Trustees of the Social Security program just issued their annual report.
Each year, the picture of the program’s solvency is dismal. But this year it’s even worse.
Rather than falling short in 2033, as reported last year, this year the shortfall is projected to be in late 2032.
That’s six years from now.
Without action taken, benefits, per the report, will be cut by 22 percent late in 2032.
That means that all young working people are now forced to pay, by law, 12.4 percent of their pay—half paid by them and half paid by their employer—into a bankrupt system.
As I recall, this is a free country. So the fault is ours. We, the voters, sit by and allow this to be done to us.
Even if the system was not broken and could pay benefits as promised, it still would be a horrible situation.
The Committee to Unleash Prosperity has calculated what the average worker would have accumulated, based on life expectancy, if instead of paying the payroll tax, they were allowed to invest the same funds in their own personal retirement accounts over their working lives, divided 60 percent in stocks and 40 percent in bonds.
Using historical returns from 1986–2025, the average worker would have accumulated $1,453,726, compared with $458,532 they would have gotten under Social Security. For black people, it would $834,662 versus $261,571, and for Hispanic people, it would be $1,290,310 versus $413,726.
Social Security is the oldest (signed into law in 1935) and largest (about 21 percent of the federal budget, to the tune of about $1.5 trillion annually) federal program.
Enactment of Social Security was a game changer and opened the door to progressivism in the United States. Its constitutionality was challenged then, and the Supreme Court ruled in its favor, fundamentally changing the constitutional understanding of the government’s ability to tax and spend.
That change in understanding, which opened the door to the modern welfare state, is really the background of the horrible spending and debt situation we’re in today.
The great gift that Americans can give ourselves to celebrate the nation’s 250th birthday is to turn around this situation and restore the individual freedom that defines our nation and has been the basis of our formidable achievements.
What can define a free country more than every citizen having the right to say to the government, “No, thank you, I prefer to take care of myself rather than the government taking care of me”?
I can argue, as others have done and are doing, about restoring the fiscal soundness of the Social Security system by taking a bad situation and making it worse. Politicians who don’t have the courage to “rock the boat” will go along with reforms to raise taxes or cut benefits, such as raising the retirement age.
I propose to at least give Americans a choice.
In other words, make this discussion not just about the finances and economics of the Social Security system. Make this a discussion about our nation and the individual freedom that supposedly defines it.
If you want, stay in the existing system. But give everyone the option to get out, as long as they agree to use the same percentage of their income to fund their own personal retirement account.
The ethnic implications of this reform can be huge. Per the Federal Reserve Consumer Finance Survey, as of 2022, 61.8 percent of white households had a retirement account, 34.8 percent of black households had one, and 27.5 percent of Hispanic households had one.
Per the same survey, 65.6 percent of white households held stock, 39.2 percent of black households did, and 28.3 percent of Hispanic households did.
Per the Census Bureau, as of 2021, 20.4 percent of white households had a net worth of $1 million, compared with 5.3 percent of black households.
Let’s build wealth in our country, such that all Americans will participate.
The answer is more freedom, less government. This is how to fix Social Security.
