J and D's Corner

From the Letters Archive

To:  AV Press

Date: 02/2005

Re:  Social Security (The Ponzi Scheme)

Of all the debates currently simmering in our wacky & wonderful world, the one on Social Security must be the wackiest. Either almost no one understands how SS works, or virtually everyone who writes about it is dedicated to deliberate obfuscation. Good old Ralph Brax’s latest column triggered this letter, but the debate is a cross-party hot potato.

There are so many points involved I don’t know where to start this rant, but lets pick the term “crisis”. Is there a crisis? Well, visualize being in a car with no brakes headed down a steep mountain road with a sharp turn at the bottom. Since you have no brakes, at the bottom of the mountain the car will crash. On the other hand, it will take a while before you reach the bottom. Are you in a crisis situation? Alternatively, think of the joke about the guy who fell from the 102nd floor of a skyscraper. As he passes the 32nd floor someone yells “How’s it going?”. “Fine so far” he answers. No crisis? You decide. Frankly, just dismissing the problem by saying “Oh, we'll figure out something later on” doesn’t cut it for me.

Then there’s the term “trust fund”. Boy, “trust” sure is the operative word here. Most everyone totally ignores the fact that the so-called trust fund is just a bunch of IOU’s. The fact of the matter is that every dollar you pay in Social Security taxes is spent right then and there. Some goes right out to current SS recipients, then the government spends every bit of the remaining “surplus” and puts IOUs called Treasury bonds into the ‘trust fund’, promising to pay it back someday, somehow (plus interest to the bond holders). To give him credit, Brax seems to understand this, to a degree. He says decreasing Social Security contributions by allowing private investment will increase the deficit. Well, if the decrease in revenue is more than the current 'surplus' margin it will, but face it, the government in effect borrows the full amount of the ‘surplus’ anyway. Of course, you could always reduce government spending....well, one can dream.

I don’t claim to have a magic wand which will painlessly fix this gigantic Ponzi scheme we call Social Security, but I sure would like to see people face reality when they are debating it. Meantime, all you workers keep paying them taxes so I get my check every month. Thanks and God bless.