Social Security Isn't

Well, it seems like the next big thing for President Bush is taking on Social Security. This has been the "third rail" of politics for as long as I can remember. No one wanted to touch it. Well, that's about to change.

Granted, with Bush's financial record, I'm a bit worried about what he'll do with this program. But I know what I want done with it. Drop it. Kill it. Squish it. And banish it like the ponzi scheme that it is.

It's really simple. When Social Security was started, there were 42 workers for every retired person. That ratio had been cut down to 5 to 1 in 1960, and now sits at around 3 to 1. When the baby boomers start to retire, look for that ratio to flip. We haven't even touched the problem yet, and an entire generation who were told that they would be taken care of in their old age is about to pile on.

Now go look at your paycheck. Social Security taxes are currently at 12.4%, half paid by you and half paid by your employer. What's more, the return that we get from all of that money is less than 1%! And yet I'm FORCED to pay into this ponzi scheme, or I go to jail!

Andrew Biggs, a Social Security analyst at the Cato Institute put out an article two years ago that made me look rather sharply at Social Security. In it he proposed the following scenario:

Imagine you were offered the following deal: You could invest part of your Social Security taxes in a personal retirement account, as President Bush and many others favor. However, your account could only hold stocks, with no bonds or other stable investments as you aged. Making matters worse, you would retire during the biggest bear market since the Great Depression, with the S&P 500 stock index falling from 1500 in April 2000 to around 900 today.

Looks pretty grim, right? No bonds, no stability, and the market at it's lowest in years. Would you do it? Would you take that risk?

Even in a bear market seemingly tailor-made for opponents of reform, workers would reap substantial gains from personal accounts. Not just in dollars, but in control, ownership and personal security.
Stocks typically return 7 percent after inflation. A worker retiring in today's bear market would have received about 6 percent average returns, far above the 2.5 percent return an average couple can expect from Social Security (even after including all survivors and disability benefits)

So even after EVERYTHING has been factored in to the equasion, Social Security only gives you a return of 2.5 PERCENT! I get a better return than that by just letting my money sit in a low risk mutual fund, for criminy's sake! The Cato Institute has a Social Security calculator that can give you an estimate of what return you might get. It's not a pretty picture.

So why are people not being allowed to control their own future? Why can't I take the money currently being drained by the government and put it in an IRA, or a mutual fund? What's the harm in letting me put that money where I want it, instead of where the government wants it? After all, it IS my money that they're taking.

Another point is this: You've been paying hundreds of dollars a month into Social Security. You die before you reach retirement age. Who gets the money? Not you. Not your kids. Not anyone in your family. The government keeps it. That's right, all that money that's been taken away from you is now gone for good. You want to leave some to your family? As it stands right now you'd better do that on your own, because the money stolen by Uncle Sam is as good as gone. Even if it's hundreds of thousands of dollars. It's been swallowed by the world's largest pyramid scheme.

And then of course, there's the argument of what should be done with the people on Social Security right now, or those about to retire. Also, there are various questions about SSDI, or Disability Insurance. As one lady (from the page that I found the calculator on) puts it:

Where exactly do they (people on SSDI) go to invest? And what, exactly, are they to invest with? People who think they know all about the SSA always manage to ignore the "disability insurance" piece of the puzzle -- like these folks just don't exist in the SS system. Most of the knotheads I talk with -- those who believe everything would be so hunky, dorry if we could just plop our money into private investment-retirement accounts -- haven't even the foggiest notion about the amount of money (and the number of beneficiaries) within SS who are D_I_S_A_B_L_E_D -- and this includes MANY elderly (e.g., retirement age) people.

So, before you design your grand new libertarian, free-market, private capital country, keep in mind that lots of folks don't have the same options you (or I) do. And believe me well, I know from experience: I wouldn't be writing you this email today were it not for SSDI, the help of many federal and local agencies -- which saved my life, not to mention my sanity...at a time I most needed it.

There are real faces and names to such folks, Greg. Keep them in mind as you develop your plans to wipe out the system we have, because THESE are the people who are most hurt by such schemes".

My question to that is why haven't those people on SSDI invested already? What were they doing with their life? I'm hardly in the "rich" category (less than 30,000 a year) but if the shit hit the fan tomorrow, I could liquidate my assets to approximately $10,000 cash. I'm under thirty, and haven't made much money in my lifetime, but I at least figured out that I had to have a safety net, so I made one! Why haven't others done the same? I live in an area with astronomical costs of living, making less money than the national average, and yet I somehow had the foresight to ensure that an emergency wouldn't bankrupt me. I've never been on unemployment in my life. When I got laid off, I hit the street and pounded on office doors until I got another job. It took me a month. That was over two years ago now.

So the question remains, one which I have never heard answered: What right does that woman have to demand money from me or anyone else? What right does she have to demand other people's money in order to solve her problems? Can someone show me a Constitutional Amendment that states "People have the right to use tax dollars in order to fix their lives"? More to the point, what right does the government have to take away MY HARD EARNED DOLLARS and say "Oh, we'll give it back to you later." Or "Oh, someone else needs it more than you".

Forced charity at gunpoint isn't charity at all. It's theft. That woman above is stealing from me, from my parents, and from everybody with a job. While I can't speak for this woman specifically, I can state that many of the people on SSDI that I have worked with are on it due to lack of planning, poor lifestyle choices, and failure to heed the warnings around them. "Oh, I'm on my third bypass and I can't work!" Really? Maybe that three-pack-a-day habit that the doctor told you to quit contributed to that, eh? "Oh, my back and my knees went out!" Surely not from exercise, since your 400 pound body indicates that you only have a passing knowledge of what a treadmill is. "Oh, I can't work because of this or that." But you have no problem going out every night and partying to your heart's content!

I will invariably hear the argument "But don't you want so-and-so to get well and be a productive member of society?" Yes, I do, but I don't want the government to do it. The other big scream is "But you can't just let them sit/lay/die there!" Yes I can, and so should everyone else. I have no problem helping out people who hit a streak of bad luck. I have a huge problem subsidizing people who can't be responsible for their own choices. Drinking is a choice. Smoking is a choice. Drug use is a choice. And when your body finally says "OK, enough of this crap, I'm done" due to YOUR CHOICES, invariably it's the taxpayer who foots the bill for it. That needs to stop. Maybe if we stopped protecting people from the consequences of their actions, they would shape up and stop wasting our time and theirs.

If we were to keep some sort of system in place for those already retired or about to retire, and start cutting away much of the waste in the Social Security program, we could allow private individuals to fund their own retirement accounts. Our first goal should be keeping a promise to all those who paid into the system their entire life, with the understanding that their money would be there when they retired. The second goal is to unshackle those of us who are able to make our own way, plan our own lives, and invest our own money.