This is – “unsustainable.”
The thing is Social Security is all many people have and so what are these people to do? They have to put food on the table somehow. Even if they know Social Security is a Ponzi scene, what are their options? Just give it up in the name of “doing the right thing”? I don’t think so, and this is one of the great bugaboos of American politics. How do we become a freer society with so many people reliant on the state? It’s very difficult indeed. Of course big government people know this and reliance upon government, the state feudal master, is part of the plan. It always has been. Rope more people into the system so they can never be independent. This was the welfare state Bismarck instituted in 1800s Germany which was then instituted in the rest of the West. This is how the ruling classes, the ones who OWN government keep the bourgeoisie, the middle class, in line.
Some people don’t want to believe this. They want to believe the welfare state was some sort of “progressive” thing (as in legitimate progress). But the welfare STATE was principally a way to keep the newly “wealthy ” former peasants under control. As long as the state holds the lifeline, The People have little choice but to bow to the state.
FDR, who ushered in Social Security and radically centralized the state apparatus was a Brahman. He knew what he was doing. He knew that in order to keep the rabble in line it needed some scraps. Once the rabble came to rely on the scraps the Brahmans could consolidate power. Which is exactly what they did.
We must also factor, in addition to the truly poor who have few economic options, the many people who get Social Security who don’t even NEED Social Security. Seniors are by far the wealthiest part of American society. Many seniors rode the great post WWII prosperity wave their entire lives. Yet many of these people feel entitled to Social Security regardless, because they “paid into it.”
Every single time we write about Social Security there are a bunch of people who get all offended because we point out that after one receives what one “paid in,” factoring the historical rate of interest on the money “paid in” over the period of one’s work life, Social Security is basically welfare. After one gets what one pays in, one is simply relying on people who are working to send them a check. Many of the people receiving checks today are far wealthier than the people in the workforce sending the check.
Payroll taxes, for many small businesses just trying to get up and going, are tough to pay. They present an unfair burden (though life is not fair, often) on would be entrepreneurs and job creators. In addition to being unfair such taxes are also just stupid policy. Why cut new economic activity off at the knees to redistribute a meager stream of wealth to those who statistically are much wealthier than the people who are just trying to get their feet under them?
But this unsustainability and stupid tax policy will probably continue (until it can’t) because Social Security has become an “entitlement.” (An interesting choice of words if ever there was one.) People think that Social Security is some kind of birthright, even though others pay for much of it.
And again, we understand that some people literally have nothing BUT Social Security. Those people are not living high on the hog. However, that is not the whole picture. Not by a long shot. And we need to start talking about how we will transition out of this antiquated system. We need to seriously talk about it. Even if some people don’t want to.
The payroll tax for the OASI is 10.03 percent and is split so that one half is deducted from a worker’s paycheck and the other half is paid to the government by the employer. The payroll tax for DI is 2.37 percent and, like the OASI tax, is split between a deduction from a worker’s paycheck and a payment made directly by the employer.
In total, the worker and employer must pay the government 12.4 percent in taxes (on the first $127,200 a worker makes) for the combined OASDI tax. Self-employed Americans pay the entire 12.4 percent directly…
…”Social Security’s cost is projected to exceed its non-interest income throughout the projection period, as it has since 2010. For 2016, cost for the year exceeded non-interest income by $53 billion. For 2017, total income for the program is projected to exceed cost for the year by $59 billion, and non-interest income is projected to be $27 billion less than program cost for the year.”
The trustees’ report estimated that the Social Security program faces a $12.5 trillion shortfall over 75 years.
“Through the end of 2091, the combined funds have a present-value unfunded obligation of $12.5 trillion,” said the report.
But hey, most of the people on Social Security right now will be dead by the time the bill comes around. That’s a problem for the grandkids. Merry Christmas!