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Ronald Reagan On Social Security

In the spirit of the release of the official Ronald Reagan U.S. postage stamp, here is what he said about Social Security in 1964, in his famous "A Time For Choosing Speech" in support of Barry Goldwater:

"Yet anytime you and I question the schemes of the do-gooders, we are denounced as being against their humanitarian goals. They say we are always "against" things, never "for" anything. Well, the trouble with our liberal friends is not that they are ignorant, but that they know so much that isn't so. We are for a provision that destitution should not follow unemployment by reason of old age, and to that end we have accepted Social Security as a step toward meeting the problem.

But we are against those entrusted with this program when they practice deception regarding its fiscal shortcomings, when they charge that any criticism of the program means that we want to end payments to those who depend on them for livelihood. They have called it insurance to us in a hundred million pieces of literature. But then they appeared before the Supreme Court and they testified that it was a welfare program. They only use the term "insurance" to sell it to the people. And they said Social Security dues are a tax for the general use of the government, and the government has used that tax. There is no fund, because Robert Byers, the actuarial head, appeared before a congressional committee and admitted that Social Security as of this moment is $298 billion in the hole. But he said there should be no cause for worry because as long as they have the power to tax, they could always take away from the people whatever they needed to bail them out of trouble! And they are doing just that.

A young man, 21 years of age, working at an average salary...his Social Security contribution would, in the open market, buy him an insurance policy that would guarantee $220* a month at age 65. The government promises $127*. He could live it up until he is 31 and then take out a policy that would pay more than Social Security. Now, are we so lacking in business sense that we can't put this program on a sound basis so that people who do require those payments will find that they can get them when they are due...that the cupboard isn't bare? Barry Goldwater thinks we can.

At the same time, can't we introduce voluntary features that would permit a citizen who can do better on his own to be excused upon presentation of evidence that he had made provisions for the non-earning years? Should we allow a widow with children to work, and not lose the benefits supposedly paid for by her deceased husband? Shouldn't you and I be allowed to declare who our beneficiaries will be under these programs, which we cannot do? I think we are for telling our senior citizens that no one in this country should be denied medical care because of a lack of funds. But I think we are against forcing all citizens, regardless of need, into a compulsory government program, especially when we have such examples, as announced last week, when France admitted that their Medicare program was now bankrupt. They've come to the end of the road.

In addition, was Barry Goldwater so irresponsible when he suggested that our government give up its program of deliberate planned inflation so that when you do get your Social Security pension, a dollar will buy a dollar's worth, and not 45 cents' worth?"

Of course, Reagan backed off somewhat on his disdain for Social Security by the time he became the leader of the free world, because his 1964 position on it was not yet politicallly acceptable. Social Security was still the third rail of politics at that time, an untouchable entitlement program that could zap a political career if handled incorrectly.

In some ways, it is amazing how dramatically the nation's ideology shifted from 1964 to the 1980s. Barry Goldwater lost in 1964 with only 38% of the popular vote and under 10% of the Electoral College votes, but his ideas ignited a movement that paved the way for Ronald Reagan's Electoral College landslides in 1980 and 1984. The conservative movement thrives still today.

Just a quick note on some of the numbers Reagan used.

*$220, inflation-adjusted, is $1263.85 in 2003 dollars.

*$127, inflation-adjusted, is $729.59 in 2003 dollars. The monthly Social Security benefit has been increased somewhat over the years. In December 2004, the average monthly benefit payout under Social Security was $871.80.

How was government able to increase today's benefits from what it promised in 1964, by approximately 19%?

When Reagan delivered that speech, the Social Security tax paid by an individual was 3.625%. Today it is 6.2% (12.4%, if you count the employer contribution).

A perfect example of government inefficiency in action. The taxes increased by double, while the benefits increased by less than 1/5.

Posted by Will Franklin · 10 February 2005 11:01 AM

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