security

Big government gone wild: Social Security on the verge of insolvency

Tuesday, August 23, 2011 by: J. D. Heyes
Tags: social security, bankruptcy, health news

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(NaturalNews) Do you remember the recent debate in Congress and the White House to raise the government's ability to borrow even more money? The "debate" that was long on raising the debt ceiling but short on actually cutting government spending?

It wasn't enough that our leaders failure to effect long term, meaningful budget reform resulted in a leading credit rating agency downgrading U.S. credit for the first time in our history, but now the budgetary chickens are really coming home to roost.

High unemployment, combined with the rapid growth in baby boomer retirements has strapped Social Security for cash and it is now being pushed to brink of insolvency. The longer the economy remains in the tank, the more strain it will put on this massively expensive entitlement program.

We have known for more than a decade that Social Security was going broke. As far back as 1997, the Brookings Institute, among many other think tanks, predicted that an enormous amount of seniors born in the years following World War II were about to retire, and that doing so would put an equally enormous fiscal strain on Social Security.

What many analysts didn't predict, however, is the amount of Americans who would come to rely on Social Security's disability benefits (and others) as a result of a tanking economy.

It's all adding up, and it's doing so much faster than anyone anticipated.

The government says applications for benefits are up 50 percent from a decade ago, and that there is such a backlog now some people wait two years before their cases get resolved. New estimates by Congress aren't encouraging; they forecast that the trust fund that supports Social Security will run out of money in just a few short years, by 2017, meaning the system will be unable to pay full benefits by then.

The long-term prospects for this aren't any better. In about 20 years, Social Security's retirement fund will run out of funds too, meaning it also won't be able to pay full benefits.

Unless Congress acts, that is. And what are some of the proposals? Raise the retirement age. Conduct means testing to see if wealthier Americans (who are still paying into the benefit) can be denied. Raise taxes.

Most lawmakers and policy wonks are suggesting everything to save or extend this costly entitlement, but nothing to privatize or end it so the taxpayer can get off the hook financially for funding it. At the rate the system is being drained, even if the economy improves and fewer Americans seek benefits in the short term, the system will still have to pay out trillions in benefits for baby boomers.

The best way to prevent the system from bankrupting itself is to reduce the amount of benefits it pays. That seems pretty simple. But when you demonize the issue for the sake of votes, there isn't much chance that's going to happen.

So the next best thing is to eliminate the liability altogether, and that means adopting a small-government, personal liberty solution. Give workers the right to opt out of the government system by giving us choices in how to save for our own retirement. The Congressional Budget Office has studied how other nations, including Chile, Argentina and Great Britain, have done so, and successfully.

It's clear we can't afford this forever. Insanity is defined as doing the same thing over and over again but expecting a different result.

Sources:
http://news.yahoo.com/social-security-disabi...

http://www.cbo.gov/doc.cfm?index=1065&type=0...

http://www.brookings.edu/articles/1997/summe...

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