We find Democratic Senate candidate Jacky Rosen’s sanguine and naive response to the recent 83rd anniversary of Social Security Act disturbing to say the least.
Rosen put out a press release touting the fact she had met with a senior citizen group in Henderson to mark the anniversary.
“Social Security successfully lifts millions out of poverty and helps ensure economic security for Nevada seniors when they retire after a lifetime of hard work,” Rosen was quoted as saying. “These are benefits our seniors have earned, and Nevadans deserve another Senator who is committed to protecting and strengthening Social Security. Unfortunately, Senator (Dean) Heller is yet another Washington politician who wants to cut programs like Social Security and Medicare to pay for tax cuts for his ultra-wealthy donors.”
According to an article in The Hill by Merrill Matthews, this year Social Security must pay out more money than it receives from the payroll tax of 12.4 percent on current paychecks. This is the first time that has happened since 1982.
You see that trust fund of $2.9 trillion has already been spent and replaced with what are essentially IOUs. “Thus the government must borrow the money — or raise taxes — to redeem its IOUs so Social Security can pay benefits,” Matthews writes.
If some reform is not instituted in a few years benefits will have to be cut to 75 cents on the dollar or less.
Some have suggested cutting benefits for the rich and raising the retirement age. Others have suggested allowing younger workers to invest a portion of their payroll tax in private accounts.
Rosen specifically chastised her Senate opponent, Republican incumbent Heller, for having supported partial privatization in the past. Historically, such private accounts would likely pay retirees far more than Social Security ever can.
Rosen’s press release also screeched, “Sen. Heller is an architect of the reckless Republican tax bill that will add nearly $2 trillion to the debt and put Medicare and Social Security at risk,” paying no heed to the fact tax revenue has actually increased since the tax bill was enacted and the increased deficit and debt are due entirely to continued excessive spending by both political parties.
According to The Wall Street Journal, in the first 10 months of fiscal year 2018 revenues were up $26 billion, but spending increased by $143 billion.
No Band-Aid will stanch the hemorrhaging at the Social Security. It is fundamentally flawed. Eight decades ago when the Social Security Act was passed there were 40 workers for every retiree. The ratio is rapidly approaching 2 to 1.
Social Security was and is a Ponzi scheme. That’s when early investors are paid with money invested by newcomers. When the newcomers stop coming, the scheme goes bust.
Stephen Moore wrote an op-ed in Investor’s Business Daily a couple of years ago explaining, “From the moment Franklin Roosevelt created Social Security in 1935, the system was set up as a classic Ponzi scheme.”
Moore said there are options to fix the program, such as giving younger workers the option of partial privatization. For example, giving them the option of putting 10 percent of their 12.4 percent payroll tax dollars into an individual account. Moore estimated, “At historic rates of return, this would give workers a 7% return per year, which would let them retire as millionaires after 40 years of work. They’d receive two to three times more than Social Security promises.”
Or we can do like Rosen suggest — just wait for the whole darned thing to collapse.
A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel, Sparks Tribune and the Lincoln County Record.