Social Mythology and Reform: Income Maintenance for the Aged

Debate over the need for reform of Social Security is reviewed in this article. Even prior to recent developments, reformers have attacked the myth that Social Security is closely analogous to private insurance, and they have argued that payroll tax financing—adopted and sus tained in order to foster the illusion of a contributory system—is highly, and unnecessarily, regressive in its impact. Supporters of the system as originally conceived point to its success in terms of size, broad political acceptance and effectiveness in reducing poverty among the aged. The recent major changes in the system, culminating in the 1972 Social Security Amendments, are reviewed. It is argued that these changes sharpened the debate. Higher benefits required higher payroll taxes—thereby raising, in the reformers' eyes, the price of the insurance myth—paid primarily by low income workers. The creation of the Supplementary Security Income program appears to make income redistribution features of Social Security redundant. Defenders of the system resist the reformers' suggestions for tidying up the structure. Suggested reforms will, they argue, strip the system of the mystique of contributory social insurance and saddle Social Security with the stigma of a welfare-like, means-tested system; in such a case, they argue, the system will become vulnerable to political conflict. They maintain that social myth is necessary cement in the construction of durable social institutions.