Six Misconceptions About Social Security

Bellevue University's Economic Department ^ | Dr. Judd W. Patton

[Republican_Strategist]

Contact Dr. Judd W. Patton

Why do we continue to accept this socialist program?

[demkicker]

I guess we can only hope for another Ross Perot'esque'" type to run for President and harp, harp, harp about this b.s. scheme called social security. We can always hope.

[TheGrimReaper]

"In 1916 an Italian immigrant named Charles Ponzi created an investment fund that paid large dividends without making any investments. Money from new investors was transferred to old investors while the new investors received money from newer investors yet. The system had flexibility and boldness and worked as long as an ever-expanding pool of suckers could be found. Charles Ponzi made a profit on this, and so does the U.S. Government." - P. J. O'Rourke, on the subject of Social Security.

[Republican_Strategist]

A worker's rate of return is based on the amount of money paid into the system, the worker's monthly benefit and life expectancy. Since Social Security is skewed to help those with lower incomes, people with higher wages tend to get a lower return than those with lower wages. However, some of this progressive tilt is offset because lower-wage workers generally have shorter life expectancies (and receive fewer benefits) and longer working lives (and pay taxes longer). A person who starts his working life immediately after high school and works from age 18 to age 67 will pay into the system for 49 years; however, Social Security only credits individuals for their 35 highest earning years. Extra taxes paid by those who begin working early do not earn additional benefits.

In general, workers born before World War II paid significantly less in taxes than they will receive in benefits - and can expect a higher rate of return than subsequent generations. By contrast, baby boomers can expect a rate of return of less than 2 percent, and Generation Xers can expect less than 1 percent. Children born today can expect a rate of return from Social Security of almost zero, assuming that the program can pay full promised benefits.

[Republican_Strategist]

Blacks have shorter life expectancies than whites, they can expect to collect fewer Social Security benefits. For example, in 1996 the life expectancy of a black male at birth was 66.1 years. This means a black youth can expect to pay Social Security taxes for his entire work life and die almost a year before achieving the right to collect full benefits at age 67. (However, reduced benefits will still be available at age 62.) Prospects are better for black females, but their life expectancy of 74.2 years is less than the 79.6 years for a white female. All these life expectancies are expected to increase in future years - but the rate of return will still be lower for blacks. Further, a smaller proportion of blacks go to college, so blacks as a group begin their working lives earlier and thus start paying payroll taxes sooner than whites. But on the average they receive no additional benefits for the extra taxes they pay because Social Security benefits are based on 35 years of work history. Paradoxically, even though black workers get a lower rate of return, their overall expected loss from Social Security (discounted value of taxes minus benefits) is slightly smaller. Why? Because they earn lower incomes, they pay less in taxes. Thus, although their return is smaller, their "investment" in Social Security is also smaller. By contrast, the average white worker is forced into making a larger "investment" in Social Security.

[Willie Green]

If the current SS System = Enron, then Dubya's "privatization" plan = Arthur Anderson.

Both major political parties perpetuate The Big Lie regarding Social Security. The Big Lie has existed since Social Security's inception. The debate over "privatization" is only the latest version of The Big Lie.

The Big Lie is that Social Security is some kind of retirement savings plan.

It is NOT.

Social Security is a socialist income redistribution scheme, nothing else.

Those who are working are taxed to provide a "safety net" for those who are less fortunate.
Originally, this meant retirees and surviving dependents.
Congress has, of course, complicated it far beyond this over the last 65 years.

But one fact remains: it is NOT a "savings plan", it is an income redistribution scheme.

A major facet of The Big Lie is that "we have to do something so that Social Security remains solvent in the future.

Poppycock!

In today's age of modern computerization, the computation for operating an income redistribution scheme that remains perpetually solvent is quite simple:

This month's total SS tax receipts = Next month's total SS tax disbursements

The only change necessary to the current system is that monthly payments to eligible recipients would be a variable amount, not fixed.

THERE IS ABSOLUTELY NO NEED FOR A MULTI-TRILLION DOLLAR "TRUST" FUND!!!

Congress should NEVER have been permitted to confiscate so much money from the American People in the name of The Big Lie. This fund is nothing but a slush fund that Congress raids to pay for other government expenditures. If private sector employers did the same thing with their companies' pension funds, they'd be placed in prison. The "privatization" plan proposed by Bush is merely an attempt by Wall Street brokerage firms and financial institutions to get in on the scam: grab a portion of a constant revenue stream (guaranteed by taxation) from which they can skim their commissions.

Daschle's "concern" over the Social Security system is a lie.

Bush's plan to Enronize the system is worse.

The American People need to wake up and put these liars and thieves in prison.

[Libertarianize the GOP]

bump

[Republican_Strategist]

To his credit, Bush concedes Social Security is bankrupt and he proposes a partial privatization, with 2 percent of payroll taxes diverted to private accounts. Workers could keep more of their earnings, invest it in markets and own their assets. But it's not nearly enough. The system should be abolished.

[El Sordo]

Placemarker bump.

[dcwusmc]

Ponzi-scheme BUMP. Eradicate SS bump. And some people wonder why I don't trust FedGov... Hmmmmmmmmmmmm

[TheGrimReaper]

Children born today can expect a rate of return from Social Security of almost zero, assuming that the program can pay full promised benefits.

For this, Charles Ponzi went to prison.
FDR was elected President 4 times.

[Texas Eagle]

Why do we continue to accept this socialist program?

The answer (sort of) lies in the opening sentence from the third myth: Well, it is true that workers today pay 6.2% of their earnings (up to an earnings limit of $72,600) and the employer pays the 6.2% as well.

The fact of the matter is, the employee NEVER sees that money in the first place so he or she has no sense of ownership of it. In other words, the "worker" doesn't PAY any of those taxes. It has been my long-held belief that the quickest way to overhaul our tax and socialist security system is to require employees to write a check every month for all the taxes that are currently "withheld" from their paychecks.

Yes, yes, I know a lot of people aren't responsible enough to do this, but to hell with them. If they fall behind on their payments, then the taxes could be garnished from their paychecks.

Isn't garnishing the taxes the same as withholding them? Ask someone who has had his or her paycheck "attached" and I will tell you.....errrr.....I mean THEY will tell you that there is a very big difference.

[spunkets]

" Why do we continue to accept this socialist program?"

LOL, you missed the 1st misconception. It ain't voluntary. Beside that, if you do attempt to eliminate it and get close, some old guy'll run ya though with a sharpened golf shaft.

[sarasmom]

Stop the madness!

I am 44 and I am screwed.

I have no wish to pass this insane burden on to my beloved child.I missed the original cuttoff and the subsequent reinstatement of the GI bill.Bad timing on my part.Good lesson on the fact that life is not fair.

Stop taking FICA from anyone under 40 years old.In the interim chaos, do means testing for benefits, but for the sake of future generations, stop the insane lie of the Social Security system now!I am fully aware that this "sacrifice" is not "fair" to people my age and older.But the continuation of this now obscene scheme is not fair to anyone.End it!

[dcwusmc]

Stop taking out the "contribution" and let US have it to invest as WE see fit. Let our money help create NEW wealth! Let us enrich ourselves!

[Mark]

Where is Hillary when we need her?

[Maxy]

Good point. SHe is the smartest woman in the world and could fix this very quickly. Hillary is wonderful. While she is at it, she could fix all the worlds problems.
I think I am going to get sick after saying that !!!!

[Lurker]

Because not one single Republican has the cojones to stand up and call it what it is, let alone enough Republicans to sponsor a bill to end this Government sponsored thievery.

L

[VietVet]

I don't know why we are arguing about it. We all know that as long as the 65 and older population block votes at a higher rate than the rest of us, no Administration in Government will propose, and no Congress ever elected will pass a repeal of Social Security.

What is most likely to happen, is that the government will continue to send out the checks, every month, whether they have the income from taxes to pay for them or not. And they will print dollar bills for the Federal Reserve Banks to issue to cash those checks. The resulting inflation will effectively reduce the benefits, to zero in the end, while the politicians maintain the fiction that the government is meeting its obligations to the retired.

VietVet