Social Security Mistrust Fund

by Harrold "Haole" A`hole

Why can't you trust the government to fix the Social Security "Trust" Fund?

1. The program has changed many times in the past, despite the original promises. The tax rate has gone up as well as the amount of your income that it applies to. The age at which you can retire gets older, and the amount of your monthly payment is subject to change.
2. The plan was built as a pyramid scheme, something that's illegal when anybody but the government creates one. It only works as long as current taxpayers pay more in than current retirees (and a few others, like those who lose a parent) take out. As demographics change, this becomes harder and harder over time unless there's an ever increasing population of workers who then don't live long enough to become an ever increasing population of retirees.
3. The Ssocial Security Number was not supposed to be a federal identification number, though that number is required in many places unrelated to our supposed savings account.
4. Despite years of collecting more money than is necessary to pay for the program, the extra money was never saved or invested. This is most odd considering the new proposal regarding private investment accounts. The assertion is that by investing a portion of the tax, it will grow into a nice nest egg. Why, then, has the government never invested the surplus? Instead, the money was "saved" by purchasing treasury bonds, meaning it's already been spent and the only way the government can get it back is to tax us the full amount again plus interest.
5. Despite the fact we may get a statement saying how much money we have in our accounts, there is no money there. The courts have already ruled that we have no right to the money purportedly held in our "accounts."
6. We are told that an employee pays 6.2% and an employer pays 6.2% in Social Security taxes. This is a pure fiction as the employer only pays a single total amount to have an employee, and all the money that goes to pay for taxes comes out of that total, meaning the wage earner truly pays 12.4% of his income potential. Does anybody really believe that a company pays these benefits from its profits and that it's just gravy for the employees?
7. The Social Security tax is a regressive tax, not because it's a flat rate, but because it is only applied to the first $90,000 (up from $3,000 when it started, which would not even come close to $90,000 when adjusted for inflation). Therefore, those who make more money not only don't pay a higher rate as they would for regular income taxes, but they also don't pay more even though they earn more.
8. The idea of Social Security, to keep the elderly from being poor despite a lifetime of working, is no longer the case. The payments are made to everybody, regardless of whether they are poor or not. Demographics today show that the retired tend to be wealthier than the workers who are paying to fund the retirees. Many retirees will draw out more money than they ever put in, even if you account for the rate of return on treasury bonds, a return paid for through additional taxes by the way, not from investment gains.

If you have lots of money, you don't need Social Security or the proposed private accounts. Those who make good money already can save in pensions, IRAs, 401Ks, insurance and myriad other investment vehicles. Those who don't have sufficient money shouldn't be forced to save for a future that may not arrive and be forced to forgo using that money to feed, clothe and house their families today. It is wise to save for retirement, but being forced to do so, under penalty of law, is un-American and is the opposite of liberty.

Bush claims he needs to fix Social Security by creating private accounts, even though such investing of the contributions has never taken place by the government before, even when there was a surplus. And at the same time, the new Medicare prescription drug plan is a brand new entitlement that will be yet another financial disaster in the future. It's like pouring water on a house fire while setting the office building next door on fire.

There is a reason why socialism fails economically. It has nothing to do with the good of helping the poor, but of the waste and corruption that naturally arises when large sums of money are involved. Greed isn't good, and the results of not paying attention to the government's actions has left us with a huge financial mess.

Why do Americans feel compelled to buy things they cannot afford? Because the debt is not assigned to taxpapers who must pay it back or continue to pay interest to hold the debt for their children to pay back. We simply pretend it's not our problem.