An Answer To The Impending Bankruptcy Of Social Security: An Immigration Brain Gain
from the huddled-masses dept
As the baby boomers start to retire en masse, one of the fears is that the US will struggle to continue to fund Social Security. Though originally projected to become cash flow negative by 2016, it looks like Social Security will reach that mark this year, hastened by the early retirement taken by many boomers as a result of the global recession. Robert Reich, former Secretary of Labor under President Clinton, proposes a potential solution to the impending crisis: immigration. The way Reich puts it, the nation’s workers all put into the system to support the retirees — but the increasing number of retirees is outpacing the growth of the American workforce:
Forty years ago there were five workers for every retiree. Now there are three. Within a couple of decades, there will be only two workers per retiree. There’s no way just two workers will be able or willing to pay enough payroll taxes to keep benefits flowing to every retiree.
So, to correct this demographic imbalance, Reich proposes that the US opens itself up for more immigration:
Get it? One logical way to deal with the crisis of funding Social Security and Medicare is to have more workers per retiree, and the simplest way to do that is to allow more immigrants into the United States.
Easier said than done, perhaps. Faced with a global recession and high unemployment levels, it will be easy to find critics who will vehemently argue that there are not enough jobs here for American workers. Reich refutes this with a simple claim that “once the American economy recovers, there will be.” He may be right, but he could have done a more convincing job. Reich misses an opportunity to explain that bringing a fresh wave of skilled, smart immigrants into this country actually creates more jobs. Jobs are a not a zero-sum game — studies have shown that an increase of H-1B visas resulted in an increase in jobs. And as we’ve pointed out before, there are also suggestions like the startup visa that attempts to attract immigrants who would create jobs.
Immigration policy will almost certainly need to be included as a part of any solution to the impending Social Security shortfall. Without addressing immigration at all, the options are much more limited — focusing mainly on cutbacks or higher taxes. An option that could help grow the economy should not be left off the table.
Filed Under: immigration, robert reich, social security
Comments on “An Answer To The Impending Bankruptcy Of Social Security: An Immigration Brain Gain”
in order to make a real difference and shift those numbers the us would have to allow immigrations at levels not seen in probably 100 years. you would need to increase immigration by about half of your total forecast work force in a couple of decades. with approx 150 million workers today it would mean immigration of 75 million people. is the us ready for that?
Surely that’s a rhetorical question? Something that Mike’s articles on this subject have consistently failed to take into account is how many people are opposed to immigration just because foreigners are Different, and thus objects of fear and hatred. It’s a lot easier to complain about the competition being ‘unfair’ and demand government protection than it is to improve your own competitiveness, as any student of copyright and patent law could tell you.
“with approx 150 million workers today it would mean immigration of 75 million people. is the us ready for that?”
Think of the housing boom that would create.
Re: Re: Re:
For every Boom, there’s a Bust.
Learn to fear the boom.
how about getting rid of the FED and have our government print its own money without having to pay interest? Plus they could lower taxes.
Re: A different approach
As a newly minted 40yr old, I can pretty well assume Social Security won’t exist for me when I retire; unless some pretty radical changes are made.
Much of this discussion has focused on increasing the workforce to offset the increasing retirees. That seems like a plan destined to failure since eventually we’ll need even more workers to cover the benefits for the retirements of the newly expanded workforce.
How about changing Social Security to be an ‘insurance’ program instead? We all pay in as we currently do and only those who qualify (less than $X,000 per year retirement income) end up getting payments out of it. Life Insurance companies seem to manage payment rates to payout rates pretty well. Can’t we do the same thing for Soc. Security?
It would seem to vastly reduce the number of payouts while keeping the inputs much the same. Isn’t that the only way to truly fix the system?
Of course, this does not touch on the fact that one of the main reasons there is so much illegal immigration is farmers need people to take the low skilled, low wage job of working the fields. It would take a hell of a lot of people earning $7/hr to offset SS/Medicare imbalance since people earning minimum wage don’t pay that much into the system. And a large influx of labor, either skilled or unskilled, is only going to push wages downwards.
I fully support allowing more immigration, but we need to be intellectually honest about this. The simple fact is that Congress has little incentive to run a balanced budget. Even if a huge influx of workers suddenly balanced the system out, Congress would simply spend the system back into red ink again.
Increasing the minimum wage might be a partial solution. We have a similar problem in the UK where the minimum wage (about $8 an hour at current exchange rates, I think) is so low that it’s impossible to enjoy enjoy a reasonable standard of living without applying for various government handouts. Balancing the Social Security budget is hard enough when only those who are unable to work need to resort to it.
um. Imigrant workers do nto get H1B visas. He is talking about white collar jobs.
Early retirement actually helps the social security system in the long run. If someone retires early, they only get a fraction of what they would get if they retired at the normal age. So those few extra years that we pay social security benifits will be gained back in the form of lower payments.
It may seem so but..
1. If it happens en mass as is happening now, the short term pay out is speed up.
2. If the workers has worked longer they would have be contributing into the system longer and would be requesting benefits at a time when we might have had “fixed” the system.
Ponzi Scheme anyone?
Let’s increase the number of people paying into the system to support those currently taking out, never considering what will happen when the new entries come up for retirement. Isn’t that the definition of a ponzi scheme?
Re: Ponzi Scheme anyone?
not everyone retires. especially for low-wage jobs.
Re: Ponzi Scheme anyone?
“Let’s increase the number of people paying into the system to support those currently taking out, never considering what will happen when the new entries come up for retirement. Isn’t that the definition of a ponzi scheme?”
Yes, but I think this is worse than that. It’s mortgaging the future. An influx of immigration in order to solve Medicare and Social Security is stupid….because what happens when all of those IMMIGRANTS FUCKING RETIRE!!!??? You haven’t solved the problem, you’ve just staved it off a while for an even bigger problem in the future!
Re: Re: Ponzi Scheme anyone?
i Think this is more of a scam to create talking points to legalize the illegal aliens here already.
Obama ‘saves’ social security and solves the immigration problem in one fell swoop. All hail Obama.
Re: Re: Ponzi Scheme anyone?
Of course everyone is considering just those solutions everyone sees as fair.
Allowing immigrants to come here and pay into those systems with the understanding that they would get NO payments later [or while they are here] would resolve the issues mentioned so far.
Re: Ponzi Scheme anyone?
Good one! I think a better way to fund SS is to gradually increase retirement age (say 3 months for every calendar year). By 2050, life expectancy will hopefully be in the early 80s, and retirement age would be 75. Though a wannabe immigrant myself (for way too many years now; thinking of going back), I don’t think more immigration is the solution for America. What America is definitely in need of is sensible immigration — an objective scheme to ensure that America imports only that kind of talent that is expected to create jobs in the next 5 – 10 years, will entail large salaries and hence large tax contributions and will enhance the quality of community rather than lead to marginalization of it.
I am an engineer, but if engineers are aplenty in 2020 whereas America badly needs mechanics that can build windmills/solar panels with a view to harnessing environmentally friendly energy and lots of it, then it should absolutely be bringing in mechanics and stopping the import of engineers. That’s pragmatic and as long as the immigration scheme is objective, quite fair.
Willingness is what counts
The real question is not how many retirees an active worker can support. After all, not that long ago many families included a dependent adult of working age (non-working wife) so a ratio of 1:1 is quite practical.
Rather the question is how many they would be willing to support – and that depends on a whole lot of other things.
Over the last 60 years the bulk of the retired population has consisted of those who fought in one or other (occasionally both ) world wars.
The younger generation has always been quite generous with these people – out of a sense of gratitude (note – this may stronger here in the UK than it is in the US).
However over the last 15 years this group has been slowly declining as a proportion of the retired population – so they are now a small minority.
The relatively mean attitude shown by the baby boomer generation towards their own children (at least in terms of the public funding of education etc) doesn’t augur well for their ability to attract a reasonable income from their successors.
The immigration idea is a red herring. All it can possibly do is to postpone the problem. One cannot have a rising population forever.
Re: Willingness is what counts
“The immigration idea is a red herring. All it can possibly do is to postpone the problem. One cannot have a rising population forever.”
I agree, the numbers I have seen say that there are 3 billion to many people. The planet can only sustain 2-3 billion people before we start doing irreparable harm. Thats looking at historical trends of temperature, toxins, sustainable food production, and 20 other indicators.
Re: Willingness is what counts
“[…]After all, not that long ago many families included a dependent adult of working age (non-working wife) so a ratio of 1:1 is quite practical.”
Supporting a retiree that lives WITH YOU is different than supporting a retiree via inefficient taxes so that they can live by themselves.
Not only do you go from mostly just extra grocery costs to suddenly house/cable/water/electricity/transportation costs, but you have to add in the overhead of the distribution of those taxes.
The first thought that comes to mind...
Regarding the H1-B visa “study” of the past, something tells me that it is more relational than causative…
The last time that we had such a large active H1-B visa program was during the tech boom, when the growth of new jobs outpaced tech company’s ability to fill them with non-immigrants.
In the current situation, with the migration to “off-shoring” after the bust, there is already a glut of skilled tech workers here in America, which has even increased as those in the education system, slightly before and during the bust, are also now on the market as well.
I am not against immigration in general, and I highly support a fairly open startup Visa program, but I think the H1-B program needs to be careful to focus on filling any holes [medical?] vs being used in area where there is a glut of workers here already.
Is it even “legal” to limit what industries can hire via the current H1-B program?
Re: The first thought that comes to mind...
One of the flaws I’ve always seen with Mike’s visa argument is the assumption is made that these immigrants may start their own businesses and thus new jobs. I don’t think it turns out that way. They only become a new cog in the system.
Re: Re: The first thought that comes to mind...
That’s never been his only argument. Those that don’t start their own companies or go freelance will end up working for US firms and paying US taxes instead of working for those offshore firms everyone complains about.
Re: The first thought that comes to mind...
The letter of the rules say that you have to prove that you’ve made a reasonable effort to advertise the vacancy but no ‘minimally-qualified’ US resident has applied for it, so an employer is actually obliged to give preference to nationality over merit when selecting a candidate.
How effectively it’s enforced, and how effectively it can possibly be enforced, is another matter.
“Get it? One logical way to deal with the crisis of funding Social Security and Medicare is to have more workers per retiree, and the simplest way to do that is to allow more immigrants into the United States.”
Yeap cause there is plenty of jobs for everyone…./s
How about immigration reform. How many illegals are collecting welfare that we the people pay for. They say that illegals do the job that nobody wants to do. That may have been true but it isn’t any more.
If you want more people working lets put the people that belong in america to work.
“How many illegals are collecting welfare that we the people pay for.”
That’s false. The argument is that they’re taking jobs. The issue is that they’re not paying into Social Security, and neither are their employers. Which is why hiring them is so lucrative for cheap labor.
Take that benefit away by making those people pay into the system with no payment benefit later, and the immigration issues will take care of themselves since our jobs will be less attractive to foreigners.
That's Alot of Flippin' !
Hmm… so… the U.S. has shipped most of it’s capability to design or make anything overseas – leaving burger- flipping-like jobs, sales drones, and some tele-english support here. Mr. Reich, then, is thinking that ‘skilled, smart immigrants’ will be making more and enjoying serving coffee here than they would where the skilled, smart work will actually exist. I think I would avoid Mr. Reich in any forward planning work…
all part of the grand plan
to destroy you
hehe haha hoho
Wow, this is a great way to mask the problem and end up with a situation much worse than we face today. Or does someone really think than some exponential population curve will be sustainable?
Elephant in the room
What is the original mandate of SS, Medicare and Medicaid? They are “safety nets”, not an entitlements. A form of insurance incase someone doesn’t have any money to survive (not retire) at a certain point in life, like the early 1930’s.
You work and pay into a “pool”, just like all insurance companies, and if life was unkind to you, you get a pittance from the government to stay alive, not take vacations to Mexico. I know people who are paying their country club memberships with their SS. Their argument, “they paid a lot in over many years, so they should get their money back.” Not how it is suppose to work, government workers have bastardized the system.
Robert “Big Government Rocks” Riche wants to perpetuate a system that is the hydra destroying this country. We need to fix the system before we add more people who will demand their entitlement as well. Without any meaningful reform to SS, Medicare or Medicaid, the problem remains, government will keep peeing in the “pool” to dilute it and then tell you its just fine, have a swim.
Well first – perhaps there should be a strong enough job market to absorb more workers, huh?
because what happens when all of those IMMIGRANTS FUCKING RETIRE!!!??? You haven’t solved the problem, you’ve just staved it off a while for an even bigger problem in the future!
Now DH, isn’t that what a politician is supposed to do? Put off the problem until they are no longer running for office? Isn’t that what BO did with healthcare, the nasty parts not taking place until 2014?
Jobs American’s won’t do? What is that? I have been unemployed for about 8 months (things seem to have picked up in the past 3 weeks) and to generate a bit of money (and keep from going insane) I have worked for a landscaping company off and on laying down mulch. Was kind of funny to see our crew (2 white guys and a Guatamalan who was very nice) putting down mulch, lots of mulch. The house I was working on wasn’t all that much nicer than mine. The neighbors must have been thinking “times must be touch when white guys are doing that job.”
It’s amazing to witness America’s creative energies being channeled into ways to prop up the current too-high benefit levels rather than simply knock them back down. In 1935, a retiree qualified for SS benefits at age 65 – well past the average life expectancy. We’ve never hardly TOUCHED the age of eligibility, and now freaking EVERYBODY lives past 65. DUH! This is grade school mathematics, folks.
This has always been “the plan”, at least most people’s plans who are in the position to think about controlling more lives than just their own.
However they never planned for the new corporate culture of figuring out how to do more with fewer people. Which is rather amusing.
Manufacture items from it.
More money coming in.
Less money wasted on lost cause fighting it.
Woah brah, that’s like, totally a rad idea. Chea!
Citing a single study and calling it “studies”. Typical handwaving used by those with an agenda to distort the facts.
Check out a few of these instead:
“Debunking the Myth of a Desperate Software Labor Shortage” by Dr. Norman Matloff
“Captive Workers A Disturbing Trend in Immigration Policy” by Mark Krikorian
“The H-1B Visa Debate in Historical Perspective: The Evolution of U.S. Policy Toward Foreign-Born Workers” By Margaret L. Usdansky and Thomas J. Espenshade
Dr. Eric Weinstein – “How and Why Government, Universities, and Industry Create Domestic Labor Shortages of Scientists and High-Tech Workers” By Eric Weinstein
When it comes to immigration, most Americans hate H1Bs, “the underpaid fraudsters who took all the jobs”. Now when it comes to fixing social security, Americans are suggesting to increase H1Bs, who can be paid less, taxed higher and are not eligible for social security benefits!!
No wonder the world hates them.
Immigration - it's simple really
In the long run, a person makes money. Where that person lives/works is where that money goes.
The more *skilled* immigrants we get, the more money the USA will receive.
The more skilled workers a country as a whole has, the better off it is relative to other countries.
In the *long run*, whomever boasts the largest skilled labor force wins.
You don’t even have to understand much of economics. It’s more like thermodynamics. Skilled workers are akin to energy. If you put energy into the system, it has to go somewhere and you can tap in to the energy/money flow *IF* they work in your country.
ooh, I have a better idea! Let’s stop using Social Security coffers as congress’ personal piggy bank! While you’re at it, fire Alan Greenspan, he started this snowball rolling.
Endgame for Social Security
The Social Security program was put in place at a time when people did not generally live much past 65,the age when benefits started. In that regard, it was somewhat of a cynical ploy and became what was thought to be a bottomless cookie jar for the free spending Congress. Workers and employers would pay into the program their entire career and likely die shortly after starting to receive benefits. Well, medical technology evolved to the point where people now routinely live into late 70’s and well beyond and are receiving Social Security benefits for 15, 20, 25 years. It is not sustainable in the least as a pay as you go system, given that Congress spent all the reserves over the years on such things as cash for clunkers, owl research, and a myriad of other government waste and memorials to politicians of all kinds.
So, the endgame coming for Social Security has only two options that I can see. Benefits will be metered out on a “needs-testing” basis, meaning this will become another welfare program paid only to people with no other means of support or the program will be put back on it’s original basis with benefits starting around the age of 75 to 78, the general life expectancy.
Creates more jobs?
Really. I remember back in the 1990’s, the software industry persuaded the US Government to allow mass immigration from India to help us poor under educated programmers here in the US make better software. What that accomplished is the loss of high-paying jobs ($80,000 a year and more) to Indians willing to work for $40,000 a year. I still don’t see the logic in allowing more immigration to help offset Social Security. If the US Government would pay back the large amounts they borrowed from the Social Security fund back in the 1980’s, the fund would be flush. They borrowed Hundreds of Billions of dollars from a fund that was flush with over a Trillion dollars in cash. I remember my outrage over the theft put forward by the Reagan Republicans. I remember being totally pissed off that the government could just borrow my retirement without my permission.
Our Provincial government forecasted we would need to have about triple the number of maximum immigrants to keep our Provincial old age pension plan positive. They figure we got 5 years to triple that immigration numbers…. not likely.
Employers can legally discriminate against qualified Americans by firing them without cause and recruiting only H-1B guest-workers to replace them. The U.S. Department of Labor (DOL) has said: “H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of a foreign worker.” Some companies that discriminate against American workers are so brazen that their job advertisements say “H-1B visa holders only.” And some companies in the United States have workforces that consist almost entirely of H-1B guest-workers.
The Real Numbers
The real question is not how to fix a broken system – that was broken when it started. This is a case of dwindling returns, and always will be.
But, why are my deposits – monies paid by me and my employer – paying for the debts of everyone before me? Using basic return rates – I calculate that even on a low-end – my SS money should net a return of more than $1 million over my lifetime – even at a paltry 6% return. Why is it that the government returns negative equity on my money? And we continue to trust them with money, why?
1. The Boomers mostly don’t want to retire.
2. Best case: Most immigrants are merely ordinary workers with skill sets already found in abundance among (unemployed and underemployed) American workers.
3. Worst case: we get a bunch of frauds and scamsters like this one: http://licenselaws.com/what-do-we-do-about-this-h1b-criminal-racket
SOCIAL SECURITY IS NOT THE VILLAIN
Seventy-five years ago, the United States joined the rest of the developed world in making a commitment to provide a financially sound social security system that would take at least some of the worry out of the financial consequences of growing old. In developing the legislation, President Roosevelt stressed the importance of developing a “self-sustaining” system under which funds would be separate from general government financing. He emphatically insisted that the system “should be self-sustaining in the sense that funds for the payment of insurance benefits should not come from the proceeds of general taxation.” Six years later, in 1941, President Roosevelt made the following statement:
“We put those payroll contributions in so as to give the contributors a legal, moral, and political right to collect their pension…with those taxes in there. No damned politician can ever scrap my Social Security Program.”
Over the past 75 years, many “damned” politicians have tried to scrap the Social Security system without success. But today with so many “damned” politicians gunning for Social Security, its future is probably less certain than ever before. The biggest threat to Social Security today is the bipartisan fiscal commission that will issue its report and recommendations in December. You can be certain that the conservatives on the commission will push hard for cuts in Social Security benefits.
It is time for those who support Social Security to stand up and be counted. Unless we wage a vigorous campaign against those who would destroy Social Security, we will allow a program, that has been successful and popular for three quarters of a century, to be dramatically altered. The only serious problem facing Social Security in the short term is the fact that the federal government has embezzled every dollar of the $2.5 trillion in surplus Social Security revenue, generated by the 1983 payroll tax hike, and spent the money on wars and other government programs.
If the government had not looted the surplus Social Security revenue, or if the government repays the embezzled money. Social Security would be totally solvent until at least 2037. With a single action, Social Security could be made solvent for decades beyond 2037. That single action would be to remove the earnings cap so that every American worker would pay Social Security taxes on all of his or her income, just like everyone else, who currently earns less than $106,800, already pays.
THAT’S IT! The only actions required to enable Social Security to pay full benefits for many decades to come are:
1) The government must repay the $2.5 trillion that it has embezzled from the trust fund.
2) The cap on earnings subject to the Social Security payroll tax must be removed.
The Social Security program, which is based on sound principles, has operated successfully for 75 years. If the above two actions were taken, it could operate successfully for another 75 years and beyond. This doesn’t mean that actuarial adjustments, such as gradually raising the retirement age to correspond with the increased life expectancy, should not be given serious consideration. But there is no need to fundamentally change the principles upon which the program was initially built.
Conservative don’t hate Social Security because it does not work or is not sustainable in the long run. They hate it because it does work and can be successful indefinitely. The hate it primarily because it is a government operated program and they hate all such programs.
I have been researching and writing about Social Security for more than a decade and I am the author of four books on the subject. I don’t claim to know more about Social Security financing than anyone else. There are several good scholars who see the problems of Social Security as I do. However, I do consider myself more knowledgeable than most of Social Security’s harshest critics. I urge every reader who cares about the future of Social Security to visit my website at http://www.thebiglie.net to learn more. Those of us who want to protect and save Social Security, as we now know it, should be working together, because those who want to destroy it are well organized.
Allen W. Smith, Ph.D.
Professor of Economics Emeritus
Eastern Illinois University
Solution that creates jobs
JUST shoot everyone over 55
works for me im under that
The Many are confused again
Robert Reich seems to be a nice guy, but his insistence that Social Security is broke testifies to what has been charitably called a lack of ‘depth’.
Economist Dean Baker finds this sort of shallowness all too common:
The NYT Features the Views of the Mysterious “Many” Who Don’t Understand Social Security’s Finances
“Of course people who are familiar with the finances of the system don’t believe such things. The Congressional Budget Office projects that the program can pay all scheduled benefits through the year 2044 with no changes whatsoever. Even after this date it could still pay more than 75 percent of projected benefits long into the future (a level far higher than current benefits) even if no changes were ever made. “
Baker is a supporter of more open immigration, especially in cases where the US is forced to bear higher costs due to protectionist laws (e.g. Physicians).
The are plenty of good reasons to reform immigration; there is no reason to fabricate false ones.
For the liberal economics professor.
Raising taxes on higher income earners would perhaps put off the inevitable for a few more years, but this does nothing to deal with the underlying issues that social security is in face a ponzi scheme.
The government stealing from it only hastened the process, but all it was, and all it ever was (and can be) is a generation wealth transfer.
The only way to pay it off is with further debt or inflation, which has worked nowhere.
I hope ss doesnt go bankrupt…..i agree inflation might help!
How about less people? How about starting to consider moving to a steady-state population economic model? This IS GOING TO HAPPEN whether you like it or not anyways, why not start now?
Immigrant != Work Permit
So becoming a permanent resident of the US (a green card) is different than just getting a working visa like an H-1B. There are a lot of “immigrants” who work under the latter for a number of years in the US, pay social security taxes the whole time, and then leave back to their home country, never to benefit from the SS taxes they paid.
This actually happens a lot, especially when the visa holder is from a more wealthy country and has less to worry about in terms of living conditions back in the “old country”. This is *especially* relevant under some of the non-immigrant visas, like TNs, where you’re not even allowed start the permanent resident process.
So it’s not a ponzi scheme… there are a lot of foreign workers just injecting money into the SS system (because they have to) for no return on their investment.
Brain gain and brain maintain!
I completely agree that brain gain is an awesome thing. It’s not a zero sum game. There is no reason, ever, to turn it away.
That said, brain maintain does not get what it deserves. Old people aren’t just a drain on the system, unless we let them be. We have increasing numbers of creative, skilled, experienced Baby Boomers retiring to golf courses in low-tax areas. These people have ideas and the desire to implement them, but they don’t have the societal support and expectation to do so.
I’d love to see a project that plays off of the soc sec scare in order to team up on the brain gain & maintain idea, perhaps starting some kind of reciprocal mentorship program. This kind of pro-active problem solving is what we need, but so often we just get FEAR. More active contribution to the world is always desired. We just need to stop being so focused on what it costs in order realize its superior benefits.
damm, was that the longest post in Techdirt history? So much space, so little information. I should have quoted it just to beat the record.
Way to kill a discussion.
The most serious problem that Social Security faces is that the government has “embezzled” every dollar of the $2.5 trillion in surplus Social Security revenue that is supposed to be in the trust fund and spent it.
I have been researching and writing about Social Security for more than a decade, and I have published four books on the subject. The hard fact is that every dime of the $2.5 trillion in surplus Social Security revenue, generated by the 1983 payroll tax hike, has been spent on wars and other government programs. Every month, for the past 25 years, the total receipts from the payroll tax have been split two ways. First, benefits for current retirees are paid from the Social Security revenue. Then, all remaining Social Security revenue, not needed to pay that month’s benefits, are deposited into the general fund and become indistinguishable from other general fund revenue.
Most workers think that at least some of the FICA taxes deducted from their paychecks will be saved and used to pay future Social Security benefits. But it doesn’t work that way. Not a single dime of payroll tax revenue has ever been saved and earmarked for the payment of future benefits. To put it bluntly, the government has “borrowed,” “embezzled,” or “stolen” every penny of the $2.5 trillion of surplus revenue that was supposed to be saved and invested. I consider this to be the greatest fraud ever perpetrated on the American people by their government. I have been trying to expose this awful truth for more than a decade, and some courageous people were trying to expose it even before I stumbled onto the scam in 1999.
On October 13, 1989, Senator Ernest Hollings of South Carolina issued the following warning in a speech on the Senate floor.
“…the most reprehensible fraud in this great jambalaya of frauds is the systematic and total ransacking of the Social Security trust fund ..in the next century…the American people will wake up to the reality that those IOUs in the trust fund vault are a 21st century version of Confederate bank notes.”
On January 21, 2005, David Walker, the Comptroller General of the GAO, tried to make it clear to everyone that the trust fund contained no real assets. He said:
“There are no stocks or bonds or real estate in the trust fund. It has nothing of real value to draw down.”
If anyone has any remaining doubts about whether or not the trust fund contains real assets, those doubts should be removed by the following statement from the 2009 Social Security Trustees Report:
“Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.”
I urge everyone who cares about the future of Social Security to please visit my website at http://www.thebiglie.net to learn more about Social Security and my efforts to expose the scam. Excerpts from my latest book, “THE BIG LIE: How Our Government Hoodwinked the Public, Emptied the S.S. Trust Fund, and caused The Great Economic Collapse,” are posted on the site. Please feel free to download them.
Allen W. Smith, Ph.D.
Professor of Economics Emeritus
Eastern Illinois University
THE BABY BOOMERS HAVE PREPAID THE COST OF THEIR BENEFITS
The baby boomers have paid more into Social Security than any other generation. The 1983 Social Security Amendments required the baby boomers to pay for the benefits of the generation that preceded them, which was customary. However, it also required the boomers to pay enough additional Social Security taxes to prepay most of the cost of their own benefits, which was not customary. The $2.5 trillion in surplus Social Security revenue, generated by the 1983 payroll tax hike, was mostly paid by the boomers, but the revenue was used mostly to replace the lost revenue from the unaffordable Reagan income tax cuts that went mostly to the wealthiest Americans. Now, conservatives want to cut Social Security benefits to the baby boomers, who have already prepaid most of the cost of their own benefits.
When I first stumbled onto this information, more than a decade ago, I was outraged, and I wanted to tell the whole world, so they would be outraged too. But nobody wanted to listen. The whole idea of imposing the very regressive payroll tax on working Americans, and then using the revenue from that tax to help fund large income tax cuts to the very wealth is absolutely repulsive, at least to me. Is it repulsive to you?.
Allen W. Smith, Ph.D.
I hope this comment actually gets read after some jackass copy/pastes data instead of linking it.
“One logical way to deal with the crisis of funding Social Security and Medicare is to have more workers per retiree”
The other is not to fund it at all.
1) Institute a VAT
2) Institute a flat tax
3) Eliminate welfare programs and end pensions
4) Institute a “Nothing in, nothing out” tax policy where the gov’t will not issue back more money than it has taken in per individual. The net result is that no one gets paid from taxes, they will just owe none.
5) Tax corporations based on their net income, not profits. Far too many are abusing tax law by taking losses in the US and moving profitable businesses overseas to low-tax havens.
6) Take away the power of the Fed to control the supply of money. The longest period of prosperity in history in the US was during an extended deflation of the US dollar. The value of goods produced exceeded the amount of money created, making each dollar more valuable and coupled with the gold standard, rewarded those who saved their money.
If these things happen, the country will be on the right track
Socialist Insecurity Abomination bankrupt since 1937
We knew all along that the Socialist Insecurity Abomination has been bankrupt since 1937. That was one of the things the people who hatched it liked about it.
“One of those who brushed these objections aside was professor Paul Samuelson…: ‘The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in…'” — Thomas Sowell 2004 _Applied Economics_ pp158-159
when to delare bankruptcy
When you are struggling with credit card and other debt to the point where you truly cannot make your regular monthly payments, the idea of declaring bankruptcy can be very appealing. After all, it looks like 6. declaring bankruptcy gives you the chance to wipe the slate clean and start over. While this can be the basic effect of declaring bankruptcy, if you are eligible for the right kind, you need to look carefully at your situation before making this drastic decision.
Remember, declaring bankruptcy will ruin your credit score, and the impact stays on your credit history for as long as ten years. It can also make it very difficult to get a credit card, loan, new bank account, or even a job. If you should need to buy a car or a house in the near future, you will probably be unable to finance the purchase.
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Baby Boomers paid- so Show Me the Money-IOU's
Comments pertaining to five workers for every retiree forty years ago, where did all that excess SSN collection money go? We know, IOU’s. So now the excess and possbile interest on that money are our problems. Oh what a joke. Government mismanagement and now a crisis all of the sudden.