Monday, March 07, 2005

Social (In)Security

The government's web page dedicated to informing on the history and (non-)functionality of Social Security is devoting a huge chunk of cyberspace trying to rebut the argument that the program is all one big Ponzi Scheme. Check out this ridiculously clumsy piece of writing (you thought blogs were sloppy?).

It reminds you of Fox News having to tell you over and over again that they really are fair and balanced.

In 1995, Forbes wrote of this "Legal Ponzi Scheme": "If the US government were required to keep its books the way businesses are required to keep theirs, the national debt wouldn't be $5 trillion. It would be $17 trillion, an amount equal to 2½ times the nation's gross domestic product."

Politicians continue to tell us that our 'contributions' to the Social Security go directly into a 'trust fund', where it is invested in government bonds. But....Social Security has ALWAYS paid out benefits from current cash flow rather than paying benefits out of any interest the investment had accumulated. This will only be complicated as people's life expectancy continues to grow (as the Baby Boomers now begin to retire there are only two young workers (and shrinking) contributing to the system for every one retiree).

Bush's plan to 'fix' it is no better. The idea he is floating around actually involves us throwing another huge chunk of change away. Somehow this will correct the system's faults? I thought the idea was to return the money to the people who had been sustaining it all these years.


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