Framing the program as a fiscal emergency
Social Security enters the show chiefly as one of the “big four ticket items” — with Medicaid, Medicare and defense — that guests say must be reformed if the federal budget is to be brought under control. In an October 2010 episode, Bob Zadek states that 43 cents out of every dollar then being spent was borrowed, and argues that without significant reform of Medicaid, Medicare, Social Security and defense spending, the country would not remain viable and the currency would become worthless A Better America (2010). The same 43-cents figure is used by Gary Johnson in an April 2011 episode, where he places himself in the category of those who do not support foreign aid while the government borrows to fund it Straight Talk with Gary Johnson (2011).
Johnson’s numbers are larger and more specific. He says he believes the country is on the verge of a financial collapse because it cannot pay back $14 trillion worth of debt, and that it is not good for the $100 trillion of unfunded entitlement liability going forward. He attributes the absence of an immediate collapse to the Federal Reserve buying up Treasuries — the government buying its own debt — which he says eliminates the short-term reality of a collapse but must eventually stop. His proposed remedy is to balance the federal deficit by cutting $1.6 trillion from the federal budget, a figure he contrasts with $60 billion from the current year’s budget and $200 billion from the next fiscal year’s. He says the discussion has to start with Medicaid and Medicare and with reforming Social Security, which he describes not as cutting Social Security but as making it a viable system that takes in more money than it pays out Straight Talk with Gary Johnson (2011).
Zadek’s response in that episode is to praise Johnson as the only public figure with the courage to touch the alleged “third rails,” including defense, and to argue that no one could defend the defense budget as the perfect number. He extends the point to Social Security and Medicare: to say that what is spent at this moment is the perfect amount, and that anything less is less than perfect, is not defensible Straight Talk with Gary Johnson (2011).
The third rail and the charge of folly
The program’s political untouchability is itself a theme. Introducing Burton Abrams in a March 2014 episode, Zadek calls Social Security the third rail of American politics — you do not mess with it — and notes that it is depended upon, relied upon and, he says, beloved by Americans. He puts to Abrams the apparent strangeness of listing its creation as a folly, since most people would call it an example of government doing the right thing Worst Ten Economic Mistakes of the 20th Century (2014). Abrams, described by Zadek as an economics professor at the University of Delaware and author of The Terrible 10: A Century of Economic Folly, answers that the program is a major redistribution program which few people understand, and that people are replacing private savings with Social Security taxes. He says the taxes were initially intended to go into a savings fund that would lead to lending and the building of capital, but instead the money went to the first retirees. His example is Ida Fuller, the first person to receive a Social Security check, who Abrams says paid about $21 into the system and collected over $20,000 over her lifetime — a generosity Abrams attributes to robbing the trust fund Worst Ten Economic Mistakes of the 20th Century (2014).
Zadek characterizes the structure as having many of the attributes of a Ponzi scheme, though he agrees with Abrams that it is not one: the first people out made all the money, and the people at the end of the stream — his listeners — are left when the music stops. Abrams supplies a numerical illustration of a one-earner family of two retiring in 2011 on an average wage of $43,500, which he says paid some $360,000 in Social Security and Medicare taxes including a computed real interest rate of 2%, and can expect over $800,000 in benefits — roughly $450,000 more than it saved. Asked by Zadek where that money comes from, Abrams answers that it comes from other potential retirees or savers who will get nowhere near that payback and will lose money, and that the money was never saved but has to come out of current taxes Worst Ten Economic Mistakes of the 20th Century (2014).
Abrams also raises means-testing. He says it appears that some kind of needs-based revision is coming, so that retirees with good private retirement income would have part of their Social Security taken away, and he calls this counterproductive because of the message it sends to people who save privately. He notes that 63 million people were then receiving Social Security benefits, with perhaps 20 or 30 million more within a few years of retirement Worst Ten Economic Mistakes of the 20th Century (2014).
The defense of social insurance
The program’s most direct defender in these excerpts is Sean McElwee, in a February 2015 episode. McElwee says he differs from his earlier libertarianism in believing that government can be and in many cases has been a force for good, and cites Social Security as a program that has not eradicated but dramatically reduced poverty among the elderly, adding that he does not see why there cannot be more policies like it Inclusive Capitalism: Economic Savior or Socialism in Disguise? (2015).
Zadek frames the issue for him by dividing Social Security into two combined policies: a wealth transfer from one group to another, which he says he opposes, and an encouragement — by force of law — for people to provide for their own retirement, where he says encouragement is good but compulsion he is not sure about. He asks what is wrong with having people provide for their own retirement, even encouraged by government, but not forced to Inclusive Capitalism: Economic Savior or Socialism in Disguise? (2015).
McElwee answers that the best way to think of Social Security is as an insurance program, which is why the term social insurance is used. He argues that if every individual prepared for their own retirement, there is a high likelihood that some would be defrauded, fall on hard times, or lack enough income at any point in life to pay for retirement; he says this is not hypothetical because before Social Security elderly poverty was a huge problem in the country. He states that most people who retire at the height of Social Security had about 40% of their income replaced, and that if young people are not made to save, many will not, with those who do being more highly educated and from wealthier families. He adds that while the program is progressive, people who put in more still get more out, a tenet of basic fairness he credits for its long support Inclusive Capitalism: Economic Savior or Socialism in Disguise? (2015).
The breaking point
In a January 2017 episode, a caller identified as Evan from Alabama asks Ivan Eland about a chart based on CBO data showing that by 2025 the entire federal budget will be consumed by Social Security, Medicare, Medicaid and interest on the debt, leaving no money for other basic functions, and asks whether that is the breaking point and what will happen The Return of Big Spending Republicans? (2017). Eland says it is hard to say, and suggests one trigger might be the loss of reserve-currency status, which facilitates much of the borrowing. He says the entitlements are what are really growing, that Medicare is in worse shape than Social Security but that both will run out of money at some point, and that the programs work on the premise that whoever qualifies gets paid — so a bulge in the population retiring, as with the baby boomers, produces a bulge of expenses with fewer workers paying in. He calls the system untenable, praises sequestration for cutting across the board, and criticizes it for not including most entitlement programs, arguing entitlements need to be included The Return of Big Spending Republicans? (2017).
Social Security taxes and independent contractors
A July 2020 episode approaches the program from the side of employment classification rather than retirement policy. Zadek explains California’s AB 5, a bill passed by the California legislature and the law in California, with New York, New Jersey and other states considering similar legislation. Under his non-legal summary, workers such as drivers for Uber and Lyft are independent contractors who are paid a fee, pay their own Social Security taxes, and do not contribute to unemployment insurance funds or Social Security funds. He says the legislature decides by statute that they are employees instead, entitled to unemployment insurance benefits and Social Security benefits and a 40-hour week, and that the flexibility of the business model then fails Terrible New Worker “Protection” Laws Threaten the Gig Economy (2020).
Across episodes: no development, a standing disagreement
The excerpts show no development in the treatment of Social Security across the decade; they show a stable disagreement. Gary Johnson in 2011 and Ivan Eland in 2017 both treat the program as an unfunded liability approaching a breaking point, while Burton Abrams in 2014 supplies the redistribution arithmetic and Sean McElwee in 2015 supplies the social-insurance reply. The 2020 episode touches the topic only through the question of who pays Social Security taxes.
What the sources do not cover
The excerpts do not state the year Social Security was enacted, the name of the statute that created it, or the payroll tax rate at any period; Zadek’s reference to instituting Social Security in 1935 appears in his own framing rather than in a source statement of the law’s provisions. They do not describe any legislative reform that was enacted, only proposals and predictions. They do not give the views of any guest on the constitutional basis of the program, and they do not carry the portions of the Abrams or McElwee conversations that followed the breaks.