The emptiness of the Social Security promise seems to have dawned upon a lot of people now, younger ones mostly. Nevertheless, we see Internet indignation regularly bewailing the uncertainty of coming pensions. That uncertainty is received with indignation; how dare the government deprive us of money we have paid in? That is a sign of willful ignorance.
Willful because first, anyone who trusts a politician deserves his harvest; second, because no citizen ignorant of such a massive and long-running program with so much effect on his later life can be considered responsible.
Of course, the politicians lie. The so-called Social Security Trust Fund is not and has never been a trust fund. Every dime of Social Security payroll taxes that it receives is spent on pensions almost immediately upon receipt. Those are the pensions of the currently retired, not the accounts of future pensioners. Add that when collections of those taxes exceed the current pensions, the difference is spent by Congress on other, unrelated programs. So, since no money stays in the “Trust Fund” longer than it takes to spend it, it is no trust fund. Not one nickel is held in trust for anyone, ever.
When Congress “borrows” any surplus taxes to spend on other programs, it issues to the Social Security Administration a special ‘bond.’ An IOU from Congress for the amount borrowed. A worthless piece of paper, until enough taxes are collected from taxpayers to make it good. A sort of joke on taxpayers. “We will pay you your Social Security pension … as soon as we can tax it away from you!”
The pension payouts have exceeded taxes received for a while now; the “Trust Fund” is in cash deficit. It still has some of those IOU ‘bonds’ though, so the deficit remains unacknowledged. But that cover is running out. At that point, Congress must either reduce pension payments or steal from other programs. But pensions are only part of the current deficit; add Medicare, Medicaid, Obamacare and overseas military adventures that are also in deficit. It is all presently one way or another, borrowed money owed by taxpayers. who don’t have the ability to repay all that borrowing, with interest.
So what have we?
1. Senior pensioners who feel entitled to their pensions, and cannot replace them in their declining years. Pensioners who vote.
2. A Treasury unable to fund said pensions incurring rising obligations to keep them going, obligations growing too large to continue without default at some point not far off.
3. Young and middle-aged taxpayers expected to pay more of their declining incomes to relieve this.
4. An oncoming limit upon government borrowing ability as perceptions of liklihood of repayment worsen. That is, as default risk looms.
Adding it all up: we are getting the bill for the free lunch. Lacking cash to pay our bill, we’ll be washing dishes for a long, long time …