A Ponzi Scheme Built On Meaningless IOUs.

Unfortunately, that's how too many people see Social Security, because they've bought into a thirty-year campaign of disinformation funded by right-wing think tanks bankrolled mainly by people who stand to make a lot of money if Social Security is ever privatized.

"Meaningless IOUs?" Those would be U.S. Treasury bonds, also known as the safest investment in the world. The same Treasury bonds held by the Chinese government and all the biggest players on Wall Street.

The Social Security trust fund has always been invested in T-bills, and for good reason. They're safe, backed by the full faith and credit of the U.S. government (granted, that looks less reliable all the time, but what are the alternatives?) If they are "meaningless IOUs," then so is your 401K and your bank account.

But think of the money that could be made if the trust fund was turned over to Wall Street! A lot of people have, and that's why they've invested in propaganda designed to convince voters that Social Security is bankrupt.

Let me quote from this article by Gene Lyons from Salon:

In fact, the law’s working precisely as intended. After 28 years of generating huge payroll tax surpluses to cover the baby boomers’ retirement benefits, the system must now begin to draw upon those funds to help pay current benefits—the vast majority still covered by current payroll tax receipts.

“Rather than posing any sort of crisis,” explains Dean Baker of the Center for Economic and Policy Research, “this is exactly what had been planned when Congress last made major changes to the program in 1983 based on the recommendations of the Greenspan commission.”

Again, this is the beneficiaries’ money, invested by the Social Security trustees in U.S. Treasury bonds drawn upon “the full faith and credit of the United States.” Far from being “meaningless IOUs” as right-wing cant has it, they represent the same legally binding promise between the U.S. government and its people that it makes with Wall Street banks and the Chinese government, which also hold Treasury Bonds.

A promise not very different, the Daily Howler’s Bob Somerby points out, from the one implicit in your bank statement or 401K (if you’re lucky enough to have one). Did you think the money was buried in earthen jars filled with gold bullion and precious stones?...

So is Social Security a “Ponzi scheme”? No, it’s group insurance, not an investment... Do fewer workers support each beneficiary? Sure, but who cares? It’s denominated in dollars, not a head count. The boomers were nearing 40 when the Reagan administration fixed the actuarial tables. No surprises there.

Are longer life expectancies screwing up the numbers? Not really. Most of the rise is explained by lower infant and child mortality, not by old-timers overstaying their welcome. Kevin Drum points out that gradually raising the payroll tax 1 percent and doubling the earnings cap over 20 years would make Social Security solvent forever.

We've heard a lot of crap from interested parties and ignorant tools about this issue. It's time to push back.

P.