The present value of Social Security’s expected revenue stream is less than the present value of its expected expenses. That is the very definition of bankruptcy. FULL ARTICLE by Robert P. Murphy
Source link: http://archive.mises.org/13159/the-myth-of-the-social-security-trust-fund/
The Myth of the Social Security “Trust Fund”
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As the MMT guys like to say, “the government can’t go bankrupt. It can always print more money. It’s just a question of real resources”. Which means, either they will meet their obligations in nominal terms, but pensioners will get shafted in terms of real value, or pensioners will receive what they should have gotten in real value, and everyone else will have to make up for the shortfall.
First off, employed people also pay that 15 or so percent – it just doesn’t show up on their paycheck stub. In the US they try to fool people by saying your employer is paying 1/2 of the tax. In truth, the employee pays the whole tax since it just means the employer has less available for your salary. It’s surprising how well this subterfuge works.
I think Harry Browne’s analysis in 1996 (Why Government doesn’t work) was spot on. He shows a simple chart with the rates of SS taxes paid in other countries. Here’s the top end:
Italy 10% workers 46% employer total 56%
france 19% workers 31% employer total 50%
Holland 37% workers 10% employer total 47%
Japan, Sweden, Germany, Belgium, Austria, totals are 25% to 41%. Sweden’s 32% is shown as entirely paid by the employer.
There’s a general increase in the share of employer vs. employee as the rates increase. So, it appears the entire world gets suckered by this idea that your employer pays it – NOT you.
As Harry points out, these countries have had SS longer than us and so this chart is only pointing out WHERE we are headed. And Murphy is right on when he says the discussion is merely to soften us up for an increase. I’m betting they will ONLY increase the employer share. Then they can tell us how they saved SS without a tax hike.
But Harry did also have a plan for privatization of SS. He wants to have a fire sale on all the Federal lands and buildings to be used to buy private annuities for people 50 and over. The rest simply get out of the tax burden and can invest it themselves.
Think of it, one day maybe someone will buy and convert the FED buildings to a condo! That would be a laugh. Maybe Disney would want to buy the Grand Canyon for an amusement park.
But the US is not going to do that – not when they believe that money inflation will solve all their problems. And this is why people like Krugman exist. As Rothbard wrote, they are the government intellectuals that get rich by spreading the government lies. Quite a good racket if you ask me.
“Italy 10% workers 46% employer total 56%
france 19% workers 31% employer total 50%
Holland 37% workers 10% employer total 47%”
Good God, seriously? Why even bother to get an education and work hard at all when you’re spending your whole life climbing up hill with a ball and chain attached to each leg? No wonder so many over there are bohemian.
So, essentially, monies collected for Social Security didn’t actually go to Social Security, so now it’s broke because the government used the collected funds for other things and now wants to stick us with the bill for the balance owed.
So, essentially, they lied about what the money was for and now want us to cough up even more because they can’t replace it themselves.
And we can say it’s okay because the law didn’t actually say the dedicated tax had to go to the Social Security fund?
The funny thing is, the tax couldn’t say that it had to go to Social Security because that was part of the compromise made so that Social Security could be declared constitutional.
From Wikipedia (saw this from other sources before):
Helvering v. Davis, 301 U.S. 619 (1937), decided on the same day as Steward, upheld the program because “The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way”. That is, the Social Security Tax was constitutional as a mere exercise of Congress’s general taxation powers.
“‘The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way‘. ”
Sounds like Christmas in the halls of the capital building!
And the really infuriating part about this as well is that if a private enterprise did the exact same thing, the management team would be hauled away in shackles.
Statistics show that any imaginable, randomly generated, incorrect fact has a 99.984% chance of Paul Krugman believing it is correct.
You can’t write an IOU to yourself and call it a trust fund. Social Security is broke today, not in 34 years from now.
Who will in the MSM will say the Emporer is naked? The Austrians have said this since the founding of the idiotic program.
All US government checks come from the US Treasury. Why do people think the Treasury will stop writing Social Security checks but don’t worry about checks for guns and ammo and army tanks and whatever?
I think you are a lot more optimistic then I am, if you think they can keepit together for anyone over 40. My best guess is if they keep spending like they are and we get a couple of bankrup states they could screw it up for anyone under 55 to 60.
“At times I am amazed that the general public hasn’t rounded up all of us economists and thrown us over Niagara Falls.”
It’s because economists have done such a fine job of scapegoating lawyers.
Well, here is the cloud no bigger than a man’s hand, a revival of a 60-year-old idea of a global paper currency to fix what ails us.
So…..are you ready?
http://www.alternet.org/story/148082/we%27re_being_conned_on_social_security_–_how_we_could_easily_raise_benefits_or_allow_people_to_retire_earlier
“How We Could Easily Raise Benefits or Allow People to Retire Earlier”
“So if we, as members of a nominal democracy, want to live in a society where older people aren’t mired in poverty — it’s estimated that four in 10 would be without Social Security benefits — then all we have to do to close the gap is increase overall taxes by less than a single percentage point. Problem solved! And we didn’t even require an august commission.”
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