What Social Security Crisis

In 1935, wealthy liberal do-gooder Franklin Delano Roosevelt, the most notorious violator of Constitutional federalism in the 20th Century, found a clause in that venerable document authorizing the central government to provide retirement benefits for all Americans. Apparently, 100 years earlier, that clause did not exist. So claimed another Democrat, Tennessee's Davy Crockett, who rose on the floor of Congress and chastised his colleagues for their proposal to appropriate benefits for the widow of a distinguished naval officer.

Crockett protested: "I will not go into an argument to prove that Congress has no power to appropriate this money as an act of charity. Every member upon this floor knows it. We have the right, as individuals, to give away as much of our own money as we please in charity; but as members of Congress we...have not the semblance of authority to appropriate it as a charity."

Crockett was echoing the words of our Constitution's author, James Madison, who said, most eloquently, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents...." Madison further noted, "If Congress can do whatever in their discretion can be done by money, and will promote the General Welfare, the Government is no longer a limited one, possessing enumerated powers, but an indefinite one, subject to particular exceptions."

However, those words were long lost on FDR, who eviscerated federalism in his relentless endeavor to make the central government the agent of salvation for all ills. In June of 1934, he announced to Congress one lasting example of that endeavor -- his intent to create a nationalized Social Security program, ushering the United States into the ranks of Europe's welfare democracies. The nation was in the midst of the Great Depression, and FDR was funding his political dynasty by redistributing wealth. After all, as noted by George Bernard Shaw, "A government that robs Peter to pay Paul can always depend upon the support of Paul." FDR's plan, like all unbridled populist-entitlement programs, was popular with the democratic majority -- and helped ensure his re-election to office three times.

Social Security's first beneficiary was Ernest Ackerman of Cleveland, Ohio, who retired one day after the Social Security Act was signed into law 14 August 1935. A nickel was withheld from Ackerman's final paycheck, but he received his one-time lump-sum Social Security payment ... 17 cents.

That 12-cent return was the beginning of unforeseen things to come. Soon, congressional amendments added benefits for spouses, minor children and survivors, and by 1950 the program assured virtually universal coverage. 1972 saw the addition of the Supplemental Security Income

(SSI) program (AKA "welfare"), and by 1975 the addition of annual Cost of Living Adjustments (COLAs) assured the SS juggernaut's exponential growth. In 1977, Medicare became an independent entitlement, spun off from the Social Security system. Today, despite its humble beginnings, the Social Security system confronts our young people with the grim prospect of paying for unfunded promises made to past generations.

Notwithstanding the "welfare reform" acts of the 1990s, when Social Security turned 65, SSI benefits covered 6,688,489 Americans at a cost of $32,165,856,000, while Social Security itself disbursed some $431,949,000,000 to 45,877,506 beneficiaries. However, those staggering numbers are mere chump change compared to what lies ahead.

President George W. Bush's modest proposal to reform Social Security appears to be a good start at diverting this behemoth from its collision course with insolvency. Predictably, though, the latest retort from the Left is, "What insolvency? What crisis?" Indeed, these do-nothing Demos claim the Fed's IOUs in Social Security's so-called "trust fund,"

combined with minor tweaks to the system, will keep it solvent for generations.

Well, not exactly. Unless Democrats plan to "tweak" the system by increasing both the retirement age and the current 12.4% SS tax, adding more government debt and reducing benefits, Social Security will not have the revenues to refund current IOUs and meet the SS revenue shortfall. IOUs? For generations, every dime forcibly taken from worker paychecks -- ostensibly to finance the non-existent SS "trust fund" -- has been taken from that fund and applied to other massive entitlement programs.

Social Security outlays now consume 4.28 percent of GDP but will exceed 6 percent in 20 years. There are two reasons for this growth:

demographics and benefits increases.

There are 48 million Social Security beneficiaries today, but in 2030 there will be 84 million. In 1950, there were 16 SS taxpayers for every recipient. Now there are only 3.3 taxpayers for every recipient, and that will be reduced 30 percent by 2030. Additionally, when SSI was formed, life-expectancy was 61 years, which is to say, most Americans did not make it to 65. Now, however, average life expectancy is 77.

The second reason for the SSI balloon is that benefits have not been indexed to inflation. Future retirees are being guaranteed retirement increases that grow substantially faster than inflation.

Social Security, as currently managed, will incur an estimated unfunded liability of 27 trillion 2003 dollars over the next 75 years. To offset this jaw-slackening shortfall, President Bush has proposed the incremental privatization of some SSI taxes by allowing individuals under age 55 to invest in personal retirement accounts (PRAs). Additionally, Congress must resolve to index benefits to inflation.

The President's three-year PRA opt-in for SSI taxpayers born after 1950 would allow them to put up to four percent of their wages in their PRAs. At retirement, those invested in PRAs would be guaranteed to receive at least what their payout would be if they only had SSI income. But those beneficiaries whose PRAs have a higher return can share in that return, which reduces the burden on the SSI fund, and the principal balance is fully inheritable.

from The Federalist

More Quotes of the Day

·Bumper sticker of the year: "If you can read this, thank a teacher -and, since it's in English, thank a Marine !!"

"[I]n 1848, Karl Marx said, a progressive income tax is needed to transfer wealth and power to the state. Thus, Marx's Communist Manifesto had as its major economic tenet a progressive income tax. ... I say it is time to replace the progressive income tax with a national retail sales tax, and it is time to abolish the IRS." --Rep. James Traficant, Jr.

"President Bush...release[d] his 2006 budget, requesting slightly more than $2.5 trillion in spending. That's $2,500,000,000,000. If a Democrat proposed a budget this big, Republican fiscal hawks would squawk to the top of the Capitol dome." --Stephen Moore ++

"A Republican president sits in the White House. The GOP enjoys clear majorities in both houses of Congress. If now isn't the time to control federal spending, when will it be?" --John Fund

"Social Security should be phased out and ended altogether. ... Social Security in any form is morally irredeemable. We should be debating, not how to save Social Security, but how to end it -- how to phase it out so as to best protect both the rights of those who have paid into it, and those who are forced to pay for it today. This will be a painful task. But it will make possible a world in which Americans enjoy far greater freedom to secure their own futures." --Alex Epstein

"[I]f the party of gloom is ever to regain its footing, it will have to start by understanding that those who defeated them are not a bunch of ignorant yahoos looking forward to Armageddon." --Mona Charen

"Iraq's real Minutemen in the vanguard of popular revolt are the Iraqi voters whose actions said 'give me liberty,' despite the threats of reactionary thugs who promised to give them death." --Austin Bay

"This President well understands the war for Iraq, and for the Middle East, is fought not just in Iraq and Afghanistan but here, on the home front. This is a war not just for Iraqi freedom but for American opinion." --Paul Greenberg

From "The Federalist"

Quotes of the day

"We can't expect the American People to jump from Capitalism to Communism, but we can assist their elected leaders in giving them small doses of Socialism, until they awaken one day to find that they have Communism." --Nikita Khrushchev

 

"The American people will never knowingly adopt Socialism. But under the name of 'liberalism' they will adopt every fragment of the Socialist program, until one day America will be a Socialist nation, without knowing how it happened."--Norman Thomas

 

"Of all the properties which belong to honorable men, not one is so highly prized as that of character." --Henry Clay

 

"The high-minded man must care more for the truth than for what people think." --Aristotle

 

US citizens want to move to the Great White North

According to the New York Times, there are over 18,000 US citizens trying to move to Canada because of the election results that kept President Bush in the White House, and gave him an even larger majority in both houses of Congress.  I say good riddance.  Don’t these people realize that if they move, and hopefully give up their citizenship, they won’t have a say in the future of our government.  Maybe that’s the point.  They will live else where, but still vote.  I sure hope they enjoy Canada.  It seems to me to be a very scenic country, with lots of hockey.  It can’t be all that bad, even if it does take a week or so to see a doctor if you have strep throat.

 

Maybe Barbara Streisand will throw a benefit concert to help all of these disgruntled liberals with their moving expenses.  Maybe she will go too….Maybe that’s just wishful thinking.

 

But seriously….Am I the only one who thinks that if these people were truly patriotic, they would stay I their country and try to help keep the country on the track they think is the correct direction. Not that I will miss these people who want to move, but they would better serve OUR country by staying.

Two words for Bush's Budget....Too Big

 

 

I miss the days of the “fiscal conservative.”  Our president is one of the biggest spenders I have seen.  So much for the days of big government being over.  I didn’t think that was true when Bill Clinton said it, and I sure don’t believe it with Bush either.  I guess compassionate conservatives are radically different from fiscal conservatives.  I can only hope that Sen. Inhofe gets to take a red pen to the budget and cuts everything except the FAA and the DOD, my 2 personal favorites.

 

The larger government gets, the more it can, has, and will take our freedoms away from us.  Whatever happened to the days when a limited federal government was something every citizen wanted.  I almost feel like that concept died with Publius.  I wish we still heard of cuts as large as entire departments.  The Department of Education would be a lovely start.  Don’t get me wrong, I am not anti-education.  Instead, I support more control of education by local and state governments.  The 10^th amendment to the Constitution guarantees the states every right and function not explicitly given to the federal government.  Education is not mentioned in the constitution, therefore this includes oversight of the education system.  Somewhere along the way, some major sidetracks happened.  Yes, that’s right.  I am on record as saying that The Department of Education is unconstitutional.  Ronnie was RIGHT! Not just right wing.

 

Hey Bush, Thanks for the tax cut, get control of spending! Then give me another tax cut.  It’s my money, not yours!

 

Sounds like I’m an evil conservative huh.