there is no margin in the Democrats running against entitlements.

    3. The Democrats can play the “want your grandma to starve” game all day long (and will) when almost all the Republicans have virtually identical moral principles.

    4. A symbolic gesture does serve a purpose. I agree, Sessions proposal is DOA when it reaches the senate. That said, it has people talking, and debating, a specific set of ideas, in which we can gauge public support.

    5. “They need to force the Democrats to make a counter proposal.”

      They make a proposal all the time: tax the rich and/or let Bush tax cuts expire. That 700 billion that’s saved will somehow take care of all our problems.

    6. Given that democrats are too craven to take SS away from even “very wealthy” people, I don’t see a compromise in the works.

  7. Ugh. I wish this had a shot in hell of passing. Earlier today I conducted a tax consultation with a young man who had recently immigrated and apparently hadn’t examined his paystubs all that closely, because when I highlighted for him the SS & Medicare withholding, he asked “Oh, so do I have 2 retirement accounts and 2 kinds of health insurance- from the gov’t and from my employer?” (Meaning his 401k & employer provided health insurance.)

    When I explained to him that, no, your money is being taken to pay for other people’s retirement and health care, and depending on how long you work in the US, you might not get any of it back, I like to think his stunned disbelief indicated a nascent libertarian.

    1. Dangy, you should emulate your namesake- ask the boy out to dinner, and seduce him into libertarianism. We need all the voters we can get, and the hippies ain’t above doing the same!

      1. Libertarians vote?

        1. In truth, in the case of individuals, their actual voting is not to be taken as proof of consent, even for the time being. On the contrary, it is to be considered that, without his consent having ever been asked, a man finds himself environed by a government that he cannot resist; a government that forces him to pay money, render service, and forego the exercise of many of his natural rights, under peril of weighty punishments. He sees, too, that other men practise this tyranny over him by the use of the ballot. He sees further that, if he will but use the ballot himself, he has some chance of relieving himself from this tyranny of others, by subjecting them to his own. In short, he finds himself, without his consent, so situated that, if he use the ballot, he may become a master; if he does not use it, he must become a slave. And he has no other alternative than these two. In self-defence, he attempts the former. His case is analogous to that of a man who has been forced into battle, where he must either kill others, or be killed himself. Because, to save his own life in battle, a man attempts to take the lives of his opponents, it is not to be inferred that the battle is one of his own choosing. Neither in contests with the ballot — which is a mere substitute for a bullet — because, as his only chance of self-preservation, a man uses a ballot, is it to be inferred that the contest is one into which he voluntarily entered; that he voluntarily set up all his own natural rights, as a stake against those of others, to be lost or won by the mere power of numbers. On the contrary, it is to be considered that, in an exigency, into which he had been forced by others, and in which no other means of self-defence offered, he, as a matter of necessity, used the only one that was left to him.

          Lysander Spooner

          1. Shorter answer: No, libertarians do not vote.

            1. Just the Kochtopus.

  8. Savings Account for Every American (SAFE) Act

    Congress had no respect for the Constitution and, apparently, no respect for the laws of acronym formation.

    1. LOAF?

      1. Or LAF would be acceptable.

    2. Stealing All From Elderly
      Saving All From Elderly
      Squirreling Away For Eventualities
      Swelling Annuity For Everyone
      Saving Actuaries From Exasperation

    3. Savings Account for Every American (SAFE) Act

      Congress had no respect for the Constitution and, apparently, no respect for the laws of acronym formation.

      Laws are for little people, remember?

  9. I’m sure this would be an improvement, but how exactly does the “SAFE account” work? I assume there are all sorts of strings attached (you can’t use it until a certain age, you have only limited choices where you can invest it, etc). Almost anything is better than the status quo, but why not propose a bill to let us opt out completely?

    1. Because commoners can’t be trusted to run our own affairs.

      1. When the feds mandate how much of your paycheck you must invest, and which companies are allowed to handle those investments, are you really running your own affairs?

      2. Unfortunately, unless we are willing to start letting irresponsible people die in the streets, there is truth in that sentiment. What do you do with the 70 year old who didn’t save a dime and now can’t work?

    2. The account would probably work just like a 401k.

      I would think that the financial industry would be all over this. Think of all the money they will make when every working American is mandated to invest a percentage of their paycheck.

      Why aren’t these companies out lobbying congress?

  10. Mandatory government managed savings account = social security.

    Nice try fuckbags.

    1. In the same family tree, maybe. Equivalent to Social Security, no.

    2. I’d liken it more to government mandated 401k/IRA… at least I hope it’s not just a savings account.

      Of course, that’s still better then a Ponzi scheme.

    3. Social security = someone else spending your money.

      Personal accounts = you spending your own money.

      Personal accounts aren’t perfect, but they provide more freedom than social security.

    4. Yeah, that’s the other side of the damn coin. Unless it allows me to put it in some sort of savings account or IRA with my credit union, I’m not really interested.

      Personally, I’d rather take the whole shot and bury it in my backyard. Bernanke and the government will do their damnedest to make sure it’s inflated into worthlessness, but at least I know that, unlike SS, every penny will be there when (if) I retire.

    5. Not exactly.
      Social Security only pretends to be a personal account. Your money is actually going into the general fund, and your benefits are defined by a formula, not by how much you put in.

  11. none of your people have a chance against obama. I’m in heaven.

  12. Fuck old people.

    1. Like your parents? Are they hot?

  13. Organizations with endowment funds still have not recovered from the last stock crash, imagine if the nation’s elderly had their social security and medicare ‘privately invested.’

    All this seems to play on the same misconception that social security or medicare is equivalent to a savings account where you get back what you put in plus interest. That’s not what it is afaik, it’s more like a “you pay today to take care of today’s old people, and tomorrow when you are old young people pay to take care of you.”

    1. “Except we’ve taken on a lot of debt to do all this and spent all of the actual cash, so we’re just going to raise taxes perpetually and eventually have to pay very meager benefits because we can’t create a real return on investment.”

      There’s a reason younger people don’t support it as much, and it’s because they realize their benefits in comparison to their parents’ are very small for what amounts to an 11.7% (12.4/106.2) tax on gross income on people making less than $100k and some. Taxes will increase, benefits will fall, and because there are no individual accounts there’s little you can do to stop it. Most people recognize that they’ll depend more on their private retirement accounts, which even with an employer match can often be smaller than SS contributions.

      Also, retirees should not invest the same way endowments do. Endowments usually have a perpetual time horizon and can take free risk as long as they can meet spending targets. That means hedge funds, RE, . Retirees should have money in fixed income. To that end, popular target retirement mutual funds like Vanguard’s Target 2015 (which almost always exist in 401k plans) are basically where they were before the financial crisis. Anyone who actually bought in at those lower prices during the recession — as they should have since 2015 implies you’re not yet retired — actually came out ahead.

      And they wouldn’t have had to confiscate the wages of younger workers to do it.

      1. Now, now…don’t confuse MNG with such things. Any risk of loss is unacceptable in his opinion. Of course, a program that even in the view of its own actuaries will be insolvent is a much better bet. I don’t know about you, but I’ll take the risk of losing half my cash over the risk of getting nothing when my benefits are “means tested”.

    2. Organizations with endowment funds still have not recovered from the last stock crash…

      Golly, what could have been the reason for the latest asset bubble to bring the ceiling down on our heads?

      If a retiree has any sense, they’ll have their money in very low risk investments that focus on retention of capital and not large gains.

    3. “That’s not what it is afaik, it’s more like a “you pay today to take care of today’s old people, and tomorrow when you are old young people pay to take care of you. we’ll take money from you today and give it to the wealthiest class of Americans tomorrow, literally, and if the system hasn’t gone tits up by the time you retire, well, I suppose you’ll get some too”


  14. “Seniors who have paid into Social Security through a lifetime of hard work shouldn’t end up in a risky privatization scheme to gamble their retirement on Wall Street,” [Democratic Congressional Campaign Committee Chairman Steve] Israel said. “The public has rejected this kind of Social Security privatization in the past and will again.”

    Fuck you, Steve. The only reason you’re so hysterical about this is because you know the minute people decide to opt out of Social Security, the whole thing will come crashing down–because there’s no money and the “lockbox” is full of IOUs that the Treasury has to take out additional debt to pay for.

    Party’s over, dipshit.

  15. So, what percentage of a SAFE account will have to be in Treasuries? Sorry, but I see this as a way of forcing Americans to finance the government’s debt.

    You don’t fool me, fuckers.

    1. Yeah, this “privatization” scheme takes money from Government Peter to fund Government Paul.

  16. Social Security doesn’t run out of money for the next 25 years. Pay no attention to the fact that it insolvent right now.

  17. Is it safe?

    Is it safe?

    Is it safe?

  18. The whole “SocSec will be bankrupt in X years” thing is completely wrong. It assumes that there is a “trust fund” that will pay SocSec until then.

    I believe SocSec outlays exceeded receipts last year. SocSec is bankrupt now, and is being bailed out with general tax revenues.

    1. But Lloyd Christmas promised me that all those IOUs in the trust fund were as good as gold.

    2. The standard rhetoric that we are burdening our “children and grandchildren” is whistling through the graveyard. The people who are going to suffer for this are adults now.

  19. Savings Account for Every American (SAFE) Act

    I prefer Savings Underwriting Commission Creating Easy Retirement (SUCCER) Act.

  20. this is a workable idea but will never fly unless the politicians explain this to younger workers who have no idea how social security is funded. People think that the money they get (social security benefits) is THEIR money from THEIR account and to make political headway, they need to know how social security really works

Please to post comments

Comments are closed.