But it's "the third rail" because there is so much money on the table. It's a program that makes transfer payments, which is zero sum, so any change will be fought hard by whoever ends up worse off than they are under the status quo.
Social Security is compulsory savings, and you get out pretty much what you put in.
(Maybe I'm focusing too much on one word.)
> it's "the third rail" because there is so much money on the table.
Also, I think because people feel an existential threat - some people rely on that money to survive.
And because, after seeing that deduction every two weeks for their entire lives, they want their payout.
It pays until you die instead of paying until you run out of savings. The risk it's insuring against is that you live longer than the average person and outlive your savings.
> Also, I think because people feel an existential threat - some people rely on that money to survive.
Nah, the more sensible of the reform proposals are the ones that convert it into a fixed payment for everyone. Those proposals are still every hard to pass because some people would get more than they do now and some would get less, and the people who would get less are the more affluent people with no existential risk, but they would still fight it.
> And because, after seeing that deduction every two weeks for their entire lives, they want their payout.
The program started by making payouts to people who never paid in. Their money is already gone, given to their own parents.
But it is like insurance in that the program is named Old-Age, Survivors, and Disability Insurance (OASDI) Program.
It's also like insurance in that the payout is related to the premium / taxes. If you pay your premiums and experience the covered risks, you (or your survivors) get paid.
It's not like savings, because if you don't experience disability, or old age, you don't get paid. Your survivors might still get something though, I don't know much about survivor benefits.
Disability insurance is available from private insurers, but with different terms. Old-age insurance is more or less an anuity, again available from private insurers, with different terms.
The biggest difference with social security is that smaller incomes (and thus, smaller payments into oasdi) get a larger payment per dollar income if they experience a covered event. Another major difference is that if one has multiple former spouses of marriages that lasted at least 10-years, they're all potentially eligible for spousal benefits and they don't have to share it: no private insurer would sign up for that. Also, the actuarial tables are rarely updated and rather out of date at this point.
I'm relatively lucky in that I do hit the SS income cap every year. And I think it's extremely stupid that my paycheck suddenly grows 6.2% well before the end of the year every year. I can absolutely afford to continue paying my 6.2% tax, just like everyone else, and not need special treatment when withdrawal time comes in retirement.