|
|
Social Insecurity
| Article
# : |
14857 |
|
|
Section : |
BOOK WORLD
|
| Issue
Date : |
10 / 1988 |
3,910 Words |
| Author
: |
Grover Norquist
|
SOCIAL SECURITY
The System That Works
Merton C. Bernstein and Joan Brodshaug
New York: Basic Books, 1988
321 pp., $21.95
In the tradition of the French military establishment that declared the Maginot Line "impregnable" in 1939, and the owners of the Titanic, who proudly advertised their ocean liner as "unsinkable," Merton Bernstein, the principal consultant to the National Commission on Social Security Reform in 1983, and his wife have drafted a new book, Social Security: The System That Works.
The book claims that Social Security works well for today's elderly and will continue to provide promised benefits for today's young workers. It belittles questions about the system's solvency and largely ignores alternatives to our present, compulsory, universal, and "pay as you go" unfunded system. If the concerns of working men and women about the continued solvency of Social Security are so ill founded, one wonders why the book was written in the first place and why it took 293 pages--and a sidestepping of all serious critiques of the system--to "prove" that the emperor is exceedingly well clothed. Lady Macbeth at least had the virtue of comparative brevity in her protestations.
It is true that many of today's retirees can look at Social Security as one of the most lucrative "investments" they made in their lives. Present retirees are collecting benefits amounting to four or five times the taxes they put into the program. The return on past Medicare payments can reach as high as fourteen times the initial payments.
Ida Fuller, who received the first Social Security check in January 1941, raked in $21,000 in Social Security payments. She and her employer, who matched her contributions, paid a grand total of $45 in Social Security taxes. Nice work if you can find it.
The problem is not with Ida Fuller or present retirees. The question is whether young workers--and some workers not so young--will be able to collect windfalls of this magnitude, or even break even.
A Ponzi scheme
Social Security is not--despite its advertising--a fully funded pension program. It is not simply legally mandated savings. When you send in your Social Security payments, and those payments are matched dollar for dollar by your employer, they are not deposited in some trust fund that accumulates interest as does a savings account in your local bank or an Individual Retirement Account. Rather, the taxes paid in are almost immediately turned around and shipped out to present retirees. The system is even referred to by the government as "pay as you go."
Should you attempt to run such a pension system in the private sector, the government would have another name for it. It would be called a "Ponzi scheme," and you would to jail for fraud. Mr. Ponzi was a con artist working in Boston some eighty years ago. He solicited investors by offering them above-market rates of return on their money. And for a while he would pay those "miraculous" returns. He could do so,
...
Read Full Article
|
|
