How Social Security Works
SHANE KILLIAN: I have been making a lot of science ideas because I’ve seen a great need for people to have a greater understanding of science. Once again, like every election year, I started seeing a similar girth of knowledge with political policy.
It’s amazing how may otherwise skeptical people just turn it off when they enter the political arena and completely trust what the government tells them.
No, there’s no conspiracy mongering here. I don’t put up with that. I just wanted to tell the objective truth about how government policies work.
This first video will cover Social Security.
Charles Ponzi was one of the greatest swindlers this country has ever seen. No, he is of no relation to Chris Parilla’s wife; I would just want to make that clear.
In 1918, soon after being released from jail for smuggling and other offenses, he begun running an investment scam. He would take money from investors and just spend it, living the good life. When it came time to pay off the investors, he would get money from new investors and use some of it to pay the old investors and use the rest for himself, and so on. This is the type of scam known as the Ponzi scheme.
Then the other Ponzi schemes had followed including one from the Church of Scientology. Both prosecutors and psychologists have noted the effects of the Ponzi scheme on its victims: Few of them even want to admit that it’s been a scam and often speak out in court in favor of the person who ripped them off.
What does that have to do with Social Security?
Well, Social Security works the exact same way. Government gets the Social Security tax, uses part of it to pay part off current beneficiaries and just spends the rest however they want.
This was the reason for the so-called surplus of the Clinton years. In reality, the budget deficit never got lower than $80 billion. It was just the extra funds from Social Security, which covered it up.
Every year, the Social Security account is ran dry and new money coming in from taxes is needed to replenish it. Beneficiaries are paid and the government just spends the rest, and the next year, it starts all over again.
The official government response to this argument is thus, “As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever. There is no sustainable progression driving the mechanism of a pay-as-you-go pension system and so it is not a pyramid or Ponzi scheme.”
But then why have they constantly had to increase the Social Security tax rate? Why have they constantly had to increase the retirement age and decrease benefits? Why does the Government Accountability Office say it’s unsustainable?
Social Security is very much a Ponzi scheme. Let’s look in detail at how it works.
Every year, the government has a certain amount of dollars for Social Security. Only a fraction of that gets sent to beneficiaries. The rest, according to government, is invested.
But it’s “invested” in government bonds, so really the government goes in debt to itself. The money goes from the Social Security budget into the General Treasury where it can be spent however Congress or the President want to spend it.
What’s left of the Social Security fund is the bonds. The next year, the government takes in so much in Social Security taxes, but it also has to pay the interest on these bonds, as well as the principal on any bonds that have matured.
Since that money has already been spent, other money taken in taxes, from income tax, excises, and so forth, must be taken from general budget and paid into the Social Security fund. Then whatever surplus remains after paying beneficiaries is used to buy more bonds. The money goes back into the treasury. The politicians spend it however they want and it starts all over again.
This is sustained by nothing more than the government’s power to tax the bejesus out of us. The government invests this money in itself and puts it to productive use and therefore must tax people even more to pay it back.
Also, it can just grab the surplus for itself again. As the interests and obligations rise, the government’s power to sustain the scheme dwindles.
According to the Government Accountability Office, Social Security will cease running surpluses by 2017, and by 2041, there will be no way to raise Social Security money to do anything other than pay off the Treasury obligations.
There is one place in the country where you can go to in order to get out of this scam. In 1981, Galveston County, Texas took advantage of a loophole allowing it to run its own pension plan instead of participating in Social Security.
Congress quickly closed the loophole, so that no one else could do it, but to this day, Galveston County runs its own pension plan and its citizen are not subject to Social Security/Ponzi scheme.
After 27 years, we can easily look at the long-term results of their plan versus Social Security. This plan uses a banking model. Workers in Galveston County drawing from the pension get anywhere from a 150 percent to 400 percent what would they would have made with Social Security.
Their benefits are better too. Disability, for example, is 60 percent of salary, much better than Social Security, despite the union’s warning that only Social Security can only provide disability funds. Workers can also make hardship withdrawals if they need to, an option that just doesn’t exist with Social Security.
When you look at it in detail, a rational person can only come to the conclusion that the name Social Security is just Orwellian newspeak. It isn’t social. In fact, it’s fraudulent nature makes it quite anti-social, and it isn’t secure at all.
It has been sustained only by increased forceful taxation, both with the Social Security tax and of general taxes, and of reducing and even denying benefits whenever possible. And in case you’re wondering if Medicare and Medicaid are any better, practically every explanation and argument given here about Social Security applies equally well to them.
Far from helping us from in retirement, this Anti-Social Insecurity actually robs us of much of our wealth while the politicians and politically connected corporations and industries profit at the expense of the poor and the middle class.
They keep us satisfied by throwing us a few crumbs in return, making people fearful of what would happen if their Social Security checks were taken away, proving the psychology of the Ponzi scheme once again.
This is a clear example of what Harry Brown was referring to when he said, “Government breaks your leg, hands you a crutch, and says, ‘See, without us, you couldn’t walk’.”
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