Social Security can't go bankrupt.

[HiPointDem]

It is a logical impossibility for Social Security to go bankrupt. We can voluntarily choose to...eliminate the program, but it could never fail because it “ran out of money...” To explain this, let’s create a simple world. Say there (are only) ten people...assume that each of us is only able to produce enough output for herself or himself to survive. How many people can retire...? Obviously, none. Anyone who stops working, starves...

This reality is inescapable and is the reason why the real determinant of the feasibility of Social Security (or any other type of retirement system, private or public) is productivity. If it falls short, then supporting a class of retirees is impossible, regardless of how much cash we have... Now let’s say...we have been able to increase our productivity. To make the math simple, double it. This gives us some options:

- We could all keep working and just double our standard of living.
- Five people could keep working and share half... with the other five, giving us each the same standard of living as at the start.
- We could adopt an intermediate position with more than zero but fewer than five retirees, allowing us both a chance to retire and a higher standard of living.

The third would probably be the most attractive...Assuming we follow this path, what is the next step...? The possibilities are determined by productivity, while the specifics are a function of our sense of justice and our national philosophy (and, if we are realistic about it, the distribution of power). To make the example concrete, say we decided that three of our survivors qualify for retirement (leaving seven workers) and that we will all get equal shares. This would mean that each worker would get to keep 70% of what they produced, passing the remaining 30% to the retirees.... And that’s it–we are done.... We have a retirement system and we don’t need to talk about money at all. We just say stuff like, “Hey, Bob! I caught ten fish today–which three do you want?”

To give it a more realistic feel, change the numbers from 7 workers and 3 retirees to 70 million and 30 million. Now what...? The most obvious and straightforward means is this: set a tax of 30% on... workers and give it directly to the retirees–right now, today, immediately. Have the money come straight out of your paycheck and right into your grandmother’s bank account... This is how Social Security actually operates...this needs no prior financing or savings, nor would that appear to be particularly helpful... What, then, you may ask, is the Social Security Trust Fund, the pool of money that people say will dry up and make it impossible for anyone to receive their Social Security payments...?

http://www.forbes.com/sites/johntharvey/2011/04/08/why-social-security-cannot-go-bankrupt


Why is this 'big lie' being sold to the public? Why did the VP debate moderator advance it, and why did neither of the debaters challenge it?

MS. RADDATZ: Both Medicare and Social Security are going broke and taking a larger share of the budget in the process. Will benefits for Americans under these programs have to change for the programs to survive, Mr. Ryan?

RYAN: Absolutely. Medicare and Social Security are going bankrupt. These are indisputable facts...

MS. RADDATZ: Vice President Biden, two minutes.

BIDEN: And with regard to Social Security, we will not -- we will not privatize it. If we had listened to Romney, to Governor Romney and the congressman during the Bush years, imagine where all those seniors would be now if their money had been in the market...

[WhaTHellsgoingonhere]

1. +1

[underoath]

2. What if productivity stops or people are not as productive?

Wouldn't that mean there is less fish being given out which means we might run out if productivity is not there?

[HiPointDem]

3. yes. but it hasn't. productivity has doubled since 1980. unfortunately, most of the gains went

to the top 5%, while median incomes stagnated.

[MrYikes]

5. I dislike the word stagnated in this context.

while median incomes were repressed. Sounds more like what really happened.

Not trying to be a jerk.

[HiPointDem]

6. i agree. workers' incomes were deliberately kept down. upper incomes were deliberately pushed

up. no question.

[TBF]

4. Excellent - should be required reading. nt

[Starry Messenger]

7. k&r

[reformist2]

8. Very true. Here are the two big reasons "they" want to "reform" Social Security:

1.) The rich have been borrowing from the Social Security trust fund for over two decades. Annual surplusses over $200 billion were irresistible and are what paid for those huge tax cuts for the rich these past 12 years. Now with Baby Boomers retiring, the program is going to have to start using up the trust fund - some $3 trillion worth. But since the rich already borrowed from the trust fund, this money essentially has to come from the general fund, which means higher income taxes. In other words, it's time for the rich to pay back what they borrowed - some $3 trillion. Surprise, surprise, they don't want to do that! Hence their propaganda campaign to reduce benefits so the rich never have to pay back that money.

2.) The stock market has been stretched to its absolute limits. With all our factories moved to places where they can get the cheapest labor, and with valuations stretched to their limits with low interest rates (the lower the interest rate, the higher the value of stocks and bonds), the upside going forward is quite limited. Add to that the fact that Baby Boomers are now starting to withdraw from their 401Ks in large amounts, Wall Street desperately needs a new influx of cash to prop up the stock market. Not to mention prop up the fees they get by "managing" that money. Hence their propaganda campaign to privatize Social Security and have that money sent to Wall Street.

Quite honestly, I'm a little surprised they haven't been able to get their way on this yet, given all their money and power. I'm starting to think we the people may actually prevail on this and keep our Social Security largely intact. That is, if we keep fighting for it.

[HiPointDem]

9. +1