When the program was initiated let us recall that the maximum allowable to be charged to a worker was 2% and not to exceed $3,000 annually. Seems reasonable. Have a look today and you will notice we are hovering in the 15% range and the current caps approximate $15,000. Ouch indeed!
In its infinite wisdom our Congress has spent the last 70 odd years increasing the annual burden. Why is this? Well in 1964 LBJ found a way to tap in to the so called trust fund and pillage it. Subsequently Congress had learned a new trick. Spend all the cash to buy more votes and stuff the trust fund box with IOU’s. Let someone worry about it in the next century. I submit if we actually had an individual account for these monies and allowed to watch them grow over time as a 401k program does, even if we were only allowed to invest in US treasuries, well I believe no one would be complaining at this point. Today if you were to pass on at age 62, the tens of thousands in which you had ” invested ” would become virtually moot. A pittance for your heirs at best. You have only to look at the dynamic change in Chile after they implemented such a program and needless to say, it has and is a major boon for that fine nation. And it can be left to your family in toto upon your passing. Great and wise deal.
Another interesting feature is the amount of people paying in to the fund today vs. yesteryear. At initiation we had 140 workers paying benefits per individual. Today it is down to 3 to 1. Obviously from an economic perspective this is unsustainable for the burden on the young must rise dramatically for the program to exist in its current state.
To make matters worse, we only have a promise and hope that future generations will be large enough to sustain what is now obviously a charade albeit a popular one if you are on the receiving end. It is not an investment nor is it a fund with your name on it. As the dollars come in via paychecks, they go right out.
I think for all the turmoil whipped up over this, Gov Perry who used the phrase is on the money. It is in fact the classic definition of the Ponzi scheme. There can be no doubt to any reasonable observer I contend.
I suggest we review the Chilean model as a reasonable cure to sustain this currently broken program or you ain’t seen nothing yet as the trustees for Social Security have foretold. It is indeed fixable but only if a true leader where to surface. Anyone have the courage? Don’t hold your breath but stay positive as that day will come. The sooner the better. Cute baby. Article first published as <a href=’http://technorati.com/politics/article/is-social-security-a-ponzi-scheme1/’>Is Social Security a Ponzi Scheme? Let’s Chat Gov. Perry…..</a> on Technorati.?