Monday, January 26, 2009

The Soc. Sec. Ponzi Scheme

John Trever at the Albuquerque Journal had it spot on with this cartoon.

Here's how Investopedia defines a ponzi scheme:
A fraudulent investing scam that promises high rates of return at little risk to investors. The scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors.
That seems to describe Social Security exactly. SS promises a return with little risk--it's "security" after all. The older investors are paid from the receipts of new investors. As long as the new investors keep paying, the older investors get their checks.

The prob. is that it can't go on forever when the number of contributors keeps shrinking and the older investors keep living longer. And when the Congress has no lock box, to use an Al Gorism, they put their grubby little hands on our money. All that goes in goes right back out.

The scary thing is that rather than making the terribly hard decisions to fix SS, our friends on Capitol Hill on both sides of the aisle are talking about reducing payroll taxes. Yep, that means Social Security. So instead of fixing it, they'll make it worse. Keep paying out what you're paying but reduce what's coming in.

Now don't get me wrong, I would never say never to a tax cut in any form. But, but, but, this is different. Payroll taxes--SS, unemployment, medicare--aren't the same as the income taxes. There's supposed to be some sort of relationship bet. what you put in and what you get back. If they go cutting what people put into SS, they're making a terrible problem worse.

And for what? So they can look like they're doing something to "fix the economy". It's lunacy.

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