Tuesday, August 17, 2010

Social Security is 75, and it Needs to be Put Out of Its Misery

Social Security turns (turned?) 75 this week! Let's see what we have to show for it:


Yup, that's right. That program that was supposed to be optional, 1% of your income, with funds held aside to guarantee that you'd be repaid, is broke. CONgress spent all of it - every last dime. Much like Madoff, as new funds are coming in from current payers, they're being immediately sent to folks who are payees, because those folks' money was spent by the Government to keep up the wonderful utopian mirage of Progressive Socialism.

And here we sit. Each paycheck I get has 7% taken out of it, with jailtime or summary execution by Federal SWAT team awaiting me if I refuse to pay it, and I know with absolutely certainty that I'll likely never see a dime of the money I'm paying into it. That 7%, which could be used to invest in an account I CONTROL, which could be kept safe from the idiots in Washington that think that they're entitled to EVERYTHING you own, is sent to a group of people that piss it away on such high-minded activities as funding cocaine addiction studies on monkeys.

Need some fun analysis? Try this article from the Market Ticker: Revoke Krugman's PhD

That so-called "trust fund" is a fraud. It does not exist.

Here's what actually happens (and Krugman knows this, which makes him a damned liar besides):

  • Your tax dollars go to Treasury.
  • Treasury keeps them and issues "special" Treasury bonds to the Social Security "trust fund."
  • Treasury counts these tax receipts against the federal deficit, making it look (much, until the last year) smaller than it really is.

Note the slight-of-hand here. Social Security gets an alleged "bond" but they can't sell it to anyone but the Treasury. That is, legally it is an IOU, not a bond. A bond can be marketed in the open market to anyone who is willing to buy, for whatever they're willing to pay. These are unmarketable (intentionally) and thus can only be redeemed in one place - at Treasury.

The problem is that Treasury spent the money and thus doesn't have anything with which to redeem the IOUs!

So in order to redeem these alleged "bonds" Treasury will have to sell more bonds - this time to the general public (foreign governments, people, etc) who have actual capital surplus, because Treasury doesn't - it blew that surplus on social spending programs right here and now.

This is similar to you coming to me with $100,000 and I "promise" to hold on to it for you and keep it "safe." I give you a promissory note to this effect. But I never hold the funds - I immediately go blow them on hookers, coke and limousines. You now have a bunch of IOUs, and I have no money.

Now perhaps I can manage to sell someone else some bonds when you come to redeem those IOUs. Perhaps. But what is unmistakable and true is that the money you allegedly "deposited" with me was immediately dissipated, not invested, saved, held or secured.

This little scheme seems to work just fine provided that each year the Social Security system takes in more than it spends on benefits - that is, so long as the file cabinet full of IOUs continues to get bigger. Treasury gets the appearance of "Free Money", Social Security is able to pay benefits, nobody's the wiser.

But it's a scam, because in point of fact the so-called "Special Bonds" are nothing more than a bare promise to pay and the asset against which they were issued (tax receipts) was instantly dissipated!

The Baby Boomers are retiring, and there's nowhere near enough of us younger folks to keep this program solvent. "The Government will just cover the difference!" you say. Bull. We're currently spending $1.4 TRILLION MORE THAN WE MAKE. That is, the U.S. brings in around $2 trillion in revenues each year, and is currently spending $3.4 trillion. All of that money is coming in the form of a printing press from Treasury, or foreign investment - at the moment, Chinese funds.

"Well, the Government is aware of the problem and they're going to do something to fix it!" Wrong again. Check out this little gem (and it's a talking point for sure - I heard the exact same phrase from DemocRAT after DemocRAT on the news yesterday):

Social security at 75: don't mess with success (Rep. Sander Levin)

From that article:
Seventy-five years ago this month, President Roosevelt signed the Social Security Act. By any yardstick, Social Security has been the most successful domestic program in our nation's history, lifting millions of seniors out of poverty. Through good times and bad, American workers and their families have been able to rely on Social Security to provide guaranteed protection against the loss of earnings due to retirement, disability, or death.

This mental midget then goes forward with his talking point arguments of "had we allowed people to privatize Social Security and invest it in the stock market, they'd be broke right now". What tripe. Yes, the market goes up and down. Yes, you can lose money. However, Social Security pays around 1%. That doesn't even cover the massive inflation we have seen over the last 75 years, no where close. Having money in Social Security means you've LOST a significant portion of your "investment". I can get a better rate of return with that money in a Savings Account at a local bank that is insured by the FDIC.

Privatization doesn't mean you HAVE to invest your Social Security in risky equities, but it gives you the option of managing your OWN money. Personal accountability. Oops, can't have that - just let your betters in Government handle that for you - you can't be trusted with your own assets. Just give them to us so we can spend every last penny on bull$!@#.

It's far past time to stop this madness. Do away with the system. Every day Americans dump in good money after bad, and most of us will never see a dime. Robbing us to pay for the actions of politicians we were too young to even vote for isn't the answer - especially when we're all pretty sure that we won't ever see a dime of what we put in come back to us. How are we supposed to secure our retirement if we're told that we must pay for yours?

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