Originally published October 10 2013
Social Security Administration admits all benefit payments are contigent upon endless cycle of debt
by J. D. Heyes
(NaturalNews) If you have ever wondered what all the fuss over the future of Social Security has been about and thought that, no matter what, it will always be funded, because the system allegedly takes in more than it pays out, then a frank admission by the Social Security Administration in the wake of the federal government's 17 percent shutdown should dispel that myth once and for all and expose the system as nothing more than the world's greatest Ponzi scheme.
As recently reported by The Wall Street Journal:
The Social Security Administration has begun warning the public it cannot guarantee full benefit payments if the debt ceiling isn't increased.
When asked by the public, the agency is notifying beneficiaries that "Unlike a federal shutdown which has no impact on the payment of Social Security benefits, failure to raise the debt ceiling puts Social Security benefits at risk," according to a person familiar with the agency directive.
Gotta borrow more money to keep a fraudulent system afloat
In other words, without more deficit borrowing and spending, the Social Security system will simply run out of funds down the road and collapse. Feeling better about retirement yet?
WSJ reported that the dire warning was issued "after the agency consulted with the Treasury Department, which would play a lead role in determining" how the federal government would dole out existing funds in the form of benefits and other payments, if more borrowing isn't authorized soon.
"Our employees started receiving questions from the public, so the agency worked with Treasury to provide an answer they could use when asked about the debt ceiling by the public," a Social Security Administration spokesman told the paper.
Ross Kaminsky, writing at the American Spectator recently regarding the current shutdown, alluded to the fact that our nation's basic economic problem is not cash flow, but outgo:
If the debt ceiling is not raised, it does not mean the government has defaulted, but rather that it must immediately balance its budget - a Herculean task given that the government borrows nearly 40 cents of every dollar it currently spends. But default should not even be on the radar.
Say, what about - entitlement reform?
Other economists and policy analysts have equated our nation's rising debt to successive Congresses and presidential administrations' failure to come together on serious entitlement reform - which would include, of course, reforming Social Security. As the CATO Institute has noted:
Social Security is not sustainable without reform. Simply put, it cannot pay promised future benefits with current levels of taxation. Yet raising taxes or cutting benefits will only make a bad deal worse.
CATO and other think tanks have suggested some form of allowing younger workers "to privately invest their Social Security taxes through individual accounts," which would improve Social Security's "rate of return," among other ideas.
But what's truly alarming is how Social Security got in its current state of slowly bleeding itself dry: Congresses and successive White Houses long ago raided the Social Security trust fund in order to buy more votes while increasing their grip on power.
As recently as 2011, notes Forbes' Merrill Matthews, the Obama administration became the latest to perpetuate the fraud that the Social Security Trust Fund is flush with cash. He recalled that Jack Lew, then Obama's budget director, told USA Today in February of that year, "Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries. ... Even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits for the next 26 years."
But the following August, when Congress and the White House were haggling over - what else? - raising the debt ceiling, the president and then-Treasury Secretary Timothy Geithner were warning that, unless the government got to borrow more money, neither of them could guarantee that Social Security checks would go out.
"Well, either Obama and Geithner are lying to us now, or they and all defenders of the Social Security status quo have been lying to us for decades. It must be one or the other," Matthews wrote.
Well, the lie isn't new, that's for sure
Columnist Dr. Charles Krauthammer cleared it up: It is the latter.
"[Lew's] claim is a breathtaking fraud. The pretense is that a flush trust fund will pay retirees for the next 26 years. Lovely, except for one thing: The Social Security trust fund is a fiction. ... In other words, the Social Security trust fund contains - nothing," Krauthammer wrote in his syndicated column.
Adds Matthews: "The answer is that the federal government has borrowed all of that trust fund money and spent it, exactly as Krauthammer asserted. And the only way the trust fund can get some cash to pay Social Security benefits is if the federal government draws it from general revenues or borrows the money - which, of course, it can't do because of the debt ceiling."
Social Security wasn't always a Ponzi scheme. At one time, before Congress and presidents began mortgaging our future for political gain, the fund was solvent.
But those days are long gone.
As a side note, Ponzi schemes are illegal for you and I to perpetrate - perfectly legal for our untouchable lawmakers, however.
Sources:
http://blogs.wsj.com
http://spectator.org
http://www.cato.org
http://www.forbes.com
http://www.washingtonpost.com
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