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Archive for March 10th, 2005

A Fact not Typically Heard in the Social Security Debate

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Most people are unaware that Social Security is basically a government-sponsored Ponzi scheme and that if you or I ran something similar we’d be arrested and probably spend some time in jail. But as bad as that has always been, Christopher Adamo notes it’s worse in the American Thinker:

Politicians in Washington quickly recognized that intake from taxpayers would, for a time, exceed expenditures. So, in a manner sufficient to earn any Enron executive a trip to the slammer, Congress soon began pillaging the fund, using the money to supplement its insatiable quest for pork. Worse yet, it then covered its actions with a lie of unfathomable proportions. Ostensibly, such violation of public trust is assuaged by the substitution of IOU’s, offered as a — guarantee” of repayment. Consider the abject absurdity of this concept, and how it exemplifies the unbridled contempt with which these politicians regard the American people. Not even worth the paper it is written on, any government issued — IOU” simply concedes the fact that monies were indeed appropriated, and that sooner or later, somebody will be forced to repay them. Since governments cannot create wealth, and only possess that which can be forcibly extorted from the citizens, those promissory notes hold no monetary value whatsoever. Instead, they are nothing more than confessions of the original theft. If they are to be repaid, it will be by the very same citizenry that was overtaxed to create the surplus in the first place.

The problem for the politicians – especially Democrats – is practically insurmountable. Consider that they have the legacy of FDR to protect at all costs. But those are just table stakes compared to the pork the payroll tax permits – both sides of the aisle are guilty there. Then there is the huge constituency presently receiving checks from the system tied to the workers who will be mighty steamed if suddenly told that all the money they’ve “paid into the system” was actually a tax and is gone. This is why Social Security has traditionally been called the “third rail of American politics.”

President Bush’s idea to permit younger workers to voluntarily draw off some of the payroll tax into IRA-like personal accounts is a way of winding the system down without a political and economic meltdown. But even he can’t talk about the true nature of this Ponzi scheme without giving the game away. That the Democrats refuse to even discuss personal accounts is proof that they want to keep riding the carousel until the bitter end.

Written by martinipundit

March 10, 2005 at 10:48 pm

Posted in Economy, Politics

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