Several Democrats have attacked Republicans for wanting to privatize the program. “House Speaker Nancy Pelosi has made it clear that she’ll oppose any change to Social Security benefits, including raising the retirement age.” That leaves raising taxes.

But, “Moreover, Social Security taxes are already so high relative to benefits that the program has simply become a bad deal for younger workers, providing a low, below-market rate of return. In fact, many young workers will end up paying more in taxes than they receive in benefits; they’ll actually lose money under the program. . . . And mighty big tax increases they’d need to be: a 50 percent rise in the payroll tax or the equivalent.”

So the Democrats are offering young people a 50 percent rise in the payroll tax in exchange for a below-market return. What’s to like? They’d do better saving and investing that money themselves.  The program lends money to politicians for which you will get a fraction of your money back when you get old.  Given the country’s demographics and the government’s debts, payers into the program have to get a lousy return on their money.

Michael Tanner.