Yes, it was a big, ------- deal last week (in the censored words of our Vice President). No, I am not talking about the disastrous health care bill, although that WILL destroy us--in terms of being anything like the great country we once were. I am talking about Social Security, which has some relevance on the health care bill. It has some relevance because Social Security is another government managed program that has been mismanaged to the point of destroying us. This is on top of a 36 TRILLION dollar unfunded liability for Medicare/Medicaid (obviously directly relevant on the absolute insanity of creating an even bigger new entitlement such as the new "universal health care" entitlement).
What happened last week? It was announced that Social Security is, or will be, in the RED (adding to the deficit) THIS YEAR. That is six years ahead of "schedule"--ahead of the calculations of the bean eaters--rather than "bean counters"--pf the gas passing CBO (Congressional Budget Office--one of the sources for that six year estimate). What does that mean for our budget deficit? It means DISASTER#ER, given all of our other spending, whether or not we pull an Enron scam and simply declare Social Security "off budget".There is simply not enough money to do all we need to do, and try to create another entitlement bureaucracy at the same time (not to mention get out of this stubborn economic downturn). We NEED to "save" Social Security and Medicare/Medicaid, before we even dared to think about distracting ourselves with this ObamaCare nonsense.
The problem is that Social Security (not to mention Medicare and Medicaid) was a Ponzi scheme from the beginning--whether we should have "privatized it" or not. Did you think that you are putting money into Social Security for YOUR retirement? Think again. Social Security taxes from current workers pay for CURRENT retirees--NOT for a retirement account for the people paying the taxes. It is well established that you--as a current worker--have NO RIGHT to any certain level of Social Security (or, indeed, to any Social Security at all). This is the true definition of a Ponzi/Bernie Madooff tpe scheme, where current "investors" pay for "benefits" for earlier investors. As my accountant/former business owner brother likes to point out to me, HE would have gone to jail for this sort of thing. Bernie Madoff did.
This all arose from the way FDR and Congress set u Social Security as a Big Government program, rather than a true retirement account (INVESTED). As I said in my social science honors class at New Mexico State University way back in about 2968, Social Security made no sense--the way it is set up--as a retirement/insurance program. It also made no sense as a welfare program. It was always a political SCAM. My professor, by the way, showing that leftist thinking is not new in even more "conservative" universities", said that I was being "mean" to want to deprive senior citizens of the "dignity" of the fantasy that they actually "purchased" their retirement entitlement.
It was not, of course, ME who has deprived most senior citizens of dignity, but leftist Democrats and other politicians. Who paid for the Social Security of those who were elderly when the law was passed? Answer: the same people who have been praying for current Social Security benefits ever since--namely CURRENT WORKERS. The government merely collects taxes from CURRENT workers, and uses those taxes to "pay for" current Social Security recipients. The government sets both the level of taxes and payments, and there is really not such thing as a RETIREMENT INVESTMENT. It did not have to be that way.
Could we have set up actual RETIREMENT ACCOUNTS for every living American? Sure we could have. There are a number of entities allowed to "opt out" of Social Security, such as local governments, and those managed retirement accounts have generally done very well. There were many options here. One was a separate account for every single individual (basically a "defined contribution" plan). Another option was a "defined benefit" plan, but treated as an actual INVESTMENT ACCOUNT for which the government would be contractually obligated--basically a "defined benefit plan". I don't like this option, because it lends itself to the kind of manipulation that has actually taken place. However, it would have been better than what we got. What we actually got was BERNIE MADOFF--a political scam that left control in the hands of politicians.
Note that I have said NOTHING about "privatization", in terms of leaving investment decisions up to the individual--within restrictions. That is merely an OPTION--although one I would have favored, at least to a degree. It has NOTHING to do with setting up Social Security as a real RETIREMENT INVESTMENT.
"Wait a minute,", you say. What about all of those people who contributed nothing--especially in the beginning. Even later, there are still people who contributed little. And wives were an issue--more then than now, but some women still know when they have it good. Well, this is the bad WELFARE program I criticized back in 2968 (leaving aside wives, as to whom there were several alternatives, including something like what was actually done). In other words, the people who did not pay enough in to set up an adequate account could simply have been treated as WELFARE RECIPIENTS, where the government SUPPLEMENTED their account every year (sort of like the "earned income tax credit"). Obviously--and this was basically a deficit scam to rival the new health care bill--the first Social Security recipients were WELFARE RECIPIENTS. Their payments should have simply been set up that way. Notice an actual retirement ACCOUNT, like a 401(k), would be YOURS to keep. And an actual managed investment account would surely have created greater return than the government regulated payments people actually get today. Most people would have ENOUGH for a comfortable retirement on Social Security alone.
Could we afford it, or have afforded it? Sure we could. What we could not afford is what we have actually done. Obviously, some part of "richer" people's Social Security taxes would have had to go to pay those initial welfare payments, and to supplement the accounts of those not able to pay a minim amount into their retirement. But that supplemented amount would still BELONG to those individual people, and NOT to the government. Sure, some people would get more than others, btu they do today. ALL people would probably get more than they do today, if this had been the original approach--even if it had to be phased in.
What has actually happened? Well, first the government (including Republicans) realized that Social Security was really a FICTION--nothing more than a government program transferring money from one group (current workers) to another (senior citizens and some other recipients). So long as this was a SURPLUS--more tax money than payments--this was an easy way to CUT THE BUDGET DEFICIT. Indeed, unlike the health care bill budget scam--it is actually true that Social Security SHOULD be part of the budget. It is nothing more or less than a government program--a general obligation of the Federal Government.
The problem, of course, was that the politicians--as with the new health care bill--spend money we do not have. This included the Social Security surplus, even though the politicians knew that we were fast approaching the point that current workers would not be sufficient to "pay for" the benefits of current Social Security recipients. We have now reached that point, with more "baby boomers" retiring every year. The recession, of course, did not help. but it is not like recessions are a new thing. You can see that this result was almost inevitable from the beginning, by making Social Security a Big Government program, under the control of the politicians, rather than a true retirement program. Sure, there were a lot of details to be worked out, but IT DID NOT HAVE TO BE THAT WAY. You could have had a real retirement account, without politicians being able to use the taxes for their own purposes (power).
If you do not understand how badly this has worked out, I disown you (as I did President Bush in 2006, even though he was right about trying to reform Social Security to give people a REAL retirement account). You are hopeless (if you do not understand how you have been HAD).
If you do realize this basic point--the Madoff scheme that Social Security turned into--then it is only a very short step for you to realize that the new health care bill is another total disaster. I will leave the actual reasoning--aside from the fact that the new Social Security deficit makes clear that we absolutely cannot afford it--to you as an exercise in intelligence. No applause please (for not making you read another 1000 words).



P.S. Why was/is Social Security a BAD welfare program, when you consider its welfare component separately from its (equally bad, or worse) insurance/retirement compoent? Come on. You know this one. The Social Security tax is the ultimate in REGRESSIVE taxes in the way it "takes care of" people who did not contribute much to the system. Poorer people pay a GREATER percentage of their income than "richer" people, because the Social Security tax is only paid on the first so many dollars of income (which keeps going up). As I hope I have proven to you, Social Security was never an "insurance/retirement" program at all. That was just how it was SOLD. If you are paying attention, you realize that leftist Democrats are about ready to discard the entire FICTION of an "insurance" program which you pay for with your Social Security taxes, in favor of treating Social Security as totally a Big Government program to be "paid for" by the "rich". Republicans--ever people of NO real principle--have tried to buy into this concept with the idea of "temporary" payroll tax "rebates" "paid for" out of general tax revenue. If you think these people (politicians and Federal bureaucrats) are capable of running health care, or any other part of our economy, you are beyond delusional. These (our politicians--especially recently--are dishonest, stupid people. And I have never excluded Republicans from that assessment, although you can trust Republicans more in OPPOSITION to a leftist Democrat like Obama. But it is especially Democrats who want to make Social Security merely another political football--as they attempt to do every election--a constantly manipulated instrument of policial POWER, with ont even a pretense that it is any kind of real retirement program.