Saturday, January 01, 2005

Worse than I thought....


Good gosh, what a mess. The government taxes workers 6.2% for Social Security and the employer pays a further 6.2% for Social Security for that worker. This flows into the Social Security fund where it is used to pay off current expenses. If there is any surplus, this flows into the General Fund and used to pay for other things and the government[read Congress] replaces these surplus funds with IOUs in the form of bonds that can be only redeemed by the government[read Congress again] coming up with the funds from somewhere else[like other parts of the budget or by raising taxes].

Go read the article I linked to. Scary. If the tax rate is jacked to 50 or 60% of a worker's income and the business that pays part of the tax then Social Security as presently formulated may last long enough to pass the mess onto the next generation. That is assuming such an outrageous tax rate does not kill off businesses and employment because businesses will then have far less of their income to pay employees, pay expenses like rent, pay any investors, and then they might have a little profit.

I am still rummaging around looking for the info on which Session of Congress opened up the Social Security Fund to let the surplus be moved to the General Fund and the funds be replaced by those IOUs.

What a Ponzi scheme we got here.

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