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Argentina Redux: Was US social security stolen?

social security ponzi scheme

Over the past 25 years, five presidents, and the members of Congress, have participated in the great Social Security scam. All Social Security contributions made by working Americans, except the amount which was needed to pay current retirement benefits, has been funneled into the general fund and used for non-Social Security purposes. Some like to say that the government just “borrowed” the money during the time period when it was not needed to pay benefits.

Pensions require discipline in saving for retirement if you want to maintain your standard of living. Any government pension program should only provide enough to maintain a basic living standard. Pensions are not and should not be the backstop for those who choose to blow all their earnings during their working lives and not having enough in retirement to maintain that standard of living.

As powerful as the U.S is it too is living on borrowed time. While there are many wealthy Americans and I’m not referring to only those in the entertainment business or who work on Wall Street, their national debt is more than twenty times that of Canada’s. Indeed, this is all a very haunting reminder of the Argentinian financial collapse that led to, among other things, the looting of the public pension purse to fund marauder bankers looking for compensation.

The elephant in the room for the United States is their national debt and for the present everybody is pretending as though everything is flush and their trillion dollar deficit just bumps in the road.

Fact: When these welfare schemes like medicare and pensions where introcuded, people lived to about 67 and old people made up 1/7 of the population.

Fact: People now live to almost 80, and as soon as the baby boomers retire, old people will make up 1/3 of the population.

According to Dissident Voice, In December, the Obama deficit-reduction commission will make recommendations for budget cuts that will then be voted on, with an up or down vote, by the lame-duck Congress. Already, there is much speculation that Social Security will be one of the big targets. The rationale for cutting Social Security seems to be that, during such difficult economic times, everything should be a candidate for the chopping block, and that the public should support such cuts out of a sense of patriotism.

Think it can’t happen to the US or anywhere else?

Argentina has already vowed to push through similar measures in the name of rescuing the wider financial system. Last month, the government of the South American country signed a bill to mandate the National Social Security Administration takeover of $30 billion worth of private pensions.

The move sent stock markets plummeting with critics accusing the government of stealing the pensions to get their hands on extra money at a time of economic crisis, as citizens protested across the country. Source: infowars

The flaw in this argument is that Social Security has not contributed a dime to the budget deficits or the soaring national debt. Social Security is funded exclusively by payroll taxes (also known as FICA taxes), paid into the fund by working Americans. In 1983, the payroll tax was increased substantially in response to the recommendations, the previous year, of the Greenspan Commission on Social Security Reform.

Prior to 1983, Social Security had operated on a “pay-as-you-go” basis with each generation responsible for paying for the benefits of the generation that preceded them. The 1983 legislation changed the nature of Social Security funding. In addition to paying for the benefits of the preceding generation, as was customary, the baby boomers were also required to pay additional taxes to partially pre-fund their own retirement. The net result is that the baby boomers have paid more into Social Security than any other generation. Yet they are often made scapegoats and blamed for the Social Security funding problem. I am not a baby boomer, but I am very sympathetic to them. They are getting a bum rap.

Canadian situation no better

Liberal MP Ruby Dhalla’s insane plan to allow immigrants the ability to gain a full pension on the backs of Canadian taxpayers after just three years of residency is nothing short of spitting in the faces of those Canadians, many of whom have worked for decades and contributed to the government pension plans as well as their own private plans, is unlikely to make it through the House. The Conservatives won’t support the plan and neither will the Bloc Quebecois. It is unlikely that many of her fellow Liberal MPs will support such lunacy.

The move from defined benefit to defined contribution plans is one of the reasons we are seeing inadequate pensions. Central Banks have over the last 25 years deliberatly maintained a low interest rate policy. Pension Plans have had to get involved in riskier ventures to fund their plans. We saw how this latest financial crisis saw their assets decline precipitously. We are just begining to see a return to year 2000 levels. You can no longer rely on the company you worked for to make up shortfalls. Company insolvency can be hazardous for the best of plans.

One Comment

  1. veterinary technician veterinary technician July 20, 2010

    Keep posting stuff like this i really like it

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