Performance of Schemes
Declining Ratio of Workers to Retirees
America appears to be losing the battle for industrial supremacy in the world. Moreover, the computerized technology of robots displaces additional workers too. Consequently, with very good-paying jobs becoming rare, Social Security tax payments will be less for both employees and employers. Therefore, we can’t support Social Security, primarily as a nation of service workers.
SS-Ponzi is a scheme, of which the mathematical operating rules were and are destined to evolve over many decades. Thus what worked for Dear Aunt Bess won’t work for the generations to come, as the tax-paying worker/ retiree ratio* has steadily declined from 41.9 (1945); 16.5 (1950); 5.1 (1960); 3.7 (1970); 3.2 (1980); 3.4 (1990); 3.4 (2000); to 2.9 in the year 2010.
*Ref.[ http://www.ssa.gov/history/ratios.html ]
The American national work force is becoming much younger, as older skilled workers retire. Consequently the supply of workers, or SS-Tax payers, is both finite and diminishing because Boomers are many relative to younger workers. This reality will spell disaster for American retirees, when Social Security is receiving cash from about two workers per retiree. When the total number of SS-Tax payers falls below critical mass, Social Security won’t be able to meet payroll.
Escalating Social Security Tax Rates
However well intentioned the dream of Social Security was in 1935, it is currently obvious to many that it suffers the same inviolate fatal flaw of all Ponzi operations; which is ultimate total collapse. Apparently, the only way that Social Security has remained solvent for some 75 years is that the government has continued to prop it up through a series of SS-Tax hikes as follows.
For Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program, inspect the following combined tax rates* for employees and employers; 2.0% (1937), 3.0% (1950), 4.5% (1957), 6.0% (1960), 7.25% (1963), 8.4% (1969), 10.1% (1978), 11.4% (1984), 12.4% (1990), and 12.4% (2010).
*[Ref.: SS Tax Rates; Social Security website; http://www.ssa.gov/OACT/ProgData/taxRates.html ]
It is conceded that the total SS-Tax rate has been flat at 12.4% ever since the year 1990. However it seems probable that more tax increases are on the horizon. But congress may have already been to the tax well, about five times too often since 1960. Perhaps congress loathes going back to the well anymore? Moreover, it should be noted that Medicare's Hospital Insurance (HI) program tax rates are currently 2.9%, over and above the previous OASDI taxes. That's a current combined total tax of 15.3%, which is a very heavy load for the nation to bear.
Social Security System Investments
The Social Security system’s past, present and future investment earnings will catastrophically be less than the payments or returns, which will be or already have been made to SS retirees. The SS system can't be called, with any kind of dignity, a real or true investment. Americans should instead regard the Social Security Trust Fund as a finance pool for congressional pork projects. As a result, secure votes are acquired by providing money, social programs, new facilities and public-works projects for congressional constituencies.
"During 2010, the Trust Fund* held $2.5 trillion in government account series bonds—essentially "IOUs" or claims on the government's general fund or tax revenues. This amount is part of the total $14.3 trillion national debt, as of March 2011. By 2015, the government is expected to have borrowed nearly $3.25 trillion against the Social Security Trust Fund."
[Ref.;Wikipedia.org website; http://en.wikipedia.org/wiki/Social_Security_debate_(United_States) ]
By leaving paper IOU's, congress has borrowed trillions of dollars from the Social Security Trust Fund to pay for such pork-barrel projects. According to congress, they actually borrowed the money for legitimate business. However, the average American, who must balance real books, would say that congress just 'robbed the kitty' for their constituents. Federal debt is increasing very rapidly under the Obama administration. As a result, our federal Treasury is broke and without money to service those paper IOU's, as they come due.