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Honor Thy Fathers:

A Family-Friendly Reform of Social Security

Each weekday for the past five years, outside my apartment building in Queens, I have watched the old people gather like a flock of seagulls to wait for the tour bus. It disembarks daily from the neighborhood travel agency. It makes my morning to walk my dog past folks who remind me of my parents. A few white-haired veterans of World War II and Korea escort their improbably golden-haired, gold-plated wives, but most are gray merry widows in brightly colored sweatshirts bearing distant grandchildren’s names—Heather, Robin, Brendan. The seniors file amicably on board with pockets full of quarters and wads of singles, en route to Atlantic City and its tinseled Trump casinos.

Since my late mother was a gambler, I know the drill: few venture past the lobby, anywhere near the poker or blackjack tables—the games of skill that might perk up an elderly brain. No, the elders congregate up front and perch for hours each day on stools at the slot machines—technological wonders precisely calibrated to make sure people lose at a certain pace so they don’t walk out too quickly and never come out ahead. I used to joke, uncharitably, that the seats were equipped with a vacuum pump that sucked in cash directly from the Social Security “trust fund.” When I reach retirement age, and there isn’t anything left, no doubt I’ll look back on those buses with a slow burn of annoyance, as I fry up a can of cat food.

But I really cannot begrudge these retirees their fun. They are simply accepting the benefits of programs that were built before they could vote. The Social Security system was created during Roosevelt’s New Deal in response to genuine cases of destitution among the aged during the Depression. It was designed to support people who lived past the average life expectancy—then 62—in the dignity and good health that befits an American citizen who had worked throughout his life. Born of a decent impulse, the system was gradually expanded and distorted, inflated into a pyramid scheme that cannot sustain itself.

While most critiques of our Social Security program focus on its financial insolvency—which is serious enough—I prefer to direct attention to the moral and social costs it imposes, the barrier it builds between the generations, and the pressure it exerts on working families. I would like to propose in its place a new social insurance scheme that is more family-friendly and that reduces the artificially induced “necessity” of mass immigration into the West with all its attendant social costs.

Before the federal government became the pension plan of first resort for most Americans, the elderly relied upon two more traditional sources of support: accumulated wealth and their grown children. These twin pillars have for millennia been the mainstays upon which retirees depended, and our current system erodes them both. By pretending to serve as what it was never meant to be—an all-purpose, complete national system of social insurance—the Social Security system has long drained away funds from private pension plans and diminished the perceived necessity of savings. It has also created in the minds of the younger generations the perception that elderly parents are meant to be financially independent in their old age, safely collecting back the contributions they made over their working lives, plus a healthy return on investment—instead of depending, in part, on the support of their adult children.

The German social philosopher and economist Wilhelm Röpke saw that the growing importance of the state as the ordinary guarantor of well being for the individual must come at the expense of the family—the bedrock unit of any healthy society. He made that point with an anecdote:

A short time ago, a member of the House of Commons movingly described her father’s plight in order to prove how inadequate the welfare state still is. But this is no proof of the urgency of public help; it is merely an alarming sign of the disappearance of natural feelings in the welfare state. In fact, the lady in question received the only proper answer when another member of Parliament told her that she should be ashamed if her father was not adequately looked after by his own daughter.

The state, by removing the financial impetus to family unity and rendering personal responsibility for one’s family unnecessary, attacks two important virtues: loyalty and accountability. Such virtues, which some have called “social capital,” are the very ground upon which a free society is built. Röpke, an architect of the postwar German economic “miracle,” saw that the free market is an amazingly efficient producer of wealth and distributor of goods, which cannot be replaced by the state. (He was a student and lifelong friend of Ludwig von Mises.) But Röpke argued that the government had a larger role than simply playing “night watchman,” protecting private property and enforcing contracts. For the market to survive, the state must take what minimal steps were necessary to insulate individuals from market failures, to promote the cohesion of the family, and to support the very virtues that make the market economy and a liberal society possible.

Following Röpke, a genuinely social conservative approach to reforming Social Security would aim to strengthen the family, encourage individual savings, and generally contribute to creating social capital—the non-economic, apolitical reserve of spontaneous order and co-operation that predates, underlies, and makes possible the survival of a free civil society. No society that refuses to save, indeed one that lives on an extended credit-card spree (as many Americans have been encouraged to do), can remain prosperous for long. It is sobering to recall the prone, bankrupt nation of Argentina was once—as late as the 1920s—almost as prosperous as the U.S. Reckless state spending that punished thrift helped impoverish that naturally rich country; can we avoid a similar fate?

Our current system is based on a lie: it does not pay people back what they put in, plus interest or investment income. It pays them far more—and confiscates that money from younger workers supporting children. As author Peter G. Peterson calculates,

The average one-earner couple retiring today will get about $123,000 more out of Social Security than the average earner and his or her employers ever paid into it, plus interest. Omit the employer’s contribution and calculate only the payback on the personal taxes paid by the employee, and the windfall rises to $173,000. With Medicare thrown in it rises to nearly $310,000, much of that tax-free. These are not “earned benefits” but unearned windfalls that our children will have to pay for and certainly will never enjoy themselves.

A researcher for Peterson’s 1989 book, On Borrowed Time, told me that the average American retiree today exhausts the money he put in, with interest accrued, within the first 19 months. After that, without realizing it, he is effectively receiving welfare benefits—distributed not according to need but rather according to his previous level of income.

Most noxiously, the Social Security tax is capped at $68,400. This means that Ted Turner and Bill Gates pay no Social Security tax at all on every dollar they earn above this amount, though they will collect vastly more in annual benefits than average workers. Thus the poor continue to receive far less than the upper and upper-middle classes, and even the extremely wealthy continue to draw inflated benefits—which they understandably regard as rightly theirs. That is what the system has taught us all to think. But it is not true, and it certainly is not fair. It is hard to imagine a more immoral system of redistributing wealth, which recalls the ancien régime’s infamous tax on salt. Like today’s high-earners, the nobility and clergy in pre-revolutionary France enjoyed exemptions commensurate not with need, but with political clout—until the wells ran dry.

The Social Security payment system is equally regressive. The tax that funds it is applied to wages—even those of the very poor—but not to investment or dividend income. The tax allows no exemptions for dependent children. Even the Earned Income Tax Credit (EIC), intended as a partial refund of this feudal tax to the poorest working families, is now the focus of harsh regulation and disproportionate audits by the Internal Revenue Service. Middle-class Americans—who do not even enjoy the EIC’s cold comfort—must shoulder an ever-increasing financial burden that takes no account of their child-rearing costs. The federal government has already estimated the costs if current trends continue: in 2040, the average worker will pay between 35 and 55 percent of each paycheck for Social Security and Medicare—up from 17 percent in 1995.

Who comes out best under such an arrangement? Double-income, no-kids couples, who need not allot money for tuition or child-friendly medical insurance. The people who suffer the most are those who actually produce the next generation of workers: large families, who do not even benefit from per-child deductions, since Social Security is creamed right off the top of every paycheck at the same regressive rate. (In any case, per-child income tax deductions have declined precipitously, measured in real dollars, over the past 40 years.) Thus the system punishes the very people who make its continuation possible.

The only way to maintain a pay-as-you-go system is to combine growth in productivity with a growing population. (The more productivity grows, the fewer new workers you need to support the elderly—and the converse.) But that combination does not exist, either in Europe or America, where productivity growth has stalled and birth rates have bottomed out. This is not the place to investigate why native-born Europeans and Americans have stopped having children; the fact is that they have, and as a result our pension plans grow more top-heavy by the year. The average woman in EU countries has 1.5 children in her lifetime—not enough to replace the current population; meanwhile, women across the Islamic world average four to five—enough to double the populations of many already crowded, impoverished nations. The Western birth decline makes our own social insurance system untenable, as Peterson noted in Will America Grow Up Before It Grows Old?: “In 1960 there were 5.1 taxpaying workers to support each Social Security beneficiary. Today there are 3.3. By 2040 there will be no more than 2.0—and perhaps as few as 1.6.”In Europe, the addiction to lavish social insurance has already set in motion a vast reverse colonization of the continent by peoples from the developing world. As readers of Pat Buchanan’s Death of the West know, European politicians will soon be faced with a stark choice: cut benefits to ever more demanding senior citizens—the same spoiled Boomer generation that did not replace itself—or open the floodgates of Europe to young and fertile workers from outside. Most likely they will come from the teeming Middle East, where population grows steadily and political instability drives disgruntled millions from their homes.

This process will be made unstoppable if the European Union swallows the suicide pill that is Turkey—leaving that country’s porous, ungovernable border with Iran, Iraq, and Syria the last barrier keeping millions of refugees and economic migrants out of Berlin, London, and Paris.

In America, with our birthrate a little above the replacement minimum of 2.1, mass immigration is already the only reason our population is increasing. While an influx from Christian Latin America is not nearly so troubling as the march of Islam into the heart of Europe, it does raise serious issues for national unity—particularly as so many of the immigrants to the U.S. come from a single neighboring country, Mexico, with a potent nationalism and irridentist claims upon large sections of our territory. I have long said, half in jest, that the future of Europe is “a brown hand pulling a white plug out of the wall.” At the very least, policy makers ought to wonder about the future of a pension system that relies upon heavily taxing poor recent immigrants and their children to support more prosperous elderly people of another race—particularly of a resented, displaced majority. A professor of Chicano Studies at California State University, Rodolfo Acuna, has applied this logic to America. He said of the Latino community, “There’s a growing feeling ‘Why should we pay for all these senior citizens’ if the majority of them are white and all they were willing to pay for was prisons?” Professor Acuna has a point. How exactly do we justify over-taxing struggling families with children to keep gassing up the Winnebagos of over-rewarded elders? That bumper sticker “We’re spending our children’s inheritance” ought instead to end with “birthright.”

And to buy what mess of pottage? A life of isolation from children and grandchildren, an “independence” that many of them would cheerfully trade for closeness to the people whom they nurtured throughout their lives. Instead they subsist on e-mails, semi-annual visits, some Hallmark cards, a Web-ordered floral bouquet on Grandparents’ Day—even as their descendants grow up with little or no exposure to their elders’ wisdom and cultural memory. My own nephews and nieces know little of their grandfather’s history, have absorbed almost nothing of his worldview, heard few of his tales, his recollections of the Great Depression and his service in occupied Germany—much less of our family’s origins in the Adriatic islands long ruled by Venice. I do not think that my clan is exceptional in its rootlessness; in fact, we are all too typical. The chain of memory that has traditionally linked the generations has been stretched almost to snapping, with the hearty encouragement of a government policy that reduces elders to a second adolescence—an over-funded independence, shorn of responsibilities or community. Meanwhile, the next generation can barely afford to reproduce itself—not unless it is willing to subject its children to dangerous, degraded public schools and forgo the prospect of private college education.

There is another way, and I have seen it just a few blocks away. My best friend since childhood lives in the second story of his parents’ two-family house in Queens, with his own wife and children. When the children are not at their (parochial) school, they are watched by their grandparents downstairs who speak to them in Italian, let the kids pitch in while they cook recipes from the Old Country, and teach them to tend tomatoes in the backyard. At their other grandparents’ house, the children learn some Tagalog and take part in the family rosary. They also spend plenty of time on the Internet and playing computer games, generally participating in modern life. But these two young Americans are privileged in ways that most of their contemporaries cannot even imagine—and their grandparents are blessed. They can pass along more than their genes and their money to the second generation; they can also offer their wisdom, their faith, and their hope.

So what kind of government policies would encourage this healthier model of family living? Instead of wading, wonk-like, into the numbers, let me suggest a thought-experiment. Imagine a system that did not penalize families with children or over-reward childless, prosperous investors; that did not socialize the benefits of childbearing, while imposing the costs on couples; that required prosperous adults to support their elderly parents—just as it had once required those parents to feed and educate their young. A simpler, fairer system aimed at promoting family unity, fertility, and solidarity among the generations—while providing a minimum benefit that ensured that no childless senior would live in poverty. How would such a system work?

It would provide a basic income, perhaps allotted according to cost of living in an individual city, to every retired American, regardless of his previous contributions or income. It would collect the money for this stipend through the income tax, with full deductions allowed for parents with children. On top of this basic stipend, it would draw from the salaries of every working adult a certain percentage, payable directly to his living parents—or whoever had claimed him regularly as a dependent on past tax returns. The more children one had borne (or adopted) and raised, the more sources of income one could expect. The more successful one’s children became—at least, financially—the better one’s own retirement. This might or might not change people’s child-rearing decisions; massive subsidies to mothers do not seem enough to buy more Italian babies. But in the long run, I would argue, it would indeed encourage a higher birthrate—both by reducing the tax burden on young couples and by offering a strong, long-term incentive: the prospect of a more comfortable retirement. In every traditional society, people look to their children as the comfort and support of their old age. By tapping into that instinctive behavior, rather than undermining or wishing it away, we might help blunt the Western demographic implosion.

Such a system would also be fairer. It would measure more accurately the vast contributions parents make to society. It would also greatly diminish the resentment young immigrant workers must feel at contributing to the nation’s retirement system, by making their own parents their primary beneficiaries. Whatever the legal minimum contribution to parents’ support mandated by law, an optional “check-off” on one’s income tax would allow a worker to pay more, in pre-tax dollars, to benefit his parents. Generous tax deductions would benefit adult children who provide their parents food and shelter.

To those who consider this system unjust to the childless, the minimum benefit for every American must be sufficient to permit a dignified retirement. Also, it should be noted, the childless typically have more income available for savings and investment than those who are engaged in feeding, clothing, and educating the young. Those who have forgone consumption, investment, and leisure in order to raise up the next generation of citizens—of workers, soldiers, mothers, doctors, nurses, and firemen—deserve some direct reward from the society whose future they have created.This is the outline of a truly pro-family social policy, one that accords with the best impulses of Americans old and new, bends public policy to mirror the natural order rather than undermine it—and pays due honor to our elderly citizens, recognizing that we ourselves are their greatest achievement.


J.P. Zmirak is the author of Wilhelm Röpke: Swiss Localist, Global Economist. He writes frequently on economics, politics, popular culture, and theology.



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