Social Insecurity System
Monday, July 02, 2007 - FreeMarketNews.com
One doesn't have to be a Cassandra to feel worried that the pay-as-you-go setup for Social Security is heading into a financial storm with perhaps disastrous consequences. Peter Schiff, regarding Social Security, comments in an interview with Financial Sense Editor Jim Puplava:"Initially, when Social Security was imposed it was a 1% tax on a small amount of wages, and it didn't even apply to the self-employed, who didn't even have to pay. And those people that got in early, they paid a little bit of money, they made out great; they ended up making a lot of money. But now, nobody can make any money. It's all going to collapse because the people that collect Social Security payments don't get it out of a giant trust fund, they get the payments from the people who are paying in today. So who are we – who is the baby-boomer going to get their Social Security retirement from? What generation is following them that's going to be able to afford to support them in retirement? It's just impossible. It's not there.""...So the real date of bankruptcy is the minute they start paying out more than they collect. And that happens…When is that? Probably in 5 to 10 years – that happens pretty soon. And the minute that happens, it's all over with because now they have to raise taxes, or do something. That's because there is no trust fund they can draw on; that money was spent a long time ago."Mary Ellen Tribby, interviewing Newt Ginrich, former Speaker of the House, asked him if he believed the government should even be in the retirement guaranteeing business, and what he felt would rectify the situation. He commented:"We will now have in the baby boomers the largest group of people living the longest in history. It is not possible to sustain this without serious, fundamental rethinking. You can't have a program designed for people to pass away at 46, or in the case of Social Security, the average person died three years before they were eligible to get a benefit when the program was initiated. So now you have to find a way to change the system. "I believe, in the long run, moving to the power of compound interest to allow young people to have personal savings accounts, which will give them three or four times as big a retirement for the same number of dollars invested, is dramatically better than keeping Social Security under the control of the politicians. And I think it is a program which can work, which will generate trillions of dollars in investment capital so that people will retire in a country which has a larger economy, with greater wealth, and therefore can sustain a much better and more positive economy.""...I think the government should set the rules for a person and have a tax favoritism so you would not pay taxes when the money was put into your personal savings account and you wouldn't pay taxes on the buildup of interest over your lifetime. But the government itself shouldn't run the program. You should be in control of it." Staff Reports - Free-Market News Network
One doesn't have to be a Cassandra to feel worried that the pay-as-you-go setup for Social Security is heading into a financial storm with perhaps disastrous consequences. Peter Schiff, regarding Social Security, comments in an interview with Financial Sense Editor Jim Puplava:"Initially, when Social Security was imposed it was a 1% tax on a small amount of wages, and it didn't even apply to the self-employed, who didn't even have to pay. And those people that got in early, they paid a little bit of money, they made out great; they ended up making a lot of money. But now, nobody can make any money. It's all going to collapse because the people that collect Social Security payments don't get it out of a giant trust fund, they get the payments from the people who are paying in today. So who are we – who is the baby-boomer going to get their Social Security retirement from? What generation is following them that's going to be able to afford to support them in retirement? It's just impossible. It's not there.""...So the real date of bankruptcy is the minute they start paying out more than they collect. And that happens…When is that? Probably in 5 to 10 years – that happens pretty soon. And the minute that happens, it's all over with because now they have to raise taxes, or do something. That's because there is no trust fund they can draw on; that money was spent a long time ago."Mary Ellen Tribby, interviewing Newt Ginrich, former Speaker of the House, asked him if he believed the government should even be in the retirement guaranteeing business, and what he felt would rectify the situation. He commented:"We will now have in the baby boomers the largest group of people living the longest in history. It is not possible to sustain this without serious, fundamental rethinking. You can't have a program designed for people to pass away at 46, or in the case of Social Security, the average person died three years before they were eligible to get a benefit when the program was initiated. So now you have to find a way to change the system. "I believe, in the long run, moving to the power of compound interest to allow young people to have personal savings accounts, which will give them three or four times as big a retirement for the same number of dollars invested, is dramatically better than keeping Social Security under the control of the politicians. And I think it is a program which can work, which will generate trillions of dollars in investment capital so that people will retire in a country which has a larger economy, with greater wealth, and therefore can sustain a much better and more positive economy.""...I think the government should set the rules for a person and have a tax favoritism so you would not pay taxes when the money was put into your personal savings account and you wouldn't pay taxes on the buildup of interest over your lifetime. But the government itself shouldn't run the program. You should be in control of it." Staff Reports - Free-Market News Network
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