For this week’s column at American Issues Project, I take on Social Security and the reform needed. Unshockingly, the majority of Americans want reform too — who woulda thought??

The problem with Social Security from day one has been that it is clearly a pyramid scheme. The Social Security taxes that you pay are used to pay current pensions, and are also paid into a government trust fund, where they are saved… not for you, but again, to be used to pay future pensions, and not yours. The government does not put your Social Security taxes into a private trust account, waiting for you to retire and reclaim them. They use your Social Security taxes to pay the people who are retiring now, not to be saved up for you to use when you retire. And thus you have the pyramid scheme. The first generation pays into Social Security, and they get their benefits repaid by the second generation to pay into Social Security. The second generations gets repaid by the third, the third repaid by the fourth, and on and on. And this all works fine until you have a situation where the pyramid stops growing, and the generation on top of the pyramid receiving benefits is larger than the generation on the bottom of the pyramid paying for them. The pyramid becomes inverted, and we’re in that situation now.

Americans are now realizing this, and despite the best efforts of Democrats in Congress to prevent privatization, the majority now wants to see exactly that. 49% of Americans think you should be able to opt out of Social Security if you want to, while only 37% think that Americans should be required to participate. Tellingly, most voters under 50 agree with opting out. Most voters over 50 disagree. It’s easy to see why the older voters (the boomers) don’t want people to be able to opt out. They want to receive their benefits, and they know that the younger voters need to keep paying in for that to happen. Unfortunately, most of the younger voters who are paying into Social Security won’t be eligible to receive benefits for twenty to thirty years, sometimes longer. And by that time, it’s entirely possible that Social Security will be broke. It’s a strong likelihood that people like you and me who are paying Social Security taxes today will never see a dime of that money again, which is why privatization is needed now more than ever.

With privatization, the easiest option would let people choose whether to continue paying into Social Security or to let their money be allotted to a private account. Employees who choose the private option would pay a lesser percentage than those who opt in to Social Security. Employers would still match the contributions made by employees who opt for privatization. The workers who opt out would still receive bonds from the government based on the taxes they had already paid. Benefits for current pensions would of course still be paid in full. The CATO Institute found that this privatization plan would actually, in about twenty years, eliminate the current deficit.

Be sure to read the whole thing.