THE RIGHT MESSAGE
The simplest, most basic way to say what's wrong with Social Security is to point out that the most regressive tax on the books funds one of the least progressive transfer programs in the system-- it robs the poor to pay the rich. Every year, billions of dollars are extracted from workers who are struggling to make ends meet, and paid out to elderly people who have substantial incomes and lots of assets.
The only argument in favor of this scheme is one that my commenter Tom West offered a while back:
Let us assume that we want a general safety net for the old who, deserving or undeserving, are facing poverty in old age and no way to escape it.
If the SS program is not universal, there's every possibility that like every other program directed towards the poor, there'll be a strong incentive to cut it because it doesn't affect the "average person".
Those who constructed SS realized that the only way to get the public to buy in to the program was to provide the benefit to all, so that we don't resent the heavy cost of keeping our elderly out of poverty.
Making some numbers up, we might save a 1/3 the cost of SS by making it means tested, but in doing so, the political will might not be there to tax at rates more than 1/2 of the current rates. The net result is a cut of benefits to those in need.
Stated baldly, the cynical and undemocratic nature of this argument becomes clear. It is assumed that helping the needy elderly is the right thing to do, yet the public is too greedy to recognize this, and will cut any program they personally do not benefit from. The governed will not consent to pay taxes to help the elderly poor, so they must be tricked. It is assumed further that we won't "resent" the heavy cost of keeping our elderly out of poverty as long as some benefit is paid to us-- even though paying benefits to the affluent and to the poor (indeed, worse: paying larger benefits to the affluent than to the poor!) is a far greater burden than just keeping the elderly out of poverty, which is not a "heavy burden" at all by comparison.
This argument in favor of the Social Security status quo, and it is really the only one there is, is an argument by political operators to political operators. It can only be made by people who assume they are talking over normal people's heads. It can't be used to convince voters. Imagine:
VOTER: Why do I have to pay this 12.4% payroll tax?
LIBERAL POLICYMAKER: Because we need the money to keep the elderly out of poverty.
VOTER: But most of the money doesn't go to the elderly poor. It goes to middle-class and affluent elderly, who are better off than the average person paying the payroll tax.
LIBERAL POLICYMAKER: That's true. But we can't just give the money to the poor and needy. If we did, only the poor and needy would want to keep the program.
VOTER: I would want to keep the program if it were just for the poor and needy. I agree with you that we should keep the elderly out of poverty. I just don't think my tax dollars should go to pay benefits for affluent retirees.
LIBERAL POLICYMAKER: You may say that, for now. But we know that people are really pretty selfish. If they didn't get a benefit from the program themselves, they would want to scrap it, and they wouldn't care if they threw the elderly out into the street.
VOTER: But you can't make everyone benefit from the program. If you want to redistribute to the elderly poor, people with higher incomes are going to have to pay more in than they get out, in present value terms. So if voters are as greedy as as you say they are, won't they throw out the system anyway?
LIBERAL POLICYMAKER: We're hoping they won't be smart enough to figure out that it's a losing deal for them.
You can't make this argument to someone's face. If that's your position, you have to hide it, and all you can do in public is obfuscate. If Republicans keep banging on about progressivity, about how we shouldn't be taxing the poor to pay benefits to the rich, the public will come round.
Liberals think that their cynical-idealistic argument for Social Security is justified by the fate of other Great Society programs, especially AFDC, which voters soured on and threw out because most people saw them as benefiting other people, not themselves. They see welfare reform as proof that voters are greedy and selfish, and can't be trusted to support sensible, humane, pro-poor policies.
But the real problem is not with the voters, it's with the liberals and their policies. The Great Society programs were bad for the poor, bad for the economy, bad for the country, and broadly disastrous. It was because of the liberals' hubris and incompetence that voters turned on them, not because of voters' selfishness or greed. Their cynical defense of the politics of Social Security is their way of hiding from their own failures. It's also the ugliest side of the Democratic Party.
The Democratic Party will cave in over this issue-- but will it be now, next year, or ten years down the road?