The Phantom of the Social Security Trust Fund
Stop the presses! Your intrepid observer just located the Social Security (SS) Trust Fund. It is in a federal building in Parkersburg, W.Va. Slipping through the vault door, I expected to see a huge pile of dollars lying about. Wrong. Instead of dollars, I found a stack of IOUs from the U.S. Government. I was about to sneak back out when an apparition dressed in a black cape and wearing a white mask over the right side of his face challenged me with, “What are you doing inside the Trust Fund?”
“I came to visit the SS tax dollars that my employers and I deposited here. But they are gone. And, who the heck are you, anyway?”
“I am the Phantom of the SS Trust Fund. And, I see you are one of those dolts who think your employers actually paid into my massive Ponzi scheme.”
“Wait a minute. I paid 6.2-percent and my employers paid 6.2-percent,”
“Wrong. Your employer simply reduced your pay by the amount he or she was required to pay in SS taxes. You paid all 12.4-percent of it.”
“Ouch. Well, what have you done with our, I mean my, SS tax dollars?”
“Back in the early days, not many of you lived long enough to collect your Social Security. So, I took in a lot more than I paid out. But then, President Lyndon Johnson got Congress to siphon off the so-called surplus to pay for his Great Society programs.
“So, that explains why you wear a mask. You have taken my money. But I have no ownership stake in it. Only some IOUs. But why only half a mask?
“Because, even though I have stolen your opportunity to make much wiser investments than SS, I am not all bad. But the way, I don’t really have to pay you a penny. I have won two court cases: Helvering v. Davis (1937) and Fleming v. Nestor (1960) that ruled you have no contractual rights to get back any of your SS tax dollars.
“But I enjoy my power over you. So I will pay out until I start receiving fewer dollars than I take in. That will happen in the year 2018. By then, there will only be two of you suckers to support each SS retiree. So, thirteen years from now, Congress will have to either cut SS benefits and/or raise the SS taxes on those two remaining workers.”
“Isn’t there some other way to fix a system that is headed for the financial rocks?”
“Well, there was. Maybe, there still is. Back in the 1980s, Congress should have followed the example of 11 South American countries that let their tax payers own a portion of their SS taxes by investing them in stocks and/or bonds. Now, their SS Trust Funds are solvent, and the private investments are creating a growing, and stable, middle class.”
“Is it too late for me to put a portion of my SS taxes into some investments that will help me have more retirement money than the present system?”
“If you are over 55, it is too late. But one idea floating before Congress would let those under 55 invest up to four percent of their SS taxes in some conservative investments. But don’t hold your breath for that. Powerful lobbies like the AARP and the labor unions have their own mutual funds. They don’t want SS to compete with them. Also, the Left-wing Democrats don’t want you to own even a portion of your SS taxes.”
“Why not? Isn’t the American dream to own a greater stake in society, to move up the economic ladder to financial independence?”
“Naw. We want you to be more dependent on government, not less. If you become financially independent, you might vote Republican.”
With that, the Phantom of the SS Trust Fund, like my SS taxes, disappeared in a puff of smoke.
William Hamilton, a syndicated columnist, a featured commentator for USA Today and self-described “recovering lawyer and philosopher,” is the co-author of The Grand Conspiracy and The Panama Conspiracy – two thrillers about terrorism directed against the United States.
©2005. William Hamilton.