The Social Security System is actuarially (statistically) bankrupt. It’s only a question of when it will go under, and the form the bankruptcy will take. Without massive monetary inflation, there is no way that someone entering the program today will ever be repaid for the heavy taxes he will shell out. In order to postpone the statistically inevitable, Congress in late 1977 enacted the heaviest peacetime tax increase in U. S. history. Anyone doubting the magnitude of this tax burden need only open the PDF at the bottom of this page and examine the table prepared by Huggins E: Co., consulting actuaries. The table is based on the government’s own figures.
Despite the increases, HEW Secretary Joseph Califano has admitted that the present tax rate is only temporary. It will, at best, keep the system solvent only until the year 2000, assuming that birth rates are as high as the Social Security actuaries predict (they are, in fact, much lower) and that price inflation is held to 4% per annum (it is, of course, presently far higher). In short, Califano’s “pessimistic” prediction is woefully optimistic!
The most honest assessment of what is coming as a result of Social Security’s expenditures was made in 1976 by Sen. William Proxmire. He had an exchange with James Cardwell, the head of the Social Security program (he retired in mid-1978). l need only reproduce this exchange verbatim to give you the picture:
PROXMIRE: There are 37 million people, is that right, that get social security benefits.
CARDWELL: Today between 32 and 34 million.
PROXMIRE: I am a little high; 32 to 34 million people. Almost all of them, or many of them, are voters. In my State, l figure there are 600,000 voters that receive social security. Can you imagine a Senator or Congressman under those circumstances saying, we are going to repudiate that high a proportion of the electorate? No. Furthermore, we have the capacity under the Constitution, the Congress does, to coin money, as well as to regulate the value thereof. And therefore we have the power to provide that money. And we are going to do it. It may not be worth anything when the recipient gets it, but he is going to get his benefits paid.
CARDWELL: I tend to agree.
In case you think I am making this up, you can check it out: The Social Security System, Hearings Before the Joint Economic Committee of the United States, 94th Congress, 2nd Session, May 26, 1976, pp. 27-28 (Washington: Government Printing Office, 1977).
You have now been warned.
(For the rest of my article, click the link.)
