Social Security Insolvency, Reforms, Fraud, Privatization
Great depression was one of the biggest disasters in our history. While it is not the scope of this article to go into details of causes of depression, there were, and there are a large number of implications for policy changes that took place after the crisis. Historically speaking, crisis is an ideal situation to forward certain agenda. Many game changing policies in American history were proposed, placed and enforced during the times of crises like economic downturn, wars, etc. For example, most civil rights curbing laws and regulations are mostly passed during wars. Similarly, economic downturns are good times, and even termed as “opportunities” by liberals to introduce economy and finance related regulations and laws.
During Major Depression, millions of people were desperate, and never wanted to be in that situation, ever, again. Roosevelt’s liberal administration, at the time, blamed free markets for the downturn, and proposed that only government can protect people from such disasters. Besides huge spending on tax payers’ sponsored and so called public service projects, government got a chance to budge into many aspects of personal lives. Beside, organized military, Social Security is by far the biggest of all government programs, as far as spending is concerned. The basic idea that was sold at the time was to have a government run insurance program for elderly, retired and disabled people.
The notion was that private and non-profit charitable activities have failed to support people in crisis. So, government should guarantee that. Hence, they started the biggest Ponzi scheme of all times. In addition to other things like wars and killing people in the name of Capital Punishment, government got sole and non-compete rights on Social Security mandate. If you and I do anything even close to this, we would be in jail for the rest of our lives and may even get executed.
There are some major issues and problems with Social Security which are getting increasingly obvious to everyone, day by day:
1) It is a huge tax. Like all other taxes, it finances government spending, Social Security in this case. Over 12 percent of all U.S. GDP gets dumped into this very low return fraud, every year.
2) For about first forty years, social security paid full benefits to retirees who made little or no contribution to it.
3) Successive generations including us, and future generations are paying for debt incurred by those payments.
4) The return is about two percent per year
5) Since it is run by government and has a defective design, there is no guarantee, if any one who has contributed to the system is actually going to get paid, and if paid how much?
6) There is no binding agreement. Law makers can change the law anytime or even bring down the whole system.
7) The recent government report on social security, itself, acknowledges that the payments for disability may cut down as much as 20% by 2016, and for retirees by 2032-2033.
8) To make government run social security solvent, again, there are only three choices left. a) Increase taxes. b) Decrease benefits. c) Combination of both.
9) If taxes are raised they will have to be raised by 4.1% to 16.5% of payroll, right now. If the can is kicked down the road any further, higher tax hikes will be required.
10) In other scenario, benefits will need to be cut by 25%, across the board.
11) Combination may require 2.05% increase in payroll taxes from current rate of 12.4% and a benefit deduction by 12.5%.
12) The negative effects of 12.4% dumping of world’s largest and richest economy into government treasury or government bonds are mind boggling, even to imagine.
13) If you are fifty years old, now, you will retire in 2029, and in 2032-2033 your benefits can potentially be cut down by as much as 25%.
Question is what could be worse than this? If you like current system then why? Is there a real reason or just because you are being told by sold out politicians and corporate media that this is the best possible system? Or you are scared of your retirement being in the hands of private corporations? There is no doubt that private corporations have messed up your investment portfolios quite a few times. But, the government has messed you up lot more and lot many times. Even private market mess up is mostly due to government regulations picking up winners and losers.
You know who would politicians pick up, if they get the authority to choose winners? Of course, their favorites from the rich and powerful corporate lobbies, financing election campaigns. This is the reason why competition in most U.S. markets which used to be the most competitive in whole world, is getting so increasingly limited. Your choices are being restricted, prices are higher, quality of products and services is down and good jobs are gradually getting disappeared. This is what happens, very much like third world countries when governments start controlling almost everything. Creativity and innovation gets killed by overly structured and limiting government regulations.
The resultant mess up is then blamed on private companies and an argument is made for even more regulations. This is going on in our country since WWI. Government run Social Security is a part of that grand plan. Can you, in your right mind, deny the insolvency and other related issues with Social Security? If you take a deep breath, do you see any point in kicking this empty can down the road? Do you really believe that closing your eyes will make the problem go away?
The common sense approach to this problem is that we all must stop being politically correct, open our eyes, face the reality and wake up others to it. The matter of the fact is that with ever increasing cost of living, the retirement is getting more and more expensive. About 50% of Americans are being projected to be never able to get retired. This is mostly due to the failure of Social Security and insufficiency of Social Security payments. In order to provide all of us an ability to retire when we are old, weak, sick or disabled, this whole notion of retirement need to be overhauled.