That's probably the best solution that we could get, however, I could think of a more just solution.
1.) Stop FICA collection.
2.)Cash everybody out based on real value and not the ponzi scheme value.
3.)Make everyone, across the board, pay for the ponzi scheme shortfall.
It will never happen of course. But anything else is a Marxist redistribution of wealth.
The real value of the so-called "Trust Fund" is $0.
>That’s probably the best solution that we could get, however, I could think of a more just solution.
>1.) Stop FICA collection.
>2.)Cash everybody out based on real value and not the ponzi scheme value.
>3.)Make everyone, across the board, pay for the ponzi scheme shortfall.
>It will never happen of course. But anything else is a Marxist redistribution of wealth.
I do like this idea in principle. I do also agree that it will never happen. That’s why I am willing to advocate things to prevent the coming train wreck.
As much as I would like this solution, it's even more impossible than the current scheme.
For a moment, let's pretend that the government could just issue a US Treasury bond to everyone for the value of their contributions... PLUS INTEREST.
I've done the calculations. For middle to upper-middle income taxpayers, the value of Social Security contributions is staggering, especially if you were working during the early 1980's.
I put together an Excel workbook that simulated the annual investment of Social Security contributions into long-term US Treasury bonds, at the average interest rate for each year. Each bond is held to maturity, reinvesting the interest (and new contributions) each year at the average interest rate for that year.
A conservative estimate for someone born in 1957, worked from age 21 to age 62, and paid the maximum Social Security tax each year would have $1,800,000 -- if they invested as I described above.
In contrast, the value of the expected stream of Social Security payments (to average life expectancy of 81) is only about $500,000. Note that this doesn't matter when you start receiving benefits -- the benefit is reduced until the value is the same at age 81.
So, the "Ponzi scheme value" is actually quite a bit less than the "real value" of the contribution, at least for middle to upper-middle income taxpayers. At lower incomes, the difference is not quite as stark. That's because the relationship of benefits to contributions is not linear in Social Security.
I agree, but I am not sure Mariner actually believes that.