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Sunday, March 27, 2011

The Great Ponzi Scheme - SSA

Social Security is without questions the greatest success for the Progressive movement and I mean that with all of the dripping sarcasm that I can muster. The American citizenry is now addicted to the lure of a "safety net" after 70+ years. The problem is that there is no money left, just a bunch of IOUs from the Treasury Department which doesn't have any money either. The current outlays for SSA are more than it brings in and it is definitely going to get worse. The obvious solution is to repeal the Social Security Act, but with millions of seniors who rely on Social Security as their only income, it just can't be done overnight. There is a way to do it though but it will be painful to everyone.

Here's what I suggest:
  • Everyone over 50 may opt out of Social Security completely, including those who are retired already.
  • If you opt out you no longer have to pay any Federal taxes ever again. But you must sacrifice all deposits.
  • Those under 50 will be reimbursed all deposits and they have 90 days to roll it over into a private retirement account without penalty. After that they must pay the 10% penalty and they will have the reimbursement added to their income for the year, for tax purposes.
  • Those who are already retired and do not opt out will never get an increase in their benefits again, ever.
  • Those who are not retired and do not opt out will get what their current estimated benefit is whenever they do retire and then never get an increase.
  • As far as those citizens drawing disability from Social Security you will be given the option to go back to work or retire if you are over 50, because that benefit will be terminated.
  • All survivor benefits must be terminated.
  • The remaining recipients will be paid from the general fund and tax increases and or spending cuts must be made to accommodate the difference. Eventually this will end, but we must all pay the price until then.
I know this sounds unkind and brutal but we have to do something and realistically this is the kindest thing considering the alternatives. We are on the road to anarchy if the Federal Government continues to kick this can down the road. When the Fed unleashed the latest inflation by monetizing 1 Trillion dollars in debt (AKA QE2 or printing money out of thin air) we all felt it in our wallets. The deficit last month was more than the deficit for the entire year in 2007. That was only 4 years ago, and no matter what the politicians in Washington say or do unless they deal with Social Security, Medicare, and Medicaid right now, by 2030 every cent that we pay to the Feds will go out for those 3 things. That means that the threat of a Government shutdown becomes a reality. There wont be any money for Defense, Transportation, Homeland Security, anything. It also means that we will not be able to pay the interest on our monstrous debt, and the US government will have to default on its bonds. You know that China, Japan, and the other foreign countries that are heavily invested in us might just get pissed off.

I spoke briefly about a solution for Medicare and Medicaid in a previous post. These three entitlement (WTF why are these entitled?) programs must end. Bold action is required now to avert a disaster, because chaos looms in the very near future.

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