So that is the reason they squandered the money, because it was unsustainable?
Are you taking inflation into account when you say that?
I remember a nice new house with a big yard could be had for 7 or 8 thousand dollars.
LBJ didn’t want to raise taxes to help pay for the Vietnam War. He also started a ginormous “War on Poverty” social spending programs.
So, the budget was looking pretty weak. And foreign central banks were demanding gold in exchange for their dollars. Social security receipts and trust fund monies were merged into the general fund and have been ever since the “unified budget”.
At least none of the goof ball politicians are running around saying everything is fine as they were not long ago. And Grandma can sleep well, knowing that foreign bondholders are first in line during our bankruptcy reorg, and getting her check is dependent on borrowing money overseas from those same bondholders.
Without the concept of inflation (Increasing money supply), the SS ponzi scheme would be even less workable. Without inflation there’s virtually no interest, and therefore the idea of getting out more than you paid in, is even less workable. And if you get out only what you paid in, there is even less of a reason to have it change hands through all of the government officials, skimming off the top all along the way.
SS is a pay as you go program. Here is how it works. The SSTF collects the revenue from the payroll tax (revenue) and pays out benefits. Any funds leftover, i.e., "surplus" is put into the General Fund and the Treasury issues non-market, interest bearing T-bills in the amount of the "surplus," and deposits it into the trust fund. There is about $2.6 trillion IOUs in the SSTF. The SSTF is part of the $14.3 trillion national debt and held under "Intragovernmental Holdings."
Even if the trust funds contained real assets, SS would not be solvent. In 1950 there were 16 workers for every retiree; today, there are 3.3; and by 2030 there will be two. And by 2030, one in every five residents of this country will be 65 or older, twice what it is now. The revenue will not be enough to pay everyone's benefits unless you raise taxes or reduce benefits or do both.
SS is a Ponzi scheme. Those at the top of the pyramid are receiving far more than they paid in. Why Social Security is a Ponzi Scheme--
From the 2010 Trustees Report
"Social Security expenditures are expected to exceed tax receipts this year for the first time since 1983. The projected deficit of $41 billion this year (excluding interest income) is attributable to the recession and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink substantially for 2011 and to return to small surpluses for years 2012-2014 due to the improving economy. After 2014 deficits are expected to grow rapidly as the baby boom generation’s retirement causes the number of beneficiaries to grow substantially more rapidly than the number of covered workers. The annual deficits will be made up by redeeming trust fund assets in amounts less than interest earnings through 2024, and then by redeeming trust fund assets until reserves are exhausted in 2037, at which point tax income would be sufficient to pay about 75 percent of scheduled benefits through 2084."
So there’s your admission that this scheme has run its course, and even an admission that without legislative changes, people will be getting less than they thought.
Some people say, “There’s no problem here – just raise taxes further until we get the money that we need.” But what started at 2% has now become 12.4% when both the employee’s and the employer’s portions are considered. And keep in mind that the half paid by the employer represents monies that by definition can’t be paid to the employees or investors in the form of additional wages and/or returns. As the saying goes, corporations don’t pay taxes. People pay taxes.
Furthermore, the idea that we can just raise taxes and hit some projected revenue increase is fatally flawed by static analysis — the idea that people don’t respond to incentives and penalties. Tax increases routinely fail to yield the originally projected revenue. Lastly, you have to be willing to legislatively seize a lot of property that just doesn’t belong to you (regardless of what Michael Moore might say)."
I might add that SCOTUS has ruled, Flemming vs Nestor, that once your contributions are deposited into SS, they no longer belong to you. The government can do whatever it wants with them.
And don't get me started with Medicare, which receives 51% of its current funding from the General Fund and that number is growing. And people on Medicare get three times what the contributed out of the program. The welfare state is imploding. It has made over $60 trillion worth of promises it can't keep.