The CEO of the Sofa (O'Rourke, P. J.)

by P. J. O'Rourke

  Okay, I said, I get it. Leave everything to me. What I’ll do is start a conversation going on a subject that the neighbors are really interested in.

  A couple of aging liberals like you, I said, are probably worried about how Social Security is becoming a political issue. The danger with political issues, for liberals, is that you might try to understand them. This would bum you out. Big government, that you’re so fond of, is as complicated as airline fares. You’d go nuts if you really tried to fathom all of Washington’s programs, regulations, restrictions, discounts for seniors, and frequent campaign-donor upgrades. So you do with the U.S. what you do with US Airways: you hand over the money and let yourselves be sent to hell by way of Pittsburgh with nothing but peanuts on the trip. Economists call this “rational ignorance,” meaning that you could go to hell for $20 less (and get two bags of peanuts), but the time and effort wouldn’t be worth it.

  Now, even though I’m a conservative, I don’t believe that this exploitation of your rational ignorance is a conspiracy. Well, with the airlines it is. They know what they’re doing when they throw you into their briar patch of ticket prices. But politicians—especially liberal politicians—are as confused by the abstruse underbrush of government as you are. They just say, the way you do, “Gimme those peanuts!”

  Speaking of which, average Social Security benefits are now about $745 a month. This will pay for your blowout at the Cheers-theme airport bar during your layover in Pittsburgh. Social Security is an example of rational ignorance at its most ignorant—and most rational. We’re all getting what we want from Social Security without understanding it at all. You old folks get something to carp about—$745. Your unmarried daughter gets to tell you to shove off. That $745 will be a fortune in Sun City. She needs your bedroom for a home yoga studio. A huge number of government bureaucrats get a huge government bureaucracy to run. And politicians get an issue that everybody’s for and nobody’s against. Plus, every couple of election cycles there’s a “crisis” with this issue—a crisis politicians don’t have to do much about, but that allows politicians to make thoughtful, caring, and statesmanlike noises.

  At the moment, the crisis with Social Security is that the Social Security Trust Fund will run out of money in 2032. This is right around the corner—if you’re a sequoia. Whatever the politicians propose, these politicians will be safely on the way to their eternal reward (via Pittsburgh) before their proposals wreck the nation. Meanwhile, in the name of “shoring up the Social Security Trust Fund,” the politicians have an excuse to spend surplus tax dollars. I remember, in 1999, when President Clinton—claiming he’d saved the Social Security system—told the public, “We could give it all back to you and hope you spend it right…. But…if you don’t spend it right—” So, on top of everything else, Social Security saved you from foolishly buying a snowmobile just when you thought an Al Gore administration with all its global warming was about to occur.

  If you begin to investigate Social Security, you could blow the whole thing. You should not, for example, peek into that Social Security Trust “lockbox.” There’s nothing inside. Since 1939, the Social Security payroll tax on employers and employees has been used simply to pay Social Security benefits.

  In 1916 an Italian immigrant named Charles Ponzi created an investment fund that paid large dividends without making any investments. Money from new investors was transferred to old investors while the new investors received money from newer investors yet. The system had flexibility and boldness and worked as long as an ever-expanding pool of suckers could be found.

  Charles Ponzi made a profit on this, and so does the U.S. government. Social Security payroll tax receipts have always been greater than Social Security benefit payments and will continue to be until about 2013, when the baby-boom sucker pool retires. The federal government has taken this surplus revenue, spent it, and given the Social Security Trust Fund IOUs in return. That is, the government spent the money and then promised to spend it again later.

  Debts owed to the government by the government are absurd in the first place. Furthermore, these IOUs have the same force of law as, oh, the statutes against perjury and obstruction of justice do in an impeachment case against the president of the United States involving sex. Our Social Security taxes don’t have to be spent on Social Security. In 1937 the Supreme Court ruled that Social Security taxes “are to be paid into the Treasury like any other internal revenue generally and are not earmarked in any way.” This despite President Roosevelt’s pledge that—you guys are probably old enough to remember him making it—“Those premiums are collected in the form of taxes…held by the government solely for the benefit of the worker in his old age.”

  Roosevelt also said, “We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions.” But in the 1950s a deported communist filed a capitalist suit to reclaim his Social Security premiums. The Supreme Court said, “To engraft upon the Social Security system a concept of ‘accrued property rights’ would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands.”

  Charles Ponzi—unlike FDR—never had the opportunity to appoint Supreme Court justices. He went to jail.

  Having a Social Security Trust Fund is exactly like not having a Social Security Trust Fund. Social Security will go into the red no matter what. Without a Trust Fund, the government will have to pay off the Social Security deficit by raising taxes and cutting benefits. With a Trust Fund, the government will have to pay off the Social Security deficit by raising taxes and cutting benefits.

  Unfortunate people who scrutinize the Social Security Trust Fund discover two facts: It’s not there. It’s not theirs. But for the rest of you who are rationally ignoring such things, the real question is how are you doing with this retirement fund that doesn’t exist and that you don’t own? You’re doing surprisingly well. You’re getting an average of over 16.5 percent return on your employer/employee payroll contributions—if you’re eighty-one years old. I guess you’re not. Hard to tell what age you are in those dumpy hand-knit sweaters. Let’s say—being kind—that you’re sixty-seven. Then you’re getting about one quarter of one percent return—a financial coup you could have managed on your own, without the help of the federal government, by selling your collection of Peter, Paul and Mary albums on eBay. For the rest of us, ages twenty-four to sixty-two, we can expect a return of between minus .34 percent and minus 1.7 percent and might be better off leaving the money in our blazer pockets and going through the closet when we retire.

  Here again you see the genius of Charles Ponzi. Initial payments into Social Security were very small. From 1937 to 1949 the combined employer/employee payroll tax rate was 2 percent, and this tax was levied only on the first $3,000 of annual income. The generation that made these payments then went on to surprise demographers, shock heirs, and delight Winnebago dealers by taking a really long time to die. The first Social Security recipient, Ida M. Fuller of Vermont, retired in 1940 after paying Social Security taxes for three years. She and her employer had put a total of $44 into the system. Ms. Fuller lived to be a hundred and collected $20,933.52 in benefits. Mr. Ponzi could have done as well, and been honored for his business savvy, if only he’d had the legal and legislative muscle to create a Ponzi scheme that preyed upon the most gullible of all suckers—people who hadn’t been born yet.

  But although the Social Security system does a good job of stealing prospective candy from future babies, this won’t work for long. There are too many of you old people. In 1950, America had 16 workers for every retiree. Now there are 3.3—the 0.3 being down in corporate communications eating hash brownies and putting the company web site together. By 2025, each George Bush or Bob Dole will be supported by only two George W.’s or Libbys. We’re going to need a really aggressive assisted-suicide program: “Sure, Mom, it feels like indigestion, but it’s probably pancreatic cancer. I’ll help you tie the plast
ic bag over your head.”

  And that is the great conundrum of Social Security, the thing that makes you liberals stay as ignorant as you can about it: Every political move to fix Social Security makes it worse.

  Politicians could, for example, forget the whole concept of Social Security as a government-run pension and insurance system and just pay the benefits out of general tax revenue. This would be more honest, which is why it’s such a bad idea. Your delicate fabric of rational ignorance would be destroyed. Voters would see where retirement money was coming from—from voting for any candidate who’d raise Social Security payments to $100,000 a month. You old people vote like the dickens. And tapping general revenues does nothing about the fundamental ratio problem of one geriatric duffer getting AARP sky-diving rebates to two of me trapped in an office cubicle.

  Or politicians could stick to the present system, which, as mentioned, would mean raising taxes, cutting benefits, and increasing the retirement age so much that Reagan would still be president.

  Politicians could also stick with the present system while trying to put some real money into the Social Security Trust Fund. Over the next fifteen years we’re supposed to get trillions in federal budget surpluses. Let’s save it all to pay for Social Security. Except this can’t be done. The federal government does not have the same relationship to money as a human does. The federal government issued that money. When the money comes back to the federal government it must go away again or it gets unissued, in effect destroyed. Yanking trillions in currency out of the economy would cause howling recession. When the government reissued that currency, dumping trillions into the economy would cause screaming inflation. And such money-supply shenanigans would give Alan Greenspan a heart attack. Where would we be then?

  When a budget surplus happens, politicians can (per Clinton’s 1999 suggestion) give it back. This is nice because then there’s more money and we can all have some. Or politicians can pay down the national debt. This is nice too, because then there’s more money to lend and we can all borrow some. Or politicians can do what they usually do, which is fund public television, welfare, Medicare prescription-drug plans, the military, and so on. And this is also nice because then we get more Clifford the Big Red Dog, surplus cheese, Prozac, and maybe (if the draft is reinstated) free trips to former Yugoslavia.

  What politicians can’t do is save that money in the Social Security Trust Fund. The only way to deposit money in there, as opposed to IOUs, is for politicians to have the government buy something real—say, Microsoft stock. This would put the government in an interesting position with its antitrust suit against that company. Just kidding, Bill.

  Having a government that owned economic assets is what made the U.S.S.R. the success it is today. Maybe bolshevism could be avoided, but conflict of interest couldn’t. Businesses would all want a slice of the federal investment pizza and so would labor unions, special interests, pressure groups, and every ad hoc group of jacklegs, scallywags, and hard graspers you can imagine. Not to mention that the government itself might be tempted by all the mushrooms, pepperoni, and extra cheese sitting around uneaten.

  The track record of trust funds run by individual states is not encouraging. California and Illinois raided their funds to balance state budgets. Pennsylvania put $70 million into a Volkswagen plant now worth half that. Kansas wasted between $138 and $236 million because Kansas legislators insisted on investing in Kansas. Minnesota tried to be moral and lost $2 million selling off tobacco stock. Connecticut tried to be amoral and lost $25 million bailing out Colt Industries. And the Missouri State Employees’ Retirement System venture capital fund was shut down because of low yields and lawsuits.

  The only real solution to Social Security is to buy it—to privatize the whole system of national social insurance and get rid of the politicians. This would still leave the country with enormous unfunded liabilities owed to people like you who are too old to go private. But we’ll have those anyway. And privatization would work. There is no twenty-year period in American history when stocks lost money. And even from 1930 to 1939 a conservative portfolio—half stocks, half bonds—would have made 2.27 percent a year. That’s not a spectacular return, but it beats waiting until I’m sixty-five to rummage through the Brooks Brothers for change to buy screw-top wine.

  However, thanks to people like you who love politics and politicians so much, privatization will never happen. Thirty-eight percent of the federal budget is spent on Social Security and other social insurance. By 2020 that share will be between 59 and 68 percent. Two-thirds of a politician’s throw weight will come from controlling social insurance dollars. Money is power. What use is it for a politician to endure political indignities—such as voters like you—if a politician can’t obtain mastery over people’s lives? Politicians would rather give away their spouses than give away two-thirds of their power. Some politicians would much, much rather.

  Besides, if privatization did happen you’d have to take responsibility for yourselves and maybe even for your unmarried daughter and her kid. You’d need to pay attention, learn things, make difficult decisions. It’s far more pleasant to slide along in blissful (and rational!) ignorance and hope that before you lose the rest of your teeth (and your shirt) something will come up. It did for Charles Ponzi. After he got out of jail he went back to Italy and became a top economic advisor to Benito Mussolini.

  Saw the neighbors leaving, said the Political Nut who lives around here. Where were they going in such a huff?

  “Home to destroy our best hope of affordable child care,” said my wife, who went back upstairs in something of a huff herself.

  Did you read The New York Times obits today? asked the Political Nut. Another beloved old black-listed screenwriter has died. “FrancisX. Bugbaum was highly respected in Hollywood for his significant screenplay work as well as his refusal to testify before the House Un-American Activities Committee,” said the Times. “In the 1940s and early 1950s Bugbaum wrote scripts for hit movies including Abbott and Costello Meet the Scottsboro Boys, Dead End Kids on Strike, and Uncle Joe Goes to Heaven. He was fired from MGM because of his communist affiliation and for the next twenty-one years was forced to write under the pseudonym I. M. Apykno. Not until the mid-1970s was Bugbaum finally given a screen credit, for his contribution to Disney’s That Darned Military Industrial Complex.”

  How come, asked the Political Nut, we never see any obits of beloved old Nazis? “Kurt Waldheim was highly respected in Washington for his significant UN work as well as his refusal to testify before denazification authorities in occupied Austria after World War II.” By golly, Kurt stuck to his guns—or poison gas canisters, as the case may be. He felt his personal politics were nobody’s business. Why didn’t the Times give Kurt a big wet kiss when he kicked? You know, the important thing is to teach our kids idealism. It’s not so much what you believe in, it’s that you believe in something—and that you’re loyal. Jim Jones never named names. Neither did Charles Manson, Idi Amin, Papa Doc Duvalier…. Ever think how good Hitler would have been on Oprah? He was in touch with his feelings. His faith was tested. He loved animals. He was a vegetarian—

  “Shut up and go to bed!” shouted my wife from the top of the stairs.

  Anything in the mail, Max?

  “American Spree magazine sent some extra copies of the issue with your story about how illegal drugs taught a generation of Americans the metric system. Plus they forwarded a letter from an irate reader. She says that illegal drugs are no laughing matter, and she encloses a copy of the Office of National Drug Control Policy’s 1999 report to Congress—extensively underlined.”

  I’m afraid that irate reader is right. I’m ashamed of myself. Although 1999 is a bit out-of-date. Perhaps the irate reader drinks. I’ve noticed, I said, mixing myself an eye-opener, that serious drinkers often get irate at illegal drug use—and confused about what year it is.

  “I’m a little confused myself,” said Max, who is still of an age where logic makes sen
se to him. “How do you feel about legalizing drugs?”

  Max, I said, I am in favor of legalizing drugs because I am a staunch libertarian who believes that a human being has the right to exercise individual freedoms including the freedom to snort mounds of blow, the freedom to get fired, the freedom to be kicked out of his condominium, and the freedom to end up sleeping on my sofa for months except he doesn’t sleep, he sits up all night dribbling snot and drool on the slip covers and yammering about the great times we had back when we were both majoring in street pharmacology at Bong State, blah, blah, blah, until I’m ready to shoot him, and—being a staunch libertarian and thus an opponent of gun control—I will.

  But don’t tell Mrs. O I’m a libertarian. She thinks I’m an old loadie. In her opinion this produces less sofa wear and tear than libertarianism: one husband-sized butt print facing the TV versus an entire old college buddy with saliva pools, coke boogers, bullet damage, bloodstains, et cetera.

  However, calling me an old loadie is unfair. I don’t do drugs anymore. They interfere with the lithium, Viagra, and painkillers. Anyway, if drugs were legal I wouldn’t abuse them. I would take drugs with the same discipline and moderation that I exercise in my consumption of alcohol unless I’ve had a hard day or lunch with an editor or the Orioles have been losing. And I wouldn’t even touch the hard stuff. You have to be nuts to fool with tootski. Nuts or really tired. Because sometimes it’s nice to have a little bump to get you through the evening. It’s like coffee. And if you buy your coffee at Starbucks, cocaine’s probably cheaper. It’s like coffee that you can’t stop drinking even though you’re swollen to the width of a wheelchair-access toilet stall and spurting used java out of every body orifice. Still you keep chugalugging, the hotter the better. Get up on the counter, wiggle on your back, slide your head right onto the Mr. Coffee hot plate. Smell those neck hairs burn. Suck that filter paper. Feel your tongue split and pop like a ball park frank. Who needs tongues? Tongues just get in the way of drinking more coffee, of getting more awake, more alert, more…. Speaking of alert, have you noticed that Starbucks shops aren’t built? They just appear. You’re crossing the street, there’s a dry cleaners over there, you look up to check the walk light, look back, and it’s a Starbucks. I’m calling X Files. Ouch, who boiled my gums? And why’s this toilet stall ankle deep in latte? I’d better take some heroin to calm down.