The concept that Social Security is failing, whether correct or not, is based on statistics showing the Federal government is running out of money. It needs to raid the Social Security funds to pay for its enormous and growing expenditures. Some include welfare, bank support, war operations and other seemingly out-of-control ventures.
According to those conditions and commitments at home and worldwide, the growing deficit will force the U.S. government to tap into Social Security funds to meet those expenses. This is coupled with the statistics that the nation continues to age and the aged live longer.
This could indicate that within just a few years, active workers simply will not be able to pay enough in Social Security taxes. Just a generation ago, before the aging of the so-called baby boomers, it took the SS taxes from ten workers to provide the money for one retiree. Today, it’s just about one for one, and couldn’t survive a lower ratio. Various reports predict that the SS funds will run out completely in the near future, some time between 2014 and 2018. That could mean total failure of the system.
During the Presidency of George W. Bush, it was suggested that Social Security should be privatized. That meant those administering the funds could invest in the stock market and other market resources. An influence on that concept was that the stock market had been growing at a rate of ten percent a year, while the fixed funds of the SS account were yielding just two percent.
Fortunately, the measure was defeated just before the stock market collapsed, and the already inadequate funds would have suffered huge losses. At best, that would have caused deep reductions of benefits among SS retirees and their families. At worst, the entire SS system could have collapsed and payments would have stopped entirely.
If the Republicans acquire a Congressional majority in this regional election year, and the Presidency in 2012, they may reintroduce the Bush plan to privatize Social Security. The concept is based on statistics showing the over-spending government will need to raid Social Security funds within a year or so, but with luck in the stock market, the system can continue.
As some opponents call it, this Madoff/Ponzi scheme may look promising for awhile, but the stock market is just too volatile. It can only lead to the inevitable next severe drop in values, and once again challenge the existence of Social Security.