Government In Wonderland, Part III: Social Security Ponzi Scheme

You may have heard the story of the first Social Security recipient, Ida Fuller: 

Ida May Fuller worked for three years under the Social Security program. The accumulated taxes on her salary during those three years was a total of $24.75. Her initial monthly check was $22.54. During her lifetime she collected a total of $22,888.92 in Social Security benefits.

No doubt the first reaction is amusement and maybe envy at her good fortune. But what this should tell us is that right from the beginning Social Security was a Ponzi scheme. A Ponzi Scheme is an investment scam where the early investors get a huge supposed return on their "investment."  In reality the high returns are taken from the capital of later investors.

Here is how a Ponzi Scheme works. 

The taxes that the taxpayer has paid into Social Security have become a worse and worse investment as time goes on. This is a common feature to all Ponzi Schemes. 

The unfunded Social Security liability is $8 trillion. If the Congress wanted to make Social Security solvent it would need to add that to the fund right now. There are other higher estimates based on the obvious fact that the 8 trillion will not be put into the system, and that means every year the unfunded liability goes up. Over the next 50 years Social Security will spend trillions more than it takes in. This cannot happen, the money is not there, the politicians have been spending it for 80 years. 

If nothing is done then Social Security recipients will face a cut of 22%. While this is some time away in 2036, it is a problem that should be addressed. 

While Obama's debt commission had a Social Security proposal as a part of its recommendations, there is no serious proposal to address Social Security’s problems. Both Republicans and Democrats are ostriches on this issue.

I suggest that both parties adopt a new mascot as a symbol to replace the elephant and donkey. I suggest an ostrich.