Ken Langone told CNBC on Wednesday Congress “has to have the courage” to make Social Security means tested, arguing a billionaire like him shouldn’t be getting $4,000 a month (he and his wife) from the government when entitlements are 71% of spending.
In a way, means testing would be a good thing, as it would finally cure the delusion that Social Security is anything other than a welfare program, although I’m not sure the public wouldn’t make peace with that rather quickly, rather than consider turning off the spigot.
What it wouldn’t do, unless the benefit cutoff threshold were very low, is make a difference in the program’s basic insolvency. The problem with Social Security isn’t just that it’s welfare, but that it’s welfare for everyone – “Everybody plunders everybody,” as Frederic Bastiat would say. There are currently 62 million currently receiving checks. For 60% of them, Social Security makes up half or more of all their income. Millions more have come to depend upon the benefits, even if they make up a smaller percentage.
It might make people feel good to know millionaires and billionaires will no longer receive Social Security checks, but it won’t make much of a fiscal difference. There aren’t enough of them to significantly lower the payouts. To affect Social Security’s bottom line, people who would miss the money are going to have to take a hit.
There are only two ways out: default or bankruptcy. Either way, it’s going to be ugly. Social Security really is an evil mess that can’t but end badly. Ditto for Medicare, times ten.
Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.
Good article. Means-testing Social Security benefits is the most sensible (and only sustainable) solution, long-term. But I agree Congress will avoid it as too painful, until it has exhausted all other options. My prediction is that the core of Congress’s eventual ‘grand bargain’ (circa 2033) will be massive transfers of income-tax receipts into the Social Security trust fund. These will make the program permanently solvent, but at the cost of shifting its under-funding onto the general fund. And then, thanks to the simultaneous Medicare underfunding problem (which, as you point out, is much bigger), the means-testing of Social Security will become unavoidable.