The money paid in Social Security taxes is
immediately paid out to retirees, with any excess going to whatever the federal
government is funding that day. The money is not invested in a trust fund, as
it would be with an insurance company.
Oh, there’s a trust fund all right, but
there’s no money in it and never has been. The fund contains over a trillion
dollars of Treasury IOUs. Will those eventually be paid?
Of course not. When Social Security got
started in the 1930s, there were forty workers for every retiree. Now, there
are only 2.9 workers, and the number of retirees continues to grow faster than that
of the workers. In about ten years, there will be only two workers for every
retiree.
When politicians try to raise Social
Security taxes, the workers will respond, “You want me to pay half the cost of
a retiree? The hell I will! And they will throw the taxing politicians out of
office.
Social Security is a transfer of funds
from young to old. When the retirement costs of the elderly become too
burdensome for the young, the system fails.
Raising the age at which Social Security
benefits begin would help, but not for long. The system is fraudulent. For
those not retired, it should be privatized and converted into true insurance,
with the money not needed immediately invested for the future.
