There are a whole lot of issues with Social Security you will never see mentioned in the press.
The main one is that Social Security taxes go into the general fund, and bonds are issued for the money siphoned from Social Security. In short, about $2 Trillion dollars of America's future has been spent, with IOUs placed in the till, that the government can't pay back. Had that money been invested in something as simple as asset backed securities, such as real estate bonds, Social Security would be fully self supporting with no need to collect another dime from tax payers to cover benefits. Had the money simply been held in escrow, in non interest bearing accounts, there would still be no danger of the system ever going broke.
The bottom line is Social Security is a for profit tax, where the taxes collected in the current year are used to pay benefits for that current year, and everything left over is treated like the government's own private piggy bank. It is not now, and has never been, a "savings program".
The misleading hype about projections for Social Security going "broke", is nothing more than a discussion of the point where the current year's taxes will not cover the current year's benefits, without paying back taxes collected and spent by both parties for the past 70 years. At that point, the government will have squandered over $4 Trillion of America's future.
In other words, even now, Social Security could be easily saved, with but a single change: Stop spending the money!!!
Even if the so called Baby Boomer effect is something other than mindless hype, it is a temporary phenomena, which at most might cause a brief spike in benefits paid out for a few years before it levels out again. Without looking at statistics however, I'd be willing to bet that the number of babies born in America between 1995 and 2005 was considerably higher than the number of babies born between 1945 and 1955. The population of the US has close to doubled in the past 50 years, so the argument a brief spike in baby production half a century ago will create a situation where all of a sudden everyone retires, and no one is working to pay taxes, is absurd in the extreme.
In the mean time, this whole scam to funnel retirement money into the stock market is ludicrous. There is a lot of cotton candy nonsense circulated about how well a person would have done by investing in the Dow back in the 1930s. Unfortunately, the hypesters leave two critical facts out of their numbers: 1. There isn't a single company still in business today that was part of the Dow 30 of 70 years ago. 2. The dollar has been devalued by a factor of over 300 to 1 in the same period.
A person who invested in blue chips 70 years ago would be broke today. Of course, it appears those who have invested 15% of their gross income for the past 50 years in Social Security are about to be in the same boat as those who invested in the Dow. |
