The Third Rail of American Politics ...

If ever there was an example that the conservative ideology of less government interventionism in the private responsabilities of citizens is a preferable government practice then that of quasi-socialism, it is in the form of Social Security. It is a scam of almost incomprehensible proportions. It was revealed during congressional testimony this week that this government mandated retirement plan, that I can not opt out of, will be bust as of 2041. Further in this demonstration that these probably well intentioned social nets of primarily FDR and Johnson (Bush via prescription drugs) are doomed to fail is in Medicare, which will go bust as of 2017. Our total social liabilities - and these are programs already on the books mind you, forget Sterns bail outs and the lot- went from 20 trillion in the year 2000 to 53 trillion in 2006. Going at that clip we are nearly tripling our social expenditures (that's minus the war and all military spending I might add) every 6 years. It is simply unsustainable. Just to make these two solvent past the bust dates we would have to increase Medicare & Social Security taxes by a combined 148%.

Now lets look at what Social Security was originally intended for. Born out of the fears of the Great Depression Social Security was supposed to be monies held for you by the government to be there just in case you made it to 65 years of age. Keep in mind that at its inception the average life span of the American male (primarily the sole intended worker in those days) was just under 63. This of course means that government projections concluded that the majority of participants wouldn't even tap in to what was paid in, except for the few years that a spouse outlived him. The average life expectancy of the American male in the US as of today is 76, women are given 79. Add to that, that the government never quote, "set aside" these contributions at all. It was put into the general fund and spent. WAIT, it gets better. Now, as the first set of Social Security (hence forth referred to as Soc-Sec) contributors begin to hit 65, what happens? The government has on the books that we owe X amount of dollars to John Q Contributor so they start using the money they're taking from the current "contributors", and paying out the monies owed to that elder generation. This sets up the vicious cycle in which the actual dollars you send in, you never see. They just record what you paid in and funnel out your money to the retirees of whom they have a record of owing right then. Get the program now? You're not having your money squirreled away for 65, your paying out the benefits owed to the generation before you and hoping that some young bucks will come along and pay the monies owed you via the record of your contributions. Like I said, a scam. In 1954 it took 35 people to pay out the Soc Sec benefits of one retiree. That means the expense of repaying that man his owed contributions was spread amongst 35 tax payers. By 1980 it had dropped to 15. Currently its 7. The problem arrives with the baby boomer generation. When they fully retire there's simply going to be more retirees then there are worker bees to pay them out. Technically we start running a deficit long before 2041, but we can pay out with the available coffers until then. Oh, and before that magic year the expense will have to be spread over only two people.

Now, if we are all in agreeance that socialized medicine is not the right answer for the American health care system, then can we not all agree that socialized retirement is not the answer for the American retirement community? Put simply, FDR, while a stud on the war no question, was wrong about Social Security. I don't question his intentions, but one thing is certain, if you send money to Washington they'll do a lot of things with it but NONE of it will include saving it for you.

But what to do now? How to we break the cycle? We owe the generation we're paying now the money they dutifully paid in. It's the quintessential clusterf***. There must be a private sector answer, and one thing is for sure - we've got to get those contributions out of the hands of DC.

(PS> I got my numbers from the congressional testimony on Soc-Sec solvency of just this week, via Glenn Beck's show - I wrote them down as he (& they) went - and he says they'll be available on his website. But check anywhere you want, but you'll find quickly, as I did, the numbers vary only slightly from site to site and they all spell the same type of doom that I've layed out here).