It appears we have come a full 360 from the begining. The United States is back at it again debating how to finance a ponzi scheme as it did in 1935. Does anyone know why Social Security was never financed in the begining with general reveues? Does anyone know why the original package with medical coverage and disability coverage was eliminated from the bill tha was finally passed by one vote? The answer is "There was no support for such a plan then." Why is today any different?
The reason why we have a problem is not because of an aging society. People have always grown old and will for ever. This is not something new. The problem is not an aging society. The problem is the original plan had a 2% payroll tax. Why did it have 2% payroll tax? Anything higher would have killed the bill! The workers back then would not have paid a higher tax.
Over the years congress has increased benefits faster than inflation and made it appear that Social Security was great. The added more workers so the tax wouls stay low. Then a day came when they looked around for more workers and found nearly everyone enumerated in the program. They had two choices, cut benefits and face the music of the voters rath or raise taxes a little.
Similar to the frog who jumps into what he thought was a nice cool pond only to find it was a cooking pot. When he found out, he was to sleepy to jump out. He was cooked. Is this where Social Security is?
Why do you think Social Security wants enumeration of all children at birth? It gives them an 18 year forcast which is fairly accurate. Do not be fooled that Social Security had no idea what the weighted average of workers to retirees were. A weighted average of a worker is:
A person who is enrolled into social security at age 45 had 20 years to pay before full retirement. However, he pays into the program only 1/2 his life time. On top of that he missed the first 20 years or more. However, his benefit reduction may be very little depending on average indexed wage. Remember the lower the average indexed wage, the greater the return on ones contribution. This is why enrolling more workers who are close to retirement is a bad idea. You get a inflow of new money, but it creates a huge unfunded liability!
Therefore, when Social Security calculates workers to retiree ratios, they count him as a full worker. In reality he is only a fracitonal worker. When you look at 1937 to 1999, one will find the weighted worker to retiree ratio is fairly constant and no where approaches the 12 or 15 or even 30 at its inception.
Social Security and congress have decieved and mislead the American People. Now they are trying to get out of it by passing the buck.
