Saturday, July 29, 2006

Social Security's ship is sunk!

The pseudo-libertarian think tank Cato Institute issued its report, called "What Is Their Plan for Social Security". Now I called Cato "pseudo-libertarian" because it has the same beliefs as a principled libertarian, like me, but when it comes to putting it on the line for its beliefs, it leaves me lacking.

For example, in this article, the 2nd paragraph reads, "The facts are simple: Social Security will begin running a deficit in just 11 years [in 2017]. Of course, in theory, the Social Security Trust Fund will pay benefits until 2040. That's not much comfort for today's 33-year olds, who will face an automatic 26 percent cut in benefits unless the program is reformed before they retire. But even that figure is misleading, because the Trust Fund contains no actual assets. The government bonds it holds are simply a form of IOU [worth nothing], a measure of how much money the government owes the system. It says nothing about where the government will get the money to pay back those IOUs." Good so far.

But, in the following paragraph, it says, "Even if Congress can find a way to redeem the bonds, the Trust Fund surplus will be completely exhausted by 2040." Say again? Government has no money for the so-called "Trust Fund", so the money will be exhausted by 2017. Government doesn't acquire any money. Government doesn't produce any money. And government doesn't redeem the bonds for money. There is only one way government to get the money, and that is through the taxpayers; e.g., you and me, in the form of raising taxes or cutting benefits. There is no other way possible.

The more accurate scenario is from an article by CNN Money Magazine. The magazine correctly predicts that Social Security will go bankrupt in the beginning of 2018. If you want Social Security to last past 2018, then you will either have to raise taxes (although as time goes by, more and more people find out the truth about the income tax and decide not to pay), cut benefits, raise even more debt, and/or print even more money (and devalue it to nothing). Any way you choose, its a bad situation. Now, CNN Money Magazine is not Republican, it's not Democrat, it's not Libertarian, it's not Green; it gives the truth about our money objectively.

And the Cato article tells us at the end to do? Ask your elected officials. Come on now, give me a break! The government either won't answer or give a vague answer if they don't like the question. In fact, the Supreme Court didn't give a interpretation of what the last ten words of the 1st Amendment actually means. It has many interpretations of what is the meaning of freedom of religion, freedom of speech, freedom of the press, and the right to assemble. But not one interpretation of the meaning of the right to petition. District Judge Emmet Sullivan tells the people you can ask anything you want, but your elected officials won't answer if they don't want to. Bob Schulz and We The People organization are climbing through the courts, asking them to interpret the petition clause.

But Cato tells you to ask your elected officials. It is working good so far (!?). I say forget about our elected bureaucrats; I will do this myself. Now, every time I give in taxes to Social Security, or anything else, in the past, it's a lost cause. Forget about it. But in the future, if you are older than 55, you can leave it the same. If you are between 50-55, it is up to you. But if you are younger than 50, you can legally quit paying taxes, including Social Security taxes. If you are an employee, your employer won't have to pay a payroll tax for you. That will make them happy. However, you will not get Social Security (a plus in my book). You can start investing in Harry Browne's Permanent Portfolio until you get to retirement age. And you will be richer in the process.


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