Cold hard truth re: social security

 

 

While most all of Barack Obama’s prospective Republican opponents are busy pandering to the media over social security, one columnist, Michael Walsh of The New York Post, is telling it like it is:

Social Security was long known as the “third rail” of American politics — touch it and die. But now one politician is not just touching it, but grabbing it with both hands and giving it a long-overdue yank.

Texas Gov. Rick Perry has set the conservative cat among the New Deal pigeons with his increasingly blunt assessments of the 76-year-old program as a “Ponzi scheme” and a “monstrous lie.”

Despite warnings from his chief rival for the GOP nomination, Mitt Romney, that Republicans will be “obliterated” as a party if they challenge the program’s legitimacy, Perry’s unlikely to let up in tonight’s “Tea Party” debate in Tampa.

Some fearful seniors probably will turn on the GOP, even though none of them stands to lose a penny in any conceivable reorganization of Social Security.

But maybe the American people really are finally ready for some straight talk about entitlements.

Already Social Security, Medicare and Medicaid account for 43 percent of the federal budget, and their rapacious, auto-pilot growth is inexorable. By 2049, these three major entitlement programs will consume all projected federal revenues. By any rational standard, they are the very definition of “unsustainable.”

That’s exactly the message the Republican nominee must deliver to the electorate if the nation is to survive the entitlement cancer.

Can I get an Amen?  

Social Security was never designed to be a full-fledged government pension program. Set up during the Depression, when most working men never made it to 65, it relied on a cadre of younger workers to help support the relative few who survived into a long retirement.

So, while many Americans thought they were paying into some sort of genuine retirement account, the program was essentially an intergenerational, short-term income-transfer system.

For a few decades, the system worked, and there were even healthy surpluses. But in the decades that followed, as the number of workers per retirees fell from 160 in 1940 to 3.2 in 1980, the feds kept hiking the Social Security tax rate in an effort to keep it solvent.

The brutal truth: There is no true “trust fund,” no “lock box.” All the monies paid in by workers go to pay the benefits of current retirees.

Finally, in 1983, the law was changed to “save” Social Security from the coming tsunami of retired baby boomers. The idea was to build up a huge surplus to cover the hit — but the cash was “invested” in special-issue Treasury bonds. In other words, the feds used the Social Security surplus to pay for other programs, leaving behind a bunch of IOUs.

It gets worse: Last year, for the first time since 1983, the program collected less in taxes than it paid out. It’s finally starting to collect on those IOUs. According to its trustees, Social Security is on track to go completely bust in 2036.

In some ways, it’s even worse than a Ponzi scheme. In his pyramid racket, Carlo (Charles) Ponzi fleeced only willing suckers, but Social Security taxes are compulsory.

Not so the payouts. The Supreme Court ruled in 1960 that the law that created Social Security gave taxpayers no legal rights to their Social Security “contributions”; benefits can be changed or even eliminated by congressional whim at any time.

You can try to talk to a lot of seniors, current and soon-to-be Social Security recipients, about selflessly sacrificing some of their payouts to help straighten out the country’s financial mess and preserve something for future generations.  You’re likely to get a lot of anger in response, and arguments like: “I paid into this. I deserve to get the money I paid in.”

Well, Walsh knocks a huge hole in that line of argument with the story of the first retiree to tap into Social Security:

As with all good Ponzi schemes, early “investors” made out like bandits. The first senior to collect was Ida May Fuller of Ludlow, Vt., who worked for three years before retiring in 1939. She “invested” less than 25 bucks and — by dint of having lived to the ripe old age of 100 — cashed in to the tune of nearly $23,000.

By contrast, today’s workers are forking over more than 10 percent of their pay each year — while anyone looking to retire after 2036 will be trying to collect from a program that’s gone bankrupt.

A “monstrous lie”? You be the judge.

Voters sent a CLEAR message to our leaders in November 2010:  clean up this financial mess and get our economy back in order.

Entitlements are drowning us in debt and endangering our economic future.  Politicians need to stop tip-toeing around grandma and grandpa, and get this entitlement mess under control.  Seniors need to do their part, recognize the jackpot they’ve hit with these entitlements, and sacrifice a little for the future well-being of their children and grandchildren.