12-24-90 Monday. I hope I don’t sound like a gerophobe (hater of old people) when I say this, but certain demographic trends disturb me. As the so-called baby boomers age, a shrinking percentage of working people will be supporting a growing percentage of elderly people. Economically speaking, there is an intergenerational transfer of wealth from young to old. The young and productive work; the old consume. If the percentages of people in each class remained the same over time, it would be a simple matter of striking a balance. During one’s productive years, one would pay into the pot; during one’s consumptive years, one would take out. Things would balance out in the end. But the percentages are not the same. And the amount of wealth transferred is growing every year, as evidenced by the increasing rate of Social-Security tax monies withheld from our paychecks. What can be done? What should be done? The obvious answer, to me, is to institute a means test for Social Security payments. Some, perhaps many, old people are wealthy. They have done well for themselves during their working lives and have all of their basic needs satisfied. Others, such as my grandmother, have reached old age without much in the way of savings and need transfer payments in order to survive. What we as a society should do is cut off funds to those elderly people who don’t need the money. That would ease the burden on young people, many of whom are trying to raise families of their own, without adversely affecting the needy elderly.
There is surprising resistance to this plan. I say “surprising” because it seems like such a simple and fair solution to what nearly everyone acknowledges is a problem. Even my students, who are about to embark on careers, are opposed to a means test. Perhaps they fear reaching old age without savings. But if so, they’ll qualify for Social Security payments; my plan would not affect them. Part of the problem is that Social Security has always been touted as an investment plan rather than as an insurance plan. People think they’re putting money away during their working years and will get it back when they retire. When you invest, the money is yours; it would be unjust to be deprived of it. If we think of Social Security as insurance, however, there is no injustice. The tax is a premium that we pay to insure ourselves against the risk of reaching old age without the means to support ourselves. If I had my way, I would implement my plan gradually. Those who are currently drawing Social Security would continue to do so, even if they don’t need it, for it would be unjust to deprive them of the money they have been led to believe is theirs. For those entering the work force, I would make it clear that the understanding of the system has changed. They are paying insurance premiums, not investing money. After all, isn’t the point of Social Security to make people secure in their old age—to let them know that if they fail to set aside money for themselves, society will provide for them? I doubt that this will have much of a disincentive effect, for working people have many other uses for their income.
Keith Burgess-Jackson, J.D., Ph.D. 