Social Security and Its Discontents

Restoring Hope in America: The Social Security Solution

by Sam Beard
Institute for Contemporary Studies, San Francisco, 224 pp., $14.95 (paper)

Frightening America’s Elderly: How the Age Lobby Holds Seniors Captive

by Thomas J. DiLorenzo
Capital Research Center, Washington, D.C, 98 pp., $15.00 (paper)

Will America Grow Up Before It Grows Old? How the Coming Social Security Crisis Threatens You, Your Family, and Your Country

by Peter G. Peterson
Random House, 237 pp., $21.00

Social Security in the Twenty-First Century

edited by Eric R. Kingson, edited by James H. Schulz
Oxford University Press, 313 pp., $24.95 (paper)

America, the writer Sam Beard, an inner-city organizer turned fiscal conservative, indulges in a few tricks of the political pamphleteer’s trade. “It’s time to stop relying on government for handouts. It’s time to break the bonds of dependence on Washington,” he tells us. “There’s a better way. We are a prosperous, industrious nation, and we are capable of instituting a plan that can—quite literally—turn every hard-working American into a millionaire.” Beard wants us to believe, of course, that it is government that is holding us all back. Forty-five years from now, Beard calculates, an average worker who has invested his Social Security contributions in a privately administered portfolio of stocks and other securities instead of handing it over to the government will become a millionaire twice over—if only in nominal rather than inflation-adjusted dollars. What Beard omits to say is that if Social Security maintains its currently mandated benefits, it will also make the typical recipient a millionaire in forty-five years, without the risk of investing in the volatile stock market. By the year 2040, a typical Social Security beneficiary will receive about $92,000 a year in the dollars of that year, on the basis of assumptions similar to Beard’s. To buy an annuity in that year paying the same annual amount until death would cost nearly $1 million. Even today, a package of Social Security and Medicare benefits is worth half a million dollars to the typical retired couple.

Like much of the new literature on the subject, Beard’s book transforms a genuine but soluble problem concerning Social Security’s financing into an ideological crusade. Beard insists that Social Security must be “radically reformed.” Time Magazine entitles its recent cover story on the subject, “The Case for Killing Social Security.” The economist Thomas J. DiLorenzo writes in a short book called Frightening America’s Elderly that “unless changes are made soon, the entire program will collapse by the year 2029.” DiLorenzo doesn’t bother to tell us precisely what he means by collapse. His thesis is that lobbyists have frightened the elderly to the point where they will not entertain constructive reforms of the retirement system. He readily uses fear to promote his own ends, however. One looks through his pamphlet in vain for documentation of Social Security’s coming collapse. Such writers understand that a mere declaration of a coming catastrophe in Social Security is sufficient to frighten a public long made skeptical of government promises by large federal deficits, lost jobs, and two decades of stagnating wages. One survey finds that two out of three Americans aged twenty-five to thirty-four believe it is unlikely that they will receive their Social Security benefits when they retire. Critics of the current system like to point out that more young Americans believe in UFOs than in the security of their public retirement benefits.

Before we take a cooler look at the facts, we should remind ourselves how much has …

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