Social Security; Will it last???

[Kormanthor]

Social Security; Will it last???


President Roosevelt signing Social Security Act--August 14, 1935
The Social Insurance Movement

Bismarck The Social Security program that was adopted in late 1935 relied for its core principles on the concept of "social insurance." Social insurance was a respectable and serious intellectual tradition that began in Europe in the 19th century and was an expression of a European social welfare tradition. It was first adopted in Germany in 1889 at the urging of the famous Chancellor, Otto von Bismarck. Indeed, by the time America adopted social insurance in 1935, there were 34 European nations already operating some form of social insurance program. Philosophically, social insurance emphasized government-sponsored efforts to provide for the economic security of its citizens. The tradition of social insurance would come to be seen as the reasonable, practical alternative to the radical calls to action represented by Townsend, Long, Sinclair and the others.

Although the definition of social insurance can vary considerably in its particulars, its basic features are: the insurance principle under which a group of persons are "insured" in some way against a defined risk, and a social element which usually means that the program is shaped in part by broader social objectives, rather than being shaped solely by the self-interest of the individual participants.



Social insurance coverage can be provided for a number of different types of insured conditions, from disability and death to old-age or unemployment. We may find it obvious to think of death, disability or unemployment as conditions causing loss of income and which can be ameliorated by pooling of risk. It is at first a little odd to think of old-age or retirement in these same terms. But that is precisely how social insurance conceives of retirement, as producing a loss of income due to cessation of work activity. So in terms of the eternal problem of economic security, social insurance endeavors to solve it by pooling risk assets from a large social group and providing income to those members of the group whose economic security is being threatened.
The Promise
The promise was a retirement plan that we would pay into every week for the working portion of our lifetime. In return we would have the money we would need
to live on when we retire.
The Reality
In a perfect world we would be able to go to sleep at night knowing that the
promise and the reality would be the same. However, we all know that this world is
far from perfect don’t we ?
In 1976, I graduated high school believing the promise. I was young, innocent,
and easily impressionable. So because of my strong belief in my country of which I
was so proud to be a part of and a partner with in the building of a future for both
myself and my country. So I started my adult working life in the U.S. Navy thinking that I could first serve my country while I earned a way to go to college. My reasoning was that I would be able to make more money, which in turn would give me a better living
& retirement down the road.
Boy was I wrong! Now at the age of forty-six I am making a whopping nineteen
thousand a year & still trying to finish my associates degree. On top of that I am told
that I better look out for myself when it comes to my retirement because the government
that I blindly trusted for so many years has spent all of the money in the Social Security
Fund. Read what Senator Grams & Rep. Sanford has to say about it!
The Social Security trust fund is “EMPTY�. More people believe in UFOs than in the future of social security.
Sen. Rod Grams
Beginning in 2008, 74 million baby boomers will become eligible for retirement, and the Social Security system will begin to collapse. From that point on, we will have more retirees than ever and fewer workers paying into the Social Security system. To put this into perspective, before the "baby boom" generation, there were 100 workers for every retiree. But as these same baby boomers begin to retire, that number is projected eventually to drop to merely two workers per retiree. Rep. Mark Sanford
Foresight is something folks in Washington could use right about now. At the beginning of April, the Social Security trustees told Americans that the nation's retirement system would go bankrupt about 24 months later than we had expected. According to their calculations, the wolf will not be at the door until early next century. In 1998, Social Security ran a $100 billion surplus. Washington spent $30 billion, and the remaining $70 billion paid down existing federal debt. Not a penny was used to pay for Social Security reform.

As a working person who is concerned about retirement security, I am especially concerned and incensed at Congress and the Federal government for collecting excess Social Security "contributions" and placing them into a mythical Trust Fund. The net effect of these excess "contributions" is to artificially reduce the Federal deficit--without any savings accumulation for future Social Security benefits.

These are the Facts
• Excess Social Security contributions, coming from equal amounts paid by employee and employer taxes, currently provide more money than is currently spent on Social Security benefits.
• Excess Social Security contributions will accumulate until about 2012 at which time expenditures will exceed contributions.
• The Social Security Trust Fund will accumulate about 2.6 Trillion Dollars worth of excess Social Security contributions.
• Increasing numbers of retirees will cause higher Social Security expenditures after 2012 that will exhaust the 2.9 Trillion Dollars in the Trust Fund around 2029.
• The excess Social Security contributions said to be in the Trust Fund have already been placed in the General Fund and have been spent.
• The more than 100 Billion Dollars in annual excess Social Security contributions have been used to reduce the Federal deficit or produce a "surplus." (The deficit or surplus is basically the amount of money deposited in the general fund minus the amount of money spent.)
• The Federal government places nonnegotiable government bonds in the Trust Fund.
• Government bonds are essentially IOUs that the Federal Government will attempt to honor through its taxing power, borrowing ability, and money printing authority.



Is this confusing? Is this unbelievable?
Your representatives in Congress have been supporting this fictitious Trust Fund for to many years. It's time for a change.
Is There Really a Trust Fund?
Task Force Hearing, June 8, 1999
Introductory Statement of Chairman Nick Smith
It is in this role as a savings account that the Trust Fund could fail. It cannot work because it holds no independent assets. Though the Trust Fund is backed by government securities, these have a different meaning than they would for you or me. If I hold a government bond, I have an asset that the government will give me money for or that I can sell at any time. If the government holds a bond, however, its obligation to give itself money is meaningless. The government cannot make these bonds good, as needed in 2014, except by borrowing, reducing other expenditures or taxing citizens.

Interesting Quotes

David Brinkley
This Week with David Brinkley (ABC News)
August 16, 1992
[To President Bush:] You mentioned Social Security. The trust fund consists, increasingly, of IOU's sent over by Congress, which keeps spending the money.

Lars-Erik Nelson
Newsday
March 5, 1995

. . . [A] s this week's debate over the Balanced Budget Amendment should have shown, Social Security taxes are being used to offset the federal budget deficit. The Social Security trust fund is operating in surplus, taking in $70 billion more this year than it is paying out. The extra revenues are used to buy Treasury bonds that finance the general operating costs of government. Such use of Social Security revenues, as Sen. Daniel Patrick Moynihan (D-N.Y.) once said, is theft.... By making the deficit appear to be $70 billion smaller than it actually is, this "embezzlement" of your FICA contributions (a word used by the late Republican Sen. John Heinz of Pennsylvania) also reduces pressure to increase income taxes on wealthier Americans.



Editorial
The New York Times
March 18, 1991

If Congress had acted responsibly, it would have used the trust money to lower the deficit, thereby pumping billions into private capital markets, or to finance public investments. Either choice would have sparked economic growth and raised the income of future taxpayers which is the only way Congress can lighten the burden of paying future retirees. But what Congress did instead was to use the trust funds to pay ordinary bills. The Treasury has borrowed from the trust, in effect masking a high and rising Federal deficit. Senator John Heinz of Pennsylvania has labeled these loans "embezzlement," but his accusation is hyperbolic. Come 2020, Congress will have to raise taxes to pay off the loans. Ultimately, taxpayers, not the trust fund, protect future retirees.
Editorial
USA Today
May 30, 1996

"Should Social Security go private? . . . Its trust fund is a fraud used chiefly to mask the size of the federal deficit . . . Social Security surpluses now are spent immediately on other federal programs. The trust fund's assets that opponents to change count on are nothing but a pile of federal IOUs. Boomers will have to depend on the generosity of workers to pay thousands more in taxes. Or of lenders to loan the government trillions of dollars at reasonable rates. Or they'll see their benefits slashed a third."

Speaker Newt Gingrich
Nationally televised address
April 7, 1995

In fact, the money the government has supposedly been putting aside from the Baby Boomers' Social Security taxes is not there. The government has been borrowing the money to pay for the budget deficit. The Social Security Trust Fund is simply IOUs from the U.S. Treasury.... [Social Security] would be fine if the government would stop borrowing the money
Senator Ernest "Fritz" Hollings (D-South Carolina)
Congressional Record
April 24, 1991




The truth is that the Social Security Trust Fund has “already� been stripped bare. There is no trust and no fund! It is a lot like the S&Ls. The savings and loans had a lot of real estate on the books, a lot of property, a lot of shopping centers, a lot of deposits, and everything else, until you looked inside and found out there was nothing there. The assets were mostly on paper.... Meanwhile, the Social Security cupboard is bare.
Embezzlement: is the fraudulent appropriation of property by a person to whom it has been entrusted. For instance, a clerk or cashier can embezzle money from his employer; a public office can embezzle funds from the treasury. Embezzlement differs from larceny. In larceny, the perpetrator wrongfully takes property from another's possession by fraud or stealth. In embezzlement, the property is already in the wrongdoer's possession, because it is entrusted to him for some purpose not his own; in embezzling, he appropriates it for his own use.Embezzlement may range from the very minor, involving a few dollars, to immense, involving millions of dollars and very sophisticated schemes.Embezzlement usually involves falsifying records in order to conceal the theft. Embezzlers commonly steal relatively small amounts repeatedly over a long period of time, although some embezzlers steal one large sum at one time. Some very successful embezzlement schemes have continued for many years before being detected due to the skill of the embezzler in concealing the nature of the transactions.One of the most common methods of embezzlement is to under-report income, and pocket the difference. Another method is to create a false vendor account, and to supply false bills to the company being embezzled so that the checks that are cut appear completely legitimate. Yet another method is to create phantom employees, who are then paid with payroll checks. The latter two methods should be uncovered by routine audits, but often aren't if the audit is not sufficiently in-depth, because the paperwork is in order. The first method is easy to detect if all transactions are by check or other instrument, but if many transactions are cash, it is much more difficult to detect. Employers have come up with a number of strategies to deal with this problem. In fact, cash registers were invented for just this reason.
Retrieved from "http://en.wikipedia.org/wiki/Embezzlement"

Bush and Kerry on Social Security Reform
The Associated Press recently asked both presidential candidates about their feelings on Social Security reform. President Bush pledged to "keep Social Security’s promise to today’s seniors, while strengthening it for future generations, without changing benefits for retirees or near retirees or raising payroll taxes. We will instead add voluntary personal savings accounts to allow today’s workers to build a nest egg that can be passed along to their families. These accounts could be part of a comprehensive plan, which according to the Social Security actuaries, will strengthen the system



permanently. "Senator Kerry replied, "As president, I will not privatize Social Security. I will not cut benefits. I will not raise the retirement age on America’s senior citizens. And together, we will make sure that senior citizens never have to cut their pills in half because they can’t afford lifesaving medicine and more and more of a senior's Social Security check is eaten up by Medicare premiums. That is the choice in this election, between keeping “the promise� of Social Security or choosing George Bush’s secret plan to privatize Social Security, gambling on his four-year record of wasting surpluses that could be used to strengthen Social Security and instead giving more tax cuts to the wealthiest Americans.�
Cato Scholar Suggests a Social Security Wager
October 8, 2004
Cato adjunct scholar Michael New writes in a Cato Daily Commentary that if supporters of PRAs continue to dodge the issue, meaningful reform will never happen. To avoid losing ground in the debate and to generate new support for private accounts, New proposes a novel experiment. Inviting Kerry to put his money where his mouth is, he suggests that Bush should challenge Kerry to prove that PRAs are not better for workers and retirees than the current system. New's commentary follows. "In an effort to court senior citizens in the final few weeks before the 2004 election, opponents of Social Security reform have begun their usual scare tactics. Last week (9/21), Democratic presidential nominee John Kerry charged that President Bush's plan to allow younger workers to establish private accounts would generate a $940 billion windfall to the financial services industry while cutting benefits for senior citizens. The New York Times editorial board got in on the act as well, saying that the private accounts option would result in reduced benefits and less reliable incomes for retirees.
"President Bush has done a fair amount to advance the cause of Social Security privatization. To the surprise of many, he first raised the issue during the 2000 presidential primaries and he advocated private accounts during his acceptance speech at the 2000 Republican convention. Upon taking office, he created a bipartisan commission to explore Social Security reform options, including private accounts. And, at last summer's 2004 Republican convention, he again pushed the idea of private accounts as part of his 'Ownership Society' initiative.
"Unfortunately, if history serves as any indication, Bush will probably choose not to engage Kerry on the issue in the final, heated weeks of this year's campaign. In general, when reform supporters are confronted with such scare tactics, they back down and pledge to uphold the current system. Such a response may be effective at deflecting criticism, but it does considerable damage to Social Security's long-term prospects.



"Indeed, Social Security is going to require some sort of major overhaul in the near future simply because it is not financially viable over the long term. But before any sort of meaningful reform can occur, people need to hear various ideas debated for a number of years. If reform supporters insist on dodging the issue, those important discussions will never take place.
"Clearly, supporters of private accounts need another strategy. One way to do this is to raise the stakes in the debate, both figuratively and literally. This could be done through a wager. For instance, President Bush could make the following proposal to Sen. Kerry:
"Take two workers, each earning an identical income. One will be allowed to invest 2 percent of his income in a private Social Security account. The other will have to place the same amount of money into the current government-run system. After a specified amount of time, analysts will calculate the amount of return each worker would have received on his investment. If the worker who kept his money in the traditional Social Security program would come out ahead, Bush will pay Kerry the difference. Likewise, if the reverse happens, Kerry would pay Bush the difference.
"Such a wager could change the dynamics of the debate on Social Security reform. Suppose that Kerry refused the wager. He would then rightly face criticism for refusing to believe his own sound bites and having little faith in his own policy proposals. However, if Kerry accepted the wager, the private accounts would surely come out ahead in the long run. That would visibly demonstrate the benefits of private accounts in a way that is easy to understand and would advance the prospects for reform.
"Such a wager would dramatically advance the long term prospects of reform. For once, it would put reform proponents on the offensive on the issue. It also would facilitate debate and discussion as people could see the tangible benefits of private Social Security accounts. Finally, at least one prominent opponent of reform would be left with fewer resources to make his misleading accusations around election time."
I think we are missing something here. Any rational person would have to admit that
many politicians & government officials have been embezzling our retirement money
for nearly as long as I have been living. Why don’t they have to answer to the Laws of
the Land just like anyone else would?

Social Security Works Sited

Wikipedia, a free-content encyclopedia; http://en.wikipedia.org/wiki/Main_Page
http://www.socialsecurity.org/
http://www.questia.com/Index.jsp?CRID=s ... ty_history ; http://www.ssa.gov/ ; http://www.ssa.gov/history/briefhistory3.html
http://www.whitehouse.gov/infocus/social-security

According to this data social security is already GONE.... why do you
think that bush wants to privatize it.

[Five Civilized Nations]

There are four possible solutions to the American predicament:

1) Social Security benefits will be curtailed.
2) Social Security will be taken away from the American government to private sources
3) Social Security tax will be raised.
4) Social Security will end.

Also, the first three can be used in any combination.

However, none of these takes into account the massive amounts of money that the American government owes a lot of money. Because that the government is unable to deposit Social Security money into a bank, it has been forced to spend all of it.

There is no question that Social Security will end as we know it...

[Kormanthor]

In my opinion the people responsible for taking the SS funds should be
prosecuted to the fullest extent of the law.

[Five Civilized Nations]

They can't be... They've done nothing wrong. Any jury or judge would acquit them of any wrongdoing...