RECENT fluctuations in the stock market have been used by some liberal politicians as a reason why Social Security should not be privatized. What if someone invests retirement money in the stock market, instead of in Social Security, and then retires at a point when the stock market is down?
Obviously, that retiree will not get as large a pension as if retirement had come when the stock market was up. But the relevant question is whether the pension will be greater or less than if the money had been left in the Social Security system. Retiring when the stock market is down may mean that your rate of return on your money is only double what you would have gotten under Social Security, instead of triple.
That is not a risk that should scare anybody, despite the endless repetition of the theme that privatizing Social Security is "a risky scheme." Leaving Social Security the way it is represents a much bigger risk.
Everyone concedes that there will not be enough money in the Social Security trust fund to pay the pensions that have been promised to the baby boomers when they retire. That is why there has been so much talk about how much of an increased burden it will be for younger workers to support the large numbers of retirees in the decades ahead.
What there has not been nearly enough discussion of is the reckless irresponsibility of those who set up a system where the promises vastly exceed the money set aside to keep those promises. Social Security was sold to the public as an insurance scheme but people who have insurance or annuities are financing their own individual benefits, not depending on the next generation to take care of them or their survivors.
The "insurance" myth is enshrined in the Federal Insurance Contributions Act -- the FICA item on paycheck stubs which shows how much has been deducted for Social Security. Twenty years ago, I was attacked on Meet the Press for saying that there was not enough money in the Social Security system to pay what people had been promised.
Now that we have come closer to the day of reckoning, everybody knows it. Nevertheless, the liberal politicians who created this risky pyramid scheme are now busy depicting all alternatives to it as risky. So long as the day of reckoning lies beyond the next election, they are not ready to do anything that would be an admission of what a monstrosity they created.