Wednesday, July 13, 2011

It's Your Money, And You Should Keep It Now

The economic landscape has changed drastically since the 1930s. At the time, there were few options, let alone the means, for saving for the future and retirement, especially for the lower class; that is no longer true in today’s virtual world of 24/7 internet trading and investment. Implemented at the height of The Great Depression, Social Security's original purpose was as a “social insurance” program for senior citizens facing poverty caused by the likes of retirement, unemployment and spousal disability or loss. Though amended over the years to include more people, qualifications and benefits, the concept is still the same today.

Since the first payout in 1937, total benefits paid have risen from $35 million in 1940 (adjusted for inflation, equivalent to roughly $538 million) to $702 billion in 2010. The money comes from the individual workers and employers who pay into the system in the form of payroll taxes, an increasingly-shrinking funding base due to current economic conditions and early retirees – a key argument in the dispute over the future of the program, seen as reaching its zenith as it goes bankrupt.

Payroll Taxes, Costs & Benefits Paid By Employers (

Social Security:  More Going Out Than Coming In (CNN Money)

2010 Social Security Trustees Report Continues to Show Urgency of Reform (The Heritage Foundation)

How can the government fix the situation? Easy – eliminate Social Security. Return what has already been collected from workers and employers to fund the program, and allow them to keep what would be collected to invest in private savings and business. Almost like a stimulus plan. A stimulus that would not cost the government – because, unlike income taxes, it’s not their money in the first place – while decreasing the federal deficit and stabilizing the economy through new investments. 

After all, it’s no longer the 1930s.

©2011 Steve Sagarra

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