Rick Perry and Mitt Romney have begun a lively debate about Social Security, but it’s not the one we need. Their debate mostly concerns whether it was a good idea to establish the program. Perry has made it abundantly clear that he thinks the answer is no. The program’s creation was an affront to the Constitution. Romney objects to this line of argument. He implies that he would have voted for it in the 1930s.
Neither of them is saying much about the actual question the country faces today: Given that we have a Social Security program and are not going to abolish it or devolve it to the states (as Perry has daydreamt), what should we do about it? Romney says he is open to various reforms, though he has not made any specific proposals. Perry has been even vaguer.
Romney is almost certainly right that forthright opposition to Social Security in principle is a losing proposition in American politics. It remains one of the most popular federal programs, and polls consistently find that voters want to prevent benefits from being cut. When pollsters have divided respondents by party and ideology, they find that this consensus includes strong majorities of self-described Republicans, conservatives, and tea-party sympathizers. (Nobody, to my knowledge, has even done polling on whether the federal government should withdraw from the field altogether.)
Polls also consistently find that the public understands that Social Security is in trouble. But Americans want the program to be saved, not eliminated or replaced. If he becomes president, or even the Republican presidential nominee, Perry will have to have a politically realistic agenda for Social Security. But for any set of reforms, resistance is likely to be greater if the public thinks they are motivated by a desire to undermine the program.
Governor Perry is also right, however, to suggest that the program is deeply flawed — and its flaws, as he has hinted, go beyond its much-discussed funding shortfall. Rates of elderly destitution are much lower since the development of Social Security, but this gain came at a cost. Martin Feldstein, the distinguished Harvard economist, has long maintained that the program markedly reduces the nation’s capital stock — and thus economic growth and wages — by diminishing the incentive to save. It diminishes the incentive to work, too, by encouraging retirement in the early and mid-60s, even though lifespans have increased and hard physical labor has declined.
An increasing number of studies demonstrate that the program shrinks the average American family, too, by socializing the returns to child-rearing. Parents contribute to the program’s future twice, first by paying payroll taxes and second by raising children; but the program recognizes only the first set of contributions.
The program also has some baleful political effects. It makes the electorate much more dependent on the federal government, and thus on the political class, than it otherwise would be. Social Security did not just cause the federal government to outgrow the constraints of the Constitution; it also did a lot to create a citizenry unmindful of those constraints.
The program’s structure was designed to spread false beliefs about it that would make it politically unassailable, and that now make it hard to reform. The purpose of creating a payroll tax supposedly dedicated to the program was to convince Americans that they were paying into a special fund and would later withdraw what they contributed. In reality, the program bears only a passing resemblance to this picture. But many liberals, from the dawn of the program to this day, have not believed that Americans would support the amount of redistribution the program entails if this redistribution were transparent.
Finally if most pressingly there is the question of the program’s solvency. Social Security is currently paying out more in benefits than it takes in. While it may run a surplus again if we ever see a strong economic recovery, within a few years the increasing number of retirees — ten thousand Boomers will quit working every day for the next 20 years — will push the program into deeper and deeper deficits starting just a few years from now.