That Scheme Called "Ponzi"

According to the Bureau of Labor Statistics there was only 1.75 full-time private sector workers last year for every one Social Security recipient. Obviously this doesn't include part-time workers, or "covered" workers-- those who, while receiving Social Security benefits, also work part-time and pay social security taxes. But part-time and covered workers didn't pay enough to make up the difference between what came in and what went out...

That means that for each husband and wife who worked full-time in the private sector last year there was a Social Security recipient somewhere in the country taking benefits from the federal government.

Most state and local workers are part of the Social Security system and pay Social Security taxes; and, since 1984, all federal workers have been part of the system and pay Social Security taxes. However, unlike private sector workers who pay Social Security taxes with private-sector dollars, government workers pay their payroll taxes out of wages government pays them with tax dollars or with money that was BORROWED BY GOVERNMENT AND TAXPAYERS MUST EVENTUALLY REPAY. [emphasis added]


In its latest annual report, the Social Security board of trustees reported that the federal government’s total revenue from Social Security taxes in 2010—$544.8 billion—was not enough to cover Social Security’s total benefit payments—$577.4 billion. 

This is the beautiful part: government workers paid their social security taxes with our tax money... that non-government workers have to pay back. Taxed twice, essentially... private sector workers paying for public sector workers' social security benefits.

Public sector workers deserve to receive benefits when they reach that age, but there needs to be a better system in place where the private sector isn't carrying the tax burden of public sector workers as well as their own.

This pyramid scheme isn't going to be able to keep pace with demand for much longer. Last year saw a 32 billion dollar shortfall. Reforms MUST be made. Reforms that include a lock and key on all future contributions; no more plonking it all into the general fund where politicians can squander it. Reforms that include allowing taxpayers the option of investing a portion of their pre-tax earnings into private retirement investments. Reforms that ensure that present recipients and those of a certain age are guaranteed the benefits promised them.



Follow the link for the full article:

Labor Dept. Data: Only 1.75 Full-Time Private Sector Workers Per Social Security Recipient


UPDATE:
Found a bit of history surrounding Social Security over at Godfather Politics. Here are the salient remarks:
 

Most Americans don’t know much about the financial structure of Social Security, and they also don’t know much about its history. Here’s just a little background. Take it for what it’s worth.

In William L. Shirer’s book The Rise and Fall of the Third Reich we learn the origin of Social Security policies and the effect they had on the German people. Social Security was engineered by German Chancellor Otto Von Bismarck in the 19^th century. His policies gradually made the German people “value security over political freedom and caused them to see in the State, however conservative, a benefactor and a protector.”[1] Between 1883 and 1889 Bismarck put through a program for social security far beyond anything known in other countries at the time. It included compulsory insurance for workers against old age, sickness, accident and incapacity, and though it was organized by the State it was financed by employers and employees. Sound familiar? This is American-style Social Security!

Adolf Hitler took full advantage of the German state of mind and Bismarck’s early progress in turning the nation into a model of socialist reform. Hitler remarks in Mein Kampf, “I studied Bismarck’s socialist legislation in its intention, struggle and success.”[2] It was Hitler’s social security policies and promises that helped get him elected.

Hitler was not alone in his admiration of Bismarck and what he was able to accomplish. FDR borrowed Bismarck’s socialist agenda and created what is now known as the Social Security System. Bismarck said that “the State must take the matter in hand, since the State can most easily supply the requisite funds. It must provide them not as alms but in fulfillment of the workers’ right to look to the State where their own good will can achieve nothing more.”[3] Roosevelt and his admirers agreed. P. J. O’Brien, writing in Forward with Roosevelt, links Bismarck’s social policies with those of Roosevelt: “[The quotation by Bismarck] might have been lifted out of a speech by President Roosevelt in 1936, but the Iron Chancellor uttered it in 1871.”[4]

Read more: The Hidden History of Social Security | Godfather Politics