The View From 1776

Social Security Sham

Senator Obama hasn’t calculated whether his proposed higher taxes will cure the Social Security shortfall.  He’s interested only in socialistic redistribution of income and, incidentally, punishing “the rich.”

Read Obama’s Social Security Fine Print.


Would it help Social Security’s financing problems? Mr. Obama has no idea. One of his senior economic advisers admitted to me that no one on the campaign has run any detailed models or performed any rigorous analysis.


Posted by .(JavaScript must be enabled to view this email address) on 06/25 at 12:00 AM
  1. First, Social Security is already a redistribution plan.

    When you calculate the benefit check you use 90% of earnings up to $606 and then only 35% above that to $3,653 and only 15% above that.

    So, by raising the cap, even if you allow it to count for higher benefit checks means only 15% of the higher income is counted.


    90% of First $606
    32% of next $607 through $3,653
    15% over $3,653 to cap

    For a worker making $3,750, the PIA would work out
    $545 (90%)
    $975 (32%)
    $15 (15%)

    That is one thing about S.S. many don't know. The other is the number of workers vs. retirees. We have 124 million private sector workers and 22 million government. But, all payroll tax from the 22 million first come from the private sector tax revenues. So, any increases in tax on government employees for S.S. is paid for by the private sector workers either directly or indirectly through taxes in what they buy (higher prices if taxes go up).

    But, lets take the 36 million retires we have and the benefits they get from the payroll taxes of the 124 million. For a $1,000 check on average for them each worker has to pay in his share. 3.44 workers per retiree means $290 on average per retiree not including any "surplus" or "disability insurance." 1/2 is paid by the worker and 1/2 by the consumer who pays for the business side of the payroll tax as 100% of that tax is passed on to consumers in prices of goods and services.

    The projection is for us to have 71 million retirees in 20 years. If not for population growth that would mean 1.75 workers for each retiree and $571 divided between worker and consumer each month for the same $1000. So, th solution is massive growth in population.

    We don't have enough births so Congress plans on immigrating 67 to 100 million people here at a rate of about 3.5 to 5 million a year to replace the 78 million that retire and to create job growth needed to keep the ration above 3 to 1.

    That means we would need taxes to cover building 1/3 more infrastructure and maintaining it for a population 1/3 bigger. That is why many refer to how our Social Security system is funded as a Ponzi scheme. It takes more and more and more people each generation to fund it until the population is so massive it implodes the ability to meet the needs of the people given the size of the nation and its economy.
    Posted by JanPBurr  on  06/25  at  10:07 AM
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