The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.
Ernest Hemingway, “Notes on the Next War: A Serious Topical Letter,” Esquire, Sept. 1935.
The endless fraud that is Social Security seems eternal to most Americans, and even those who prophesy its demise might feel a bit like Jonah outside the walls of Nineveh, under a gourd, cursing a worm. But the comedy of its seemingly stable instability aside, the basic truth remains quite clear: It was never constructed on a sound basis. There was never investment of funds taken in; that was prohibited by law. It was always pay-as-we-go. Surpluses were sent to Congress where they were spent. What Congress “owes” the program is vast.
And, because of its creaky, half-tontine/half-Ponzi scheme structure, “the deal” so many count on is repeatedly restructured, so to keep it going — each time the tax burden on non-retirement people raises.
None of this should be shocking to readers of Paul Jacob’s Common Sense column. Back in 1999 (that was quite some time ago!) Paul explained why the program has served as a “third rail” in American politics:
Politicians chasing votes have spent every dollar you’ve paid to Social Security. The money’s gone. There is no “trust fund” because Congress couldn’t be trusted. If a private pension fund was run this way, the people would be arrested. Managing your Social Security, Congress spent all the money and the program is headed for bankruptcy.
But why should Congress care? They’ve opted out of Social Security and their congressional pension makes them millionaires.
In 2007, Paul wrote of the first Boomers to apply for Social Security benefits under the standard retirement plan. In 2010, Paul directly contradicted a Nobel laureate economist (Paul Krugman, in case you are interested), calling him a liar. About Social Security.
Telling whoppers about Social Security is almost a national tradition at this point.
In light of this, The Wall Street Journal’s September 17 look at the subject is worth noting. It is called “Republicans’ Pre-Emptive Social Security Surrender” and it is by Joseph C. Sternberg:
The battle over Social Security reform will be among the most consequential economic fights Washington has had in several generations. So why are some Republicans already preparing to surrender?
The issue has taken on new urgency as it becomes clear a legal cliff edge will force reform by 2032 or else. By that date the so-called trust fund for the old-age portion of Social Security will be exhausted. By law, annual benefit payouts then immediately shrink to match annual payroll-tax revenues. That would mean a 22% reduction in Social Security checks in the first year.
The standard proposal to forestall all this is the focus of Sternberg’s op-ed. And what is that proposal? Nothing other than the notion — beloved by Democrats, because it looks an awful lot like “sticking it to the rich” without saying so directly — of raising the cap on contributions.
The program is funded by a payroll tax of 12.4%, borne equally by employer and employee and applied to the first $184,500 of taxable income. The theory is that if higher-earning households pay the payroll tax on all their income, it removes a regressive element of the existing system and creates a fabulous new revenue stream.
But will that work? Sternberg says No:
This issue will likely gain coverage here at ThisIsCommonSense.org in the near future.
The thought is my own only when I have no misgiving about bringing it in danger of death every moment, when I do not have to fear its loss as a loss to me, a loss of me.
Max Stirner, The Ego and His Own: The Case of the Individual Against Authority, Steven E. Byington, translator, as quoted by Joel Spring, Wheels in the Head: Educational Philosophies of Authority, Freedom and Culture from Socrates to Human Rights (Second Edition, 1999).
On September 19, 1778, the Continental Congress passed the first budget of the United States.
Congress last passed a budget in 1997.
“As colleges across the country are reinstating standardized tests,” writes Meagan O’Rourke at Reason, “New York [government] high schools are taking another approach: eliminating the state’s longstanding Regents exam requirements.”
Thankfully, the tests are not to be completely junked: “This week, the New York Board of Regents, which oversees the state’s public schools, voted to make the standardized exams optional going forward. They are currently required for most high schoolers to graduate,” explains
They want the exams to be “opt-in.”
While we’ve grown used to public school educators fiddling with grades, exams like those currently required — even if far from perfect — constitute an even better way to glean how well (or badly) teachers and students are doing.
Government schools suffer, of course, from “increased spending and mediocre results,” as Reason puts it. (I covered Michigan’s problems yesterday, for example.) The avoidance of “metrics” — in business lingo — is just the kind of evasion that one might expect from under-performing institutions. New York’s opt-in downgrade is comparable to a failing student doctoring his report card or forging a parent’s signature.
But what do they really hope to accomplish? The New York Times quotes officials admitting they are trying to “eliminate barriers to graduation for some students.”
Ignorance and lack of skills are the barriers educators should be seeking to remove.
Through teaching stuff like math, reading, and science. And inculcating basic skills.
Graduation “magically” follows.
It is interesting — in a bad way — that education bureaucrats think their job is, instead, merely pushing the biggest number of students through the system.
This is Common Sense. I’m Paul Jacob.
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The more a nation depends for its liberty on the qualities of individuals, the less likely it is to retain it. By expecting publick good from private virtue, we expose ourselves to publick evils from private vices.
John Taylor of Caroline, as quoted by Forrest McDonald, in turn quoted by Donald Boudreaux at Cafe Hayek.
On September 18, 1793, George Washington laid the cornerstone of the Capitol building.
On September 18, 1838, Richard Cobden established the Anti-Corn Law League, which eventually brought free trade to Britain.
This is cleverly addressed at the outset of a recent article in the Michigan Capitol Confidential.
“The superintendent of Port Huron’s public school system said that every year he must replace teachers who leave his district. He blames low teacher salaries,” we read. “But the superintendent was Harlan Davis, and he made his statement more than 100 years ago.”
For over a century we’ve been told “teaching does not offer a career.”
This is all a preface to the current situation, where “several Michigan newspapers” now report “that teacher pay is down 29% since 1995 after inflation is accounted for. . . .”
Thankfully, the Michigan Capitol Confidential, which the Mackinac Center for Public Policy publishes, provides context in addition to long-term inflation. “One reason why less money goes to teacher salaries may be that the state’s public school districts are hiring more and more people despite enrolling fewer and fewer students.” Michigan schools added 35,000 full-time positions while losing 113,000 students.
Now, taxpayers and parents might hope that it’s new teachers who constitute the bulk of that growth, but hopes aren’t realities. During the pandemic, for example, the state’s governor, Gretchen Whitmer, pushed to hire “560 more school psychologists, school social workers, school counselors, and school nurses.”
If politicians thought teachers’ salaries were all-important, they’d forsake their schemes to hire more non-teaching employees. But it’s obvious: creating a pro-spending voting bloc is what they care about, not teachers.
This is Common Sense. I’m Paul Jacob.
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I have no patriotism, for patriotism, as I see it, is often an arbitrary veneration of real estate above principles.
George Jean Nathan, Testament of a Critic (1931), p. 16.
On September 17, 1683, Antonie van Leeuwenhoek wrote a letter to the Royal Society describing “animalcules,” later known as protozoa.