Social Security, Payroll Taxes, and Incentives

Homeless Man - Social SecurityI’d like to discuss Social Security in a roundabout way. I do a lot of work that deals with web hosting companies. Most of them offer some kind of money-back guarantee. And the better ones will add something like, “No questions asked!” It got me thinking of a small minded business owner who offers a money-back guarantee and then grouses every time someone takes them up on it. What’s with that?

You have to think about why a company offers a money-back guarantee. It’s done to signal trust to the customer. It’s a form of marketing. The company doesn’t offer it just because it is nice; it offers it because it believes that it will only get some of the more marginal customers by offering it. And the truth is, people rarely do take advantage of money-back guarantees. Much more common is someone who buys hosting and then never uses it — effectively giving the hosting company money for nothing at all.

Our small minded business owner is not looking at the situation logically. They are seeing just what they lose and nothing of what they gain. It is like advertising in the newspaper and then complaining that it is costing you money. Right! Because you are getting something for the money. You have to look at both sides of the ledger. And it is the same thing in politics.

It depends upon young people being fine with 15% of their income taken that will never — and could never — benefit them.

I constantly hear conservatives talking about phasing out Social Security. Their favorite trick is to say that it won’t affect anyone 55 and older (which just happens to be the core of their political support). But the way that Social Security operates is that people working now pay for the people retired now. That was the only way the program could work, given that it had to start at some point.

So let’s suppose we tell 25 year olds that they will not get Social Security when they retire. Well, the older people still need their benefits, which means that we will still have to be collecting payroll taxes. But by the thinking of conservatives who have wanted to destroy the program from its very first day, this poses no problem: it depends upon young people being fine with 15% of their income taken that will never — and could never — benefit them. Is that a reasonable assumption? Of course not!

The truth is that conservatives know this. They might make up pretty stories for people close to retirement, but they know that younger people would never agree to pay the same highly regressive tax if their benefits were reduced — for the youngest, to zero. But despite what they say, the idea is not that Social Security is going bankrupt (because it isn’t). And it isn’t about reforming the program going forward. It is about killing the program — as quickly as possible for everyone.

It’s not that they just hate people. It’s that conservatives are the most ideological people in the nation. They care more about that ideology than they do people, because in their minds, if only their ideology were followed, all the problems would disappear. So I’m not saying they are psychopaths. But I am saying that they want to destroy Social Security (and a whole lot more). You should never believe them when they talk about “reform.” When conservatives talk about “reform” they are really trying to pick your pocket.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

4 thoughts on “Social Security, Payroll Taxes, and Incentives

  1. When I was much younger, I drove a disabled man to his spooky mountain church. The sermon was the usual gobbledygook about liberal permissiveness angering God, who then smoted the US economy with stagnant wages. (If I recall, the pastor cited Aristotle to prove his faux-intellectualism and tirades against homosexuality. Yeah — there you go, cite an ancient Greek about the importance of moral laws, and imagine the Greeks were talking about banning buggery.)

    So far, so predictable. What interested me most were the intercessions that came later. People stood up and described their troubles (economic, health-related) and the congregation prayed for them. When two or more are gathered in My name, I will be there, etc.

    One lady got up and spoke about her brother. He’d paid for an expensive addiction with sex work, and found a “cure” in being born again. Now he was slipping back to the old ways. As the lady began her story, the congregation was with her — yes, we remember your brother’s emotional confessions of his past sins. As she detailed his current problems, you could see the churchgoers looking away, just wanting this woman to be quiet.

    My mom had some experience with fundamentalists, so I asked her later why the congregation was so colder to this woman than the other people asking for prayer. “They can’t believe this is possible,” she said. “All of them feel that turning to God is a huge step, that it either helped them or will any day now. The idea that someone could turn to God and have it make no difference at all is terrifying. So they’d rather imagine that lady’s brother relapsed because she wasn’t devout enough in some way. So she must be a secret sinner. So they despise her.”

    I think of this when I think of the modern GOP. As you say, it’s not that they are intentionally cruel. It’s that they believe rich people are good, and deserve more rewards, while poor people are bad, and deserve their suffering. Anything else and the edifice of their self-esteem (either the success they have or the success they eventually expect) is shattered.

    It’s the odd thing about our era. Back in the time of robber barons, only a small elite believed this “rich people are better” silliness. Republican voters were likely to be immigrants who voted for the machine bosses that made efforts at reaching out to their communities. Now the philosophy of JP Morgan is easily shared by Joe the Plumber. Strange.

    • You also forget that there is a great deal of otherization involved. Joe the Plumber is okay with HIM getting benefits. The reason the rest of the people don’t get them is because they are unworthy like he is.

      • Right. I’ve never known a conservative who shied away from government spending which benefitted them. Not that they should, in terms of personal benefits; they are entitled to those by law and should take them, I mean more like companies which survive and thrive on government contracts. These tend to have a lot of conservative employees. At my job I’ve often tried to avoid unnecessary bills because it’s a waste of taxpayer money. And most wonder why I bother!

        Of course you were probably talking more about people resenting benefits that go to different social groups (lazy immigrants, welfare moms, etc.) and I’m sure that’s quite true. It’s probably the defining policy position of most GOP voters (along with how Democrats are afraid to defend America against the hordes.)

    • Fascinating story! It is typical though: Christianity can never fail, it can only be failed. This kind of thinking is the basis of faith. That’s why I say that conservatism is faith based.

      And what you mention at the end is our biggest problem. It is doubtless the reason that in the 1930s, we did something about the economic crash. And this time, we just made the problem worse. People have lost the power to imagine a different world.

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