The Social Security System is a microcosm of the government itself. It is hopelessly insolvent! That condition has been known for decades. Just like everything else, the government lies to the people about its condition and the condition of Social Security.
Charles Hugh Smith has written a terrific piece on Social Security. In his words, with his emboldening:
There are two frauds at the very heart of the Social Security system, and I am going to describe and source them in detail. After spending a number of hours poring over public data from the Social Security Administration (SSA), The U.S. Treasury and the Congressional Budget Office (CBO), and additional hours searching the Web for other published analyses, I can state with some authority that there are no published analyses or accounts of Social Security which incorporate the actual outlays and receipts from fiscal year 2010 in a context which includes the Social Security Trust Fund.
Despite the reassurances provided by the government and its no-nothing lackies in the rented economics profession and the media , Social Security has crossed over the point where it can pay its bills. According to Smith, Social Security has a $76 billion shortfall this year. His detailed analysis uses only government figures, although they took some ingenuity to gather and put together.
If you believe that Social Security is sound, please email me regarding a bridge I have for sale in the borough of Brooklyn. It might be a better deal than Social Security, depending upon your age.
Smith concludes with:
The bogus Trust Fund and absurdly optimistic estimates constitute two fundamental frauds at the heart of the Social Security system. Forget the delusional propaganda estimates and look at the actual Treasury data for outlays and receipts. The system is not “secure;” it ran a $76 billion deficit in 2010, and it is on track to run a deficit in 2011 that it was not supposed to reach until 2025.
Wake up, America, and look at the data, not fantasies.
You can read an analysis of Smith’s article and the article itself at the Daily Bail.
Monty: My understanding is that the Social Security system has no assets apart from US treasuries. I wrote a blog (http://righteousinvestor.wordpress.com/2010/08/06/government-ponzi/ ) saying it was just one big ponzi scheme. The federal government should apologize to Madoff, set him free, and lock themselves up in his place.
The Canada Pension Plan actually has real assets in the private sector, and there is some hope that its investments will give Canadians a return on their CPP taxes. So it did not have to be this way. In other words, other countries have actually invested their people’s pension funds, and did not steal it–this is how corrupt the US government has been. It is actually an extreme form of corruption and mismanagement.
P. W.,
Your understanding of Social Security is correct. Whether it was intended to be a fraud from the beginning is moot. It became one as soon as the politicians saw a wad of money that they could spend. It provided a way to buy votes without raising taxes. All along they realized that they could promise higher benefits from the fund which would get votes now with bills coming due long after they left office.
And now they want to confiscate the private retirement funds we (especially of my generation, knowing we will never see one thin dime of SS) have tried to build – but it’s for our own good, of course, that they take it.
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