Some of the presidential candidates are beginning to come out with their plans to fix Social Security. A common idea among many Democratic contenders is that the way to close the coming SS gap (the shortage of SS revenue relative to retiree payouts that will occur after the baby boomers retire) is to simply remove the SS payroll tax ceiling, thus subjecting all of a wealthier person's wages to the 12.2% SS payroll tax. Currently, only the first $97,000 of a person's wages is subject to the tax. Barack Obama has recently come out with this proposal..
Sounds like a pretty simple solution, doesn't it ? No raises in the retirement age, no increases in the SS tax rate, no reductions in benefits. Cool. Plus, we'll get the wealthy people to pay for it all, making it a liberal Democrat's dream scenario. Tax the rich. Beautiful. Elect Obama. Sure, it turns SS into almost a full blown welfare program, but hey, it solves the Social Security problem. Done deal. Bring on the next problem, so we can increase taxes and spending to fix that one too.....
But, on second thought, maybe there's more we need to consider. There might be a fly in that SS ointment. I think Barack is forgetting about how SS operates (it's a scam). I think maybe he is assuming that there actually IS a Social Security trust fund, when there actually ISN'T one. Every dollar of SS revenue that is collected beyond what is paid out to retirees goes into the general fund and is immediately spent. All of it. Then IOU's are written back to the SS 'trust fund'. So, the 'trust fund' doesn't contain any, you know, FUNDS, just pieces of paper that claim "I'll gladly pay you on tuesday for a hamburger today", like Wimpy did on the old Popeye cartoons. Keeping that in mind, what then happens to all that extra SS revenue that Obama is generating by eliminating the SS payroll tax ceiling ? IT IS ALL SPENT, and that results in A WHOLE BUNCH MORE IOU's BEING WRITTEN BACK TO THE (LOL) 'TRUST FUND'. The end result is that the SS gap only gets bigger, and future taxpayers are on the hook for redeeming even more IOU's than they were before. The central fallacy of the SS ponzi scheme is thus exposed. Economist Thomas Sowell stated it simply: You can't spend money and save money at the same time. Hard to make it any clearer than that.
What eliminating the SS payroll tax ceiling WILL do is to fill the federal big government coffers with cash for all the federal big government politicians to spend on federal big government programs. And wouldn't you know, Barack Obama just happens to be one of those politicians. What a coincidence. That SS cash influx might even lessen the deficit (just as it masks the true size of the deficit today) if the pols don't spend it ALL, but it won't do anything to fix Social Security. There's an old saying that perfectly describes how the politicians have 'invested' in our retirements via SS: It's known as 'getting ripped off'.
To fix Social Security, first congress must stop spending all the money, so that a real trust fund actually exists (DUH !). That step will at least stop Congress from being criminally complicit to extortion and fraud. However, don't expect any Democratic presidential contenders to jump on board that train, because that will give them LESS taxpayer money to play with, so it gets an automatic 'HATE IT !' from the big government types. It's anathema to them. It's like asking a junkie to voluntarily shoot less heroin. Not gonna happen. They'll have to be dragged kicking and screaming to honesty. Remember the fit they threw when Bush proposed partial personal accounts, which would have taken Congress' grubby mitts off only a small part of our SS money ? The congressional crime bosses went into full hissy fit mode over that one, so you know fixing Social Security isn't something they are interested in at all. What they are interested in is using SS as a scare tactic, and as a tool to keep you dependent on your benevolent big government overlords.
About This Blog