Social Security Quiz

We are all on the bus.

Source: Reddit

“Pop quiz, hotshot. There’s a bomb on a bus. Once the bus goes 50 miles an hour, the bomb is armed. If it drops below 50, it blows up. What do you do? What do you do?” — Howard Payne (played by Dennis Hopper) in the movie Speed.

Let’s see if you can pass a simple quiz.

1. Where does Social Security spending rank in terms of size of spending program for the federal government first, second, third, or lower. (Hint: It has held this rank for over 30 years, and the other major spending categories are national defense, interest on the debt, and Medicare.)

   1. First

   2. Second

   3. Third

   4. Lower

2. The Social Security trust fund contains what?

   1. Liabilities (i.e., IOUs)

   2. Assets

3. What was Social Security’s original purpose?

   1. An anti-poverty program

   2. A retirement program

4. True or false: You are legally entitled to your Social Security benefits.

   1. False

   2. True

5. What percentage of current Social Security payments (for those currently receiving benefits) are being paid directly by current workers’ tax payments and future workers’ tax payments (new debt being issued)?

   1. 100%

   2. About 50%

   3. 0%

6. If a private entity attempted to set up a program with the same financial structure as Social Security, would it be legal?

   1. No

   2. Yes

7. How do Social Security benefits adjust in relation to consumer inflation?

   1. At a higher rate than the rate of consumer inflation

   2. At the same rate

   3. At a lower rate

8. Social Security recipients are just getting back what they originally paid in?

   1. False

   2. True

As you might have guessed (because you are one of my readers and thus are well informed or because you’re just clever about why I’d be asking), the answers to all of the questions is the first choice (a).

Don’t feel bad if you did poorly on the quiz. Most people can’t pass it (see the link for a recent poll with commentary or consider this short podcast discussing it). This isn’t just because of rational ignorance. Politicians as well as other concentrated interest (AARP, et al.) deliberately mislead the public on the issue.

Is it time we start demagoguing against the old as Richard Hanania suggests? To be fair, I think he is making a rhetorical point rather than actually a full-throated suggestion of this. Still, he makes a point about it that is fair from simply a political strategy point of view (note: I am not advocating this). And I’ve made the prediction of coming generational warfare. We need to take this issue and Hanania’s points very seriously.

Welfare should be for the poor (young and old). Too much of Social Security is redistribution to the top of the wealth ladder. This is both a source of the problem and the lower-hanging fruit of the solution(s).

For those currently receiving Social Security, the reality counsels frugality. For those nearing it, the suggestion is to consider working longer and saving more. For the young, it highly recommends saving early, often, and at a rate that will seem painful. (As a side note this advice for the young is great advice I often give for a host of reasons. The power of compound interest favors the young!)

Considering the entire problem, long-time readers know that I’ve already solved this if we only have the courage to take my plan up.

There are a lot of other valid plans for getting us out of this quagmire.

Here are my bottom-line facts about Social Security that must be addressed especially if you support the fundamental (original) concept of Social Security and want to see it continue in some form.

1. The current arrangement is unsustainable.

2. The current arrangement is unequitable from any number of positions on what equity should look like.

3. The longer we wait to make reforms, the worse it gets.

4. There are no completely simple and painless answers—something’s gotta give.