Social Security: A Debt-Threatened Dream

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More fundamentally, the aged have been misled for two generations into believing that Social Security payments constitute no more than a return to them of the payroll taxes that they have paid during their working years. This is dramatically untrue. The average retired person today can expect to collect lifetime benefits five times as great as the total taxes that he or she once paid, plus interest.

From the very first,* Social Security benefits have been paid out of taxes deducted from the paychecks of people working that year, who in turn have to rely at their retirement on benefits from taxes paid by their children's generation.

No matter: the elderly, and many of the young, have been convinced that they have a right to Social Security payments high enough to maintain a comfortable standard of living despite old age, widowhood or disability, and this right is every bit as inalienable as the rights to life, liberty and the pursuit of happiness. Harold Sheppard, associate director of the National Council on the Aging, has a one-word description of benefits paid now and all increases that may be necessary to keep those payments abreast of inflation. The word is: sacred. And all politicians know that the aged are far more likely to vote than the young.

At bottom, the Social Security system and the nation face a crisis of political leadership. The aged, the widowed, the disabled and even the young have been promised more than the nation can guarantee to deliver at any reasonable cost. Leaders must explain why those promises are getting harder and harder to keep. The answers begin a long way back.

The idea that national governments, rather than churches, charities or extended families, might have to concern themselves with helping the old and the disabled is relatively new in history. Imperial Germany in 1889 enacted the first pension plan, financed by equal contributions from employers and employees, largely because Chancellor Otto von Bismarck saw it as a method to wean the masses away from socialism. As he explained candidly: "Whoever has a pension for his old age is far more content and far easier to handle than one who has no such prospect." Similar plans were adopted by most other major industrial nations over the next three decades.

But the U.S., sticking by its tradition of rugged individualism, held out. Theodore Roosevelt ran for President in 1912 on a Progressive Party platform calling for a national system of social insurance. He lost, and the proposal was not an issue again in presidential elections until 1932, when another Roosevelt, Franklin, campaigned for the White House in a Depression-ravaged nation where the plight of the elderly had become desperate.

Even after Roosevelt's landslide victory, Congress was reluctant to enact a plan that seemed far too radical to some members. Roosevelt repeatedly warned congressional leaders that if they did not approve a moderate Social Security bill, popular pressure would force them to adopt irresponsible Government handout schemes like the ones being pushed by California's Dr. Francis Townsend and Louisiana Governor Huey Long. To soothe conservative qualms, Roosevelt demanded that his planners draft a scheme that was not "the same old dole." That ruled out any use of general revenues, meaning primarily income taxes, to finance any part of Social