Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

The Missing Money (Thomas Sowell on Soc. Sec.)
Creators Syndicate ^ | June 21, 2011 | Thomas Sowell

Posted on 06/20/2011 1:08:08 PM PDT by jazusamo

 

One of my earliest memories of revulsion against war came from seeing a photograph from the First World War when I was a teenager. It was nothing gory. Just a picture of a military officer, in an impressive uniform, talking to a puzzled and forlorn-looking old peasant woman with a cloth wrapped around her head.

He said simply: "Don't you understand, madam? The village is not there any more."

To many such people of that era, the village was the only world they knew. And to say that it had been destroyed in the carnage of war was to say that there was no way for them to go back home, that their whole world was gone.

Recently that image came back, in a wholly different context, while seeing pictures of American seniors carrying signs that read "Hands off my Social Security" and "Hands off my Medicare."

They want their Social Security and their Medicare to stay the way they are — and their anger is directed against those who want to change the financial arrangements that pay for these benefits.

Their anger should be directed instead against those politicians who were irresponsible enough to set up these costly programs without putting aside enough money to pay for the promises that were made — promises that now cannot be kept, regardless of which political party controls the government.

Someone needs to say to those who want Social Security and Medicare to continue on unchanged: "Don't you understand? The money is not there any more."

Many retired people remember the money that was taken out of their paychecks for years and feel that they are now entitled to receive Social Security benefits as a right. But the way Social Security was set up was so financially shaky that anyone who set up a similar retirement scheme in the private sector could be sent to federal prison for fraud.

But you can't send a whole Congress to prison, however much they may deserve it.

This is not some newly discovered problem. Innumerable economists and others pointed out decades ago that Social Security was unsustainable in the long run, including yours truly on "Meet the Press" in 1981.

But the long run doesn't count for most politicians, since elections are held in the short run. Politicians' election prospects are enhanced, the more goodies they can promise and the less taxes they collect to pay for them.

That is why welfare states in Europe as well as here are facing bitter public protests as the chickens come home to roost.

It has been said innumerable times that nobody already on Social Security will lose their benefits. But it needs to be spelled out emphatically, so that political demagogues will not be able to scare retired seniors that they are going to have the rug pulled out from under them.

Retired seniors have the least to fear from a reform of Social Security, since neither political party is about to take away what these retirees already have and are relying on.

Despite irresponsible political ads showing an old lady in a wheel chair being dumped over a cliff, the people who are really in danger of being dumped over a cliff are the younger generation, who are paying into Social Security but are unlikely to get back anything like what they are paying in.

The money that young workers are paying into Social Security today is not being put aside to pay for their retirement. It is being spent today, paying the pensions of the retired generation — and it can't even cover that in the years ahead.

What needs to be done is to allow younger workers a choice of staying out of a system that is simply running out of money. Nor can the system be saved by simply jacking up taxes on "the rich."

Generations of experience have shown that high tax rates that "the rich" can easily avoid — through tax shelters at home or by investing their money abroad — do not bring in as much revenue as lower tax rates that keep the money here and the jobs here.

Since the law does not allow private pension plans to be set up in the financially irresponsible way Social Security is, that is where young people's money should be put, if they ever want to see that money again when they reach retirement age.



TOPICS: Culture/Society; Editorial
KEYWORDS: sowell; thomassowell
Navigation: use the links below to view more comments.
first previous 1-2021-4041-56 last
To: okie01
"Don't knock the "providers", as a group. Sure, there are some who abuse the system -- but it's not the ordinary doctors, hospitals or services."

Sorry, this was 'ordinary' doctors, hospitals and services.

41 posted on 06/20/2011 7:30:11 PM PDT by GourmetDan (Eccl 10:2 - The heart of the wise inclines to the right, but the heart of the fool to the left.)
[ Post Reply | Private Reply | To 37 | View Replies]

To: jazusamo

“But you can’t send a whole Congress to prison, however much they may deserve it.”

C’mon, Doc! That’s Stinkin’ Thinkin’! If we set some goals, we could get rid of them one by one by one...Let’s start with Pelosi! :)

I am STILL in love with this man’s brain! As always, Thanks, Jaz! :)


42 posted on 06/20/2011 7:39:34 PM PDT by Diana in Wisconsin (I don't have 'Hobbies.' I'm developing a robust Post-Apocalyptic skill set...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Diana in Wisconsin
C’mon, Doc! That’s Stinkin’ Thinkin’!

LOL! When I read what he said the thought came to me that he just might be wrong this time.

Anyway, I'd sure like to see it tried but he's probably right. :-)

43 posted on 06/20/2011 7:47:14 PM PDT by jazusamo (His [Obama's] political base---the young, the left and the thoughtless: Thomas Sowell)
[ Post Reply | Private Reply | To 42 | View Replies]

To: jazusamo

He’s right. We may as well just admit it. And even if he was wrong, I’d still defend him to the death! :)


44 posted on 06/20/2011 7:54:48 PM PDT by Diana in Wisconsin (I don't have 'Hobbies.' I'm developing a robust Post-Apocalyptic skill set...)
[ Post Reply | Private Reply | To 43 | View Replies]

To: NVDave

If it had been invested in equities, the result would have been even worse than spending it - virtually complete political control over the economy by whomever controls the government...


45 posted on 06/20/2011 8:05:47 PM PDT by achilles2000 ("I'll agree to save the whales as long as we can deport the liberals")
[ Post Reply | Private Reply | To 29 | View Replies]

To: sportutegrl
You can start with that diaper wearing guy.

Al Franken?

46 posted on 06/20/2011 8:18:12 PM PDT by Onelifetogive (I tweet, too...)
[ Post Reply | Private Reply | To 15 | View Replies]

To: BelegStrongbow

So did I.

But then all of my customers went to China.

And I am too old to start over in a new industry.

So keep that in mind and have a fall back plan.

It can happen to you.


47 posted on 06/20/2011 8:37:06 PM PDT by old curmudgeon
[ Post Reply | Private Reply | To 3 | View Replies]

To: GourmetDan
My mom had a hip replacement and was given a brand new walker which she used once or twice. Nobody would take it back.

SOP. Medicare won't buy any appliance like this, only rent it. If you're not on Medicare, you can buy it for the price of three or four rental payments. The lessor doesn't want it back, because they're still billing Medicare for it. It's part of the system's built in stupidity.

Her husband died tragically and the hospital billed Medicare for surgical services that were not performed. When she complained to Medicare, they encouraged her to ‘work with the hospital on that’. They didn’t care one whit.

Not surprised at all by Medicare's response. But I suspect that there is something more to the story.

We often get billing that is intended for another party. Medicare almost never catches it. When we do, they consider it an imposition.

The system is complex and fraught with mistakes. My wife is an accountant...and it's a giant task to match up the amounts billed by the vendors with the amounts paid by Medicare. Most people don't bother...and I don't blame them.

48 posted on 06/20/2011 8:38:07 PM PDT by okie01 (THE MAINSTREAM MEDIA: Ignorance On Parade)
[ Post Reply | Private Reply | To 41 | View Replies]

To: NVDave
Small nit: The money was first laundered (in a way) by buying US Treasury debt issued as Congress spent more money than we had tax revenues coming in.

So the SS surplus wasn’t ‘spent’ so much as ‘used to buy debt payable by future tax revenues.’ The proceeds from selling that debt (to the Social Security fund, among other investors) was then spent.

Yeah, the Social Security Administration, an arm of the government, bought IOUs from the Treasury - also an arm of the government.

So the "I owe yous" are actually "I owe mes." Which are, inherently, meaningless and worthless.

Any attempt to obtain dollars from them will simply dilute the value of the dollar, which is also government debt.
The Sword of Damocles hanging over retirees is not the discontinuation of Social Security but the radical dilution of the scarcity, and thus the value, of the dollar.

49 posted on 06/21/2011 5:46:23 AM PDT by conservatism_IS_compassion (DRAFT PALIN)
[ Post Reply | Private Reply | To 22 | View Replies]

To: greatplains
I hated my job for decades, but when I was 40, I went back to grad school for a PhD, and a chance to change careers.

After I got it, I wound up back in the same old type of position, but deeper in debt.

However, thanks to an incredible stroke of luck (and a total bitch of a fellow worker) I got myself fired and had to start looking again.

Fortunately, I wound up with the best job in the world for me. I could make more elsewhere, but I live in my hometown, I got to spend the last 10 years of his life with my father, I make enough to pay for the things I want the most, if not all the things I would like to have, my children all live in town, my boss respects me and the work that I do, I get regular raises, two two-week vacations each year (around July 4 and Christmas) plus I've got an extra week, I really like what I do. Let's see, have I left anything off? Probably.

The only downside is that I have a 1&1/2 hour one way commute each day, so I'm 3 hours on the road. That's what radio and CDs are for.

I plan to work till I'm 70 at least here. Then maybe I'll try to find a part time job at home. Or write a book, or something.

Cheers

50 posted on 06/21/2011 5:58:42 AM PDT by chesley (Eat what you want, and die like a man.)
[ Post Reply | Private Reply | To 34 | View Replies]

To: old curmudgeon

Our customers can’t even move to Siler City.


51 posted on 06/21/2011 7:01:43 AM PDT by BelegStrongbow (St. Joseph, patron of fathers, pray for us!)
[ Post Reply | Private Reply | To 47 | View Replies]

To: Onelifetogive

http://www.washingtontimes.com/news/2011/may/17/senator-questions-benefits-to-adult-baby/

Actually I meant this guy, but funny.


52 posted on 06/21/2011 7:51:33 AM PDT by sportutegrl
[ Post Reply | Private Reply | To 46 | View Replies]

To: BelegStrongbow

I am drawing SS now but I am still working. I only get a part of it and would supposedly have benefited if I had waited a couple of years to draw the whole big wad (about 700 a month). My take on it was get what I can now. It ain’t gonna be there at some point in the future, maybe next week.


53 posted on 06/22/2011 4:37:45 AM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
[ Post Reply | Private Reply | To 3 | View Replies]

To: BelegStrongbow

That 2G a month may buy you a nice evening at the McDonald’s by the time you get it. Or maybe it won’t. SS will not rise with inflation any more and real inflation is running at between 6 and 10 % right now and accelerating. At some point we start talking about inflation per month then day. That point will occur pretty soon, I think. Our public servants won’t talk about it though.


54 posted on 06/22/2011 4:45:20 AM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
[ Post Reply | Private Reply | To 12 | View Replies]

To: sportutegrl

If you raise the retirement age to 99 the problem is solved.Intake will not match or exceed outgo in the foreseeable future.


55 posted on 06/22/2011 4:46:56 AM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
[ Post Reply | Private Reply | To 15 | View Replies]

To: arthurus

I think you’re right on all counts, art, though I’m not entirely sure hyperinflation will come. Not sure it won’t, but think we’re still in the tipping area for it, given the arrival of responsible governance of finance.

My point in stating the amount was to make clear it would be a ridiculously small amount of no particular value in maintaing even a minimal standard of living, given the circumstances. Which is why I plan on working until I die.


56 posted on 06/22/2011 9:08:29 AM PDT by BelegStrongbow (St. Joseph, patron of fathers, pray for us!)
[ Post Reply | Private Reply | To 54 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-56 last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson