Posted by
raytex on Sunday, October 19, 2008 12:00:00 AM
President Bush's initiative to privatize Social Security was a good idea in concept. The easiest way to tell was because all Democrats were against it. Now we could argue about letting individuals invest their own money in stocks and bonds, but that isn't the point. It CAN'T happen; not in the forseeable future anyway.
When you invest in a retirement account such as an IRA, the money you invest is yours. You can get it whenever you want. You may have to pay a penalty if you take it before you are of retirement age, but that money can be accounted for and is accessable. Not so with your Social Security retirement money. It is not kept in the ficticious "lockbox" that Al Gore was so fond of refering to. If the lockbox existed, it would be filled with IOUs.
The money we all pay monthly into Social Security first goes to pay current Social Security obligations (i.e., your parents montly Social Security check). The leftover goes into the federal government's general fund to pay its current obligations (i.e., interest on the national debt). You get a promise to pay your back in the future - an IOU.
If your Social Security contributions were to be privatized, that money would have to go into an account with your name on it. That money would have to exist in one form or another. It could not be used to pay current Social Security of federal government obligations.
That would mean the federal government would have to come up with the money to pay current obligations. Where would they get it from? They would have to raise taxes. They would have raise taxes quite a bit. And if the privatization were to include all the past money you have paid into Social Security (to cover all the IOUs in your Social Security account), the cost would be enormous. I haven't done the math, but my guess is that is would be considerably higher than current bailout. (I won't go into the alternative of reducing government spending. We both know that will never happen; certainly not in the magnitude that would be required.)
Obviously the politicians in Washington know this (well, a few must - right?), but they're not going to admit it to the public.They will never admit that our future Social Security benefits are in the from of IOUs and that they don't have the actual money "in hand" to pay them. They would have to "come clean" and admit to the Ponzi scheme. They already know there is a problem coming to pay future beneifits with a growing retirement community and a declining ratio of workers to retirees.
Think about this - why do you think most in Washington want to legalize all the illegal immigrants in this country? Now, I know they keep saying that they are hard workers and paying taxes .. yada, yada, yada.... But the truth is most illegals are working for cash and not paying taxes. Making them legal would force them onto the payroll and force them to pay into Social Security. This would instantly increase
the number of people paying into Social Security and delay the day when there isn't enough money coming in to cover the money going out. Who said politicians are stupid? They just think we are.