Tag: social security

As he celebrated the 50th anniversary of Social Security, then–Speaker of the House Tip O’Neill (D–Mass.) hailed the program’s epic accomplishments.

In the days before Social Security was born, O’Neill said, “Life for the elderly is filled with uncertainty, dependency, and horror. When you get old, you are without income, without hope.” The federal government’s payments to retirees, he continued, meant that Americans no longer had to live in “fear and dependency” in old age.

It was a tidy summary of the conventional wisdom surrounding America’s old-age entitlement state—which includes not just Social Security, but also Medicare and many other taxpayer-funded efforts to subsidize the supposedly nasty, brutish, and not-so-short lives of the over-65 crowd.

It is a narrative that deserves to be shoved off a cliff.

Today’s retirees, most of them from the baby boomer generation, are the wealthiest cohort of Americans. The median household headed by someone over age 65 is far wealthier than the average household headed by someone in their late 30s.

Despite that, roughly 22 cents of every dollar the federal government spent last year was funneled to retirees via Social Security. Medicare spending accounted for another 14 percent. Many of those dollars were extracted from younger, poorer Americans. (The rest were borrowed and added to the national debt.)

A retired couple today might possess a robust retirement account and own a million-dollar home, but the government still acts as if they live in the poverty-stricken hellscape that O’Neill described. And as the old have gotten wealthier, the taxpayer-funded benefits have only gotten more lavish.

Social Security provides inflation-proof monthly payments, keeping retirees ahead of the curve even as working-age Americans struggle to make ends meet. In many places, seniors are gifted special exemptions from taxes on homes and vehicles that aren’t available to younger Americans. Medicare, created to address seniors’ medical needs, now offers such taxpayer-funded perks as discounted golf course fees, ski resort lift tickets, even pet supplies and pickleball equipment.

In short: Today’s old-age entitlement system is not a last-resort guardrail against poverty and desolation. It is a sprawling, expensive lifestyle-subsidy program that steals from the poor to give to the rich—while also worsening the housing crisis and pushing the country toward a dangerous fiscal cliff.

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For years, pointing out the obvious was considered impolite: America’s biggest, most distortionary transfer of wealth does not flow from elites to the working class. Nor does it show up as corporate welfare. It flows from the relatively young and poor to the relatively old and wealthy. It’s the defining injustice of our fiscal regime, the largest driver of our government debt, and the quiet engine behind the malaise of Millennials and Gen Z.

More than a decade ago, Reason editor at large Nick Gillespie and I wrote a piece arguing that Social Security and Medicare had together become the great cause of America’s generational inequity. We noted that senior households were wealthier than ever while young households still working to make ends meet had to prop them up further.

We also warned of the threat to a genuine social safety net. Treating every elderly person, no matter how well off, as a member of a protected class entitled to increasingly unaffordable benefits will eventually destroy a system that progressives in particular cherish.

Around that time, “Occupy Wall Street” protesters were railing against “the 1 percent.” I offered the tongue-in-cheek suggestion that they also consider occupying the American Association of Retired Persons (AARP), the most powerful lobby defending the largest intergenerational wealth grab in American history.

As such, I greatly appreciated seeing Russ Greene, managing director of the Prime Mover Institute, join the fight and coin the term “Total Boomer Luxury Communism” in an important article over at the American Mind. The name sounds like a joke, but the math is sound.

American heads of households younger than 35 now have a median net worth of about $39,000 and an average net worth of more than $183,000. Those over 75 have a median net worth of roughly $335,000 and an average net worth exceeding $1.6 million. As a group, today’s seniors are the wealthiest we’ve ever had.

Many own their homes outright in markets younger families cannot afford to enter. Seniors enjoy higher rates of stock ownership and have benefited enormously from decades of rising asset values. Meanwhile, younger Americans face soaring housing costs, student loan debt, delayed family formation, and a labor market shaped by slower growth and higher federal indebtedness.

Some of this reflects natural wealth accumulation over time, and there is nothing wrong with that. But why does the modern welfare state magnify the disparity? As Green explains, “retired millionaires have become the greatest recipients of government aid,” as Social Security can redistribute up to $60,000 a year to an individual and $117,000 to a household. “Meanwhile,” Green notes, “Medicare programs are paying for golf balls, greens fees, social club memberships, horseback riding lessons, and pet food.”

Younger Americans are also on the hook for about $73 trillion in unfunded obligations projected over the next 75 years, making now the time to act. Some defenders of the status quo argue that higher taxes will fix the problem, but it would again fall on younger earners to continue redistributing benefits to the same affluent seniors, worsening the generational imbalance. The problem is not a lack of revenue; it’s a benefit structure that ignores modern demographics, modern wealth patterns, and basic fairness. Paying less to seniors who don’t need the money is the only fair reform to this dilemma.

Every time someone points these facts out, defenders respond reflexively: “But seniors paid in. They earned it.” No, not all of it. Not in any meaningful, actuarial sense.

We’ve known for decades that the system is wildly unbalanced. As Andrew Biggs of the American Enterprise Institute points out, a typical average-wage retiree in the 2030s will receive 37 percent more in Social Security benefits than they paid in taxes. Medicare is even more lopsided: Seniors routinely receive three to five times the amount they contributed.

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The Social Security Administration (SSA) made about $114 million in improper payments to children and spouses of beneficiaries, the agency’s watchdog, the Office of the Inspector General (OIG), said in a Sept. 18 audit report.

The Social Security Act limits the amount of benefits paid to children and spouses of retired, disabled, and deceased individuals. The maximum amount that can be paid to children or spouses of a beneficiary combined is referred to as the “family maximum,” the report stated.

If the total monthly benefits paid exceed the family maximum limit, SSA is obliged to reduce such payments to bring them in line with the threshold, according to the report.

In the audit, the OIG analyzed 23,603 Social Security records of benefit payments, estimating that the SSA correctly adjusted benefits for 15,211 of these records in accordance with the family maximum provisions.

However, “SSA improperly paid approximately $114 million to spouses and children on 8,392 wage earners’ records (36 percent),” the report stated.

This includes both underpayments and overpayments. For instance, the OIG checked 225 samples from the 23,603 records and identified SSA to have made $1 million in underpayments and $189,940 in overpayments.

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