Much hay has been made over the third rail of political discourse recently. Presidential Candidate Rick Perry has had an unfortunate bout of honesty, which has led him to notice that the Social Security System more closely resembles a Ponzi Scheme than anything else. But this analysis is also wrong. While Perry’s opponents deftly admit that there are problems with this system, their supposition that it can be fixed by applying several small tweaks is a function of dishonest political pandering, and not based on any actual reality. Perry is wrong, not for sounding the alarm, but because he did not realize that Social Security is far worse than a Ponzi Scheme. At least in a Ponzi Scheme, old investors are paid off by new investors. In Social Security, old investors are paid off by borrowing funds secured by the deposits of the new investors, which deposits are then subsequently spent on some other form of governmental generosity.
Social Security consists of two separate parts, neither of which would ever be enacted alone. These two horrible components have been repackaged to look as if they are something that they are not. The first part of Social Security is a regressive payroll tax. People who earn lower wages must pay a higher percentage of their wages into the system than those who have higher incomes. America’s top wage earners reach a cap, whereby after they reach approximately $146,000 per year in income, they no longer need to pay into the tax. The net result of course is that the poor are indeed taxed more heavily than the rich. Is there anybody in America who would knowingly support this system. It of course has been repackaged into the realm of contributions. The second part of Social Security is a wealth redistribution scheme that transfers wealth not based on actual need, nor does it bear much resemblance to the amount of supposed contributions made, but instead is based on what industry someone has worked in. This of course has been sold to us in the form of an insurance safety net.
Either of these two halves, exposed to sunlight would have been laughed out of existence. Somehow though, people believe we need these programs to prevent the starvation of grandmas across the country. Social Security is a bankrupted bad welfare program coupled with a regressive taxation system. Calling it a Ponzi Scheme is an insult to Ponzi Schemes. Rick Perry is right to be blasting this program. It is a bad program from top to bottom and it does not need to be fixed, it needs to be destroyed and its evil ended. Welfare to seniors based on need would be far more efficient, and far better for our society. couple this with the progressive taxation system we already have in place, and that would work better than this sick joke of a lie.
Cross Posted at Musings of a Mad Conservative.
Tags: Rick Perry, Social Security
