Bernie Sanders: Wrong About Social Security

by / 0 Comments / 303 View / April 30, 2015

Post hoc ergo propter hoc… After this, therefore because of this…

The original Social Security Act was passed in 1935. A lot has changed in the past 80 years. Sanders wants you to believe that the reduced number of seniors living in poverty is mainly because of Social Security. (SS came first, poverty decreased; therefore, SS must have decreased poverty).

In 1935, the US was just exiting the Great Depression. The unemployment rate was around 20%; today it is at 5.5%. A nationwide depression and major unemployment at the time explains why half of all elderly were in poverty. Obviously, the creation of SS can in no way be credited with the economy recovering and employment rising again.

In the past 80 years, we have had tremendous free-market innovation that propelled the nation’s standard of living faster than at any other time in human history. Advancements in air conditioning, refrigeration, farming, automobiles, and technology should all be given credit, as well.

What is Social Security? It is a flat tax. It is a 12.4% tax on all income, regardless of income bracket, up to $118,500 (after which SS is no longer taken). It does not take from the rich and give to the poor: it takes from everyone, scrapes administrative costs off the top, and (theoretically) gives the money back at half its present value when one retires. If we instead ended SS and gave everyone a 14% raise, they could invest that money in virtually-guaranteed T-Bills, inflation-protected TIPS, or other safe investments with better returns. Or, they could spend it. That is the choice.

The only people who benefit from SS are those running the program, and politicians such as Sanders who get votes by convincing people they need him.

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