Social Security is not an expense of the government. Well, for the most part. It’s a pension plan that people pay into. Similarly for Medicare. People pay into it before retirement. Then at a certain age they get this insurance benefit. Private insurers will not insure the elderly. If anything you should characterize this as a private insurance industry subsidy. It allows insurers to offload their riskiest clients to another entity.
Your characterization is badly wrong.
EDIT: Until recently Social Security took in more money than it paid out. It’s run by the government so its expenditures are counted as a budget item. But it is a sound pension system whose defects can be easily fixed if a certain party would actually govern. It is not the largest expense by the government. It’s just that it is a government run pension system. It’s not an entitlement either.
This is incorrect per the US Supreme Court e.g. Flemming v Nestor in 1960. Social Security contributions are purely an income tax like any other, it is explicitly neither a pension nor insurance plan. Contributions create no obligation for the government to give you anything in return, same as the other income taxes you pay. The government largely treats it as tax revenue.
It is intentionally (mis)represented as a pension plan where contributions are connected to benefits but that fiction is solely to maintain popular political support, they can disqualify citizens from eligibility at any time regardless of contributions and, on occasion, have.
The main issue with Social Security is that most people in prior generations took far more out than they contributed, in part because it wasn’t really a requirement since it wasn’t actually a pension.
Notably, if the gov’t starts making pensioners subsist on cat food because they refuse to honor their obligations, hopefully a whole lot of senators will be out of jobs ASAP.
SS is explicitly sold as a pension. If it stops acting like one, there will be consequences - even if it means rewriting laws.
If the Supreme's deem it so then it must be. Are there any decisions they've gotten wrong?
Your benefit is based on what you pay in. It pays out less than what it takes in. If it were privatized you and the Supremes would call it a pension. It acts like a pension, quacks like a pension and is a pension.
If the government decided to make Social Security a private corporation it could. If it did this, keeping in place Social Security “taxes” that would then go to the new corporation, we would not consider Social Security a budget expense. Being government owned or private doesn’t matter in terms of how the expenditures should be considered. This is why Social Security and Medicare are not part of the normal budget negotiations at budget time. These are obligations that need to be paid to the people who paid for them.
> If the government decided to make Social Security a private corporation it could
No, it couldn’t. There were promises made with the full faith and credit of the United Stares.
> obligations that need to be paid to the people who paid for them
Everyone pays taxes. Social Security and Medicare obligations are treated differently because of politics. Otherwise, they’re like any other expense: the Congress can amend them at will. (As is currently expected, e.g. with Social Security benefits beginning to be curtailed from 2035.)
I agree on Medicare. But it's plausible that the Supreme Court could find government meddling on Social Security unconstitutional, because similar decisions have already been made in other countries.
In Finland, the mandatory pension system is similar to Social Security, except that it aims to replace ~60% of earned income without any limits. Pensions based on past contributions have been established as constitutionally protected private property. If the system seems to be out of balance, the basic tools are raising the contribution rates without increasing the benefits and increasing the retirement age for younger generations. Any changes that would substantially lower the pensions that have already been earned would have to go through the same process as constitutional amendments. (There is also a third tool: increasing the tax rates for all retirement income, regardless of the source. But that is understandably unpopular.)
> But it's plausible that the Supreme Court could find government meddling on Social Security unconstitutional, because similar decisions have already been made in other countries.
I sincerely hope SCOTUS doesn't care at all about similar decisions made in other countries. What is or is not constitutional in the US should be based solely on the US constitution.
> If the government decided to make Social Security a private corporation it could
No, it couldn’t. There were promises made with the full faith and credit of the United Stares.
I'm not a lawyer so I'll rephrase. In an alternate universe the U.S. government created a corporation to run Social Security. It mandated that people participate in it. Everyone called it a pension system because that it what it is.
Congress can amend them at will.
All pension systems are subject to amendment. Many pension systems have been amended over the years.
> In an alternate universe the U.S. government created a corporation to run Social Security. It mandated that people participate in it. Everyone called it a pension system because that it what it is
If the U.S. then explicitly guaranteed that corporation's liabilities, sure.
> All pension systems are subject to amendment. Many pension systems have been amended over the years
No. Many state legislatures, for instance, are constitutionally prohibited from fucking with certain obligations, commonly pensions.
> entire idea of a truly guaranteed pension is not feasible and always leads to a pyramid scheme and then insolvency
Sure. But the point of full faith and credit is it's irreversible. (Actually, the point of credit, period. You can't declare your past debts pyramid schemes and unilaterally absolve yourself of them.)
Irreversibly, like all political concepts, is a fiction that humans choose to believe in rather than a law of physics. If social security became insolvent while the US was distracted by some other future national crisis, I'm certain that the people of the future would find a way to cut the pension while staying within the letter of the law (probably via inflation or https://www.youtube.com/watch?v=TRgRz3nSG7o).
They're not part of negotiations because there was such a backlash during the Reagan era. Part of his campaign platform was to reel in the entitlements. Then he discovered that people like their entitlements. George Bush tried to privatize Social Security, and the idea went nowhere in a hurry.
The value of Social Security is the expectation that it will be bailed out by the government if it goes bust, for instance if the trust fund is depleted.
You do not understand how this all works. Social Security "spending" does not add to the deficit. It is not the source of any budgetary imbalances or of any structural budgetary issues in the United States. It is a pension system that is funded by workers that happens to be run by the government.
Social Security is not a pension plan, it's pay-as-you-go and barring massive tax increases and/or benefit cuts, its collapse is more-or-less inevitable in the next couple decades because of locked-in demographic changes.
The Social Security Retirement benefit is a monthly check that replaces part of your income when you reduce your hours or stop working altogether.
Most people would refer to this as a “pension”. Call it whatever you want to. The fact is that its issues are easily fixable and your benefit is based on how much you put into it.
This is not a very useful semantic argument. Pension programs routinely pay out to workers more than what was paid in; that's practically the definition of a defined-benefit pension plan. Either way: it's money the government pays out.
I've been hearing that since the eighties. Congress can change contribution rates and/or benefit rates at any time to keep it solvent, just like they have in the past.
Beyond a certain point, the working population will not be able to afford to pay for the retired population. It's a mathematical inevitability unless birth rates increase or people stop living as long any more (both probably impossible). Maybe the benefits could be eliminated/reduced, but this is politically untenable because older people generally vote while younger people don't.
immigration solves the birth rate problem, and is one of the big reasons why illegal immigrants is a hilariously terrible wag-the-dog wedge issue. make them legal, tax them, and have them contribute to the system as well.
Can was kicked too far, it is not easy to fix. It's easy to make the mathematical problem go away by reducing benefits AND raising taxes. Nonstarter. We will need a tragedy to illicit change.
Your characterization is badly wrong.
EDIT: Until recently Social Security took in more money than it paid out. It’s run by the government so its expenditures are counted as a budget item. But it is a sound pension system whose defects can be easily fixed if a certain party would actually govern. It is not the largest expense by the government. It’s just that it is a government run pension system. It’s not an entitlement either.