Politicians who are principled enough to point out the fraud of
Social Security, referring to it as a lie and Ponzi scheme, are under
siege. Acknowledgment of Social Security's problems is not the same as
calling for the abandonment of its recipients. Instead, it's a call to
take actions now, while there's time to avert a disaster. Let's look at
it.
The term was derived from the scheme created during the 1920s by
Charles Ponzi, a poor but enterprising Italian immigrant. Here's how it
works. You persuade some people to give you their money to invest. After
a while, you pay them a nice return, but the return doesn't come from
investments. What you pay them with comes from the money of other people
whom you've persuaded to "invest" in your scheme. The scheme works so
long as you can persuade greater and greater numbers of people to
"invest" so that you can pay off earlier "investors." After a while,
Ponzi couldn't find enough new investors, and his scheme collapsed. He
was convicted of fraud and sent to prison.
The very first Social Security check went to Ida May Fuller in
1940. She paid just $24.75 in Social Security taxes but collected a
total of $22,888.92 in benefits, getting back all she put into Social
Security in a month. According to a Congressional Research Service
report titled "Social Security Reform" (October 2002), by Geoffrey
Kollmann and Dawn Nuschler, workers who retired in 1980 at age 65 got
back all they put into Social Security, plus interest, in 2.8 years.
Workers who retired at age 65 in 2002 will have to wait a total of 16.9
years to break even. For those retiring in 2020, it will take 20.9
years. Workers entering the labor force today won't live long enough to
get back even half of what they will put into Social Security. Social
Security faces Ponzi's problem, not enough new "investors." In 1940,
there were 160 workers paying into Social Security per retiree; today
there are only 2.9 and falling.
Some politicians claim that Social Security has a huge trust
fund and is in good health. An uniformed public and a derelict news
media don't challenge that lie. Back in August, politicians were in a
tizzy over raising the federal debt limit. In an effort to frighten
seniors, President Barack Obama said in a CBS interview, "I cannot
guarantee that those checks go out on Aug. 3 if we haven't resolved this
issue, because there may simply not be the money in the coffers to do
it." Here's how we reveal the trust fund lie: According to the Social
Security Administration, it has a trust fund with $2.6 trillion in it.
If those were real assets, then the Social Security Administration could
have mailed checks out regardless of what Congress did about the debt
limit. The reality is that the Social Security trust fund consists of
government IOUs that have no real value at all and probably are not even
worth the paper upon which they are printed.
I believe that a person who is 65 years old and has been forced
into Social Security is owed something. But the question is, Who owes it
to him? Congress has spent every penny of his Social Security
"contribution." Young workers have no obligation to be fleeced in order
to make up for the dishonesty and dereliction of Congress. The tragedy
is that most seniors just want their money and couldn't care less about
whom Congress takes it from.
Here's what might be a temporary fix: The federal government
owns huge quantities of wasting assets -- assets that are not producing
anything -- 650 million acres of land, almost 30 percent of the land
area of the United States. In exchange for those who choose to opt out
of Social Security and forsake any future claim, why not pay them off
with 40 or so acres of land? Doing so would give us breathing room to
develop a free choice method to finance retirement.