Fixing the Social Security Ponzi
Trump wants to convert Social Security from a Congressional slush fund into real assets you own, like an IRA or 401k.
The difference could mean $60 trillion dollars for the American people — more than the national debt.
This matters because social security is going bankrupt, with trustees saying we’ve got just 6 years until benefits are cut up to 25%. Because Congress pissed away every social security dollar on recreational wars and NGO grants, leaving social security the mother of Ponzis with an estimated $29 trillion of unfunded liabilities.
Two Ways to Plug a Ponzi
Democrats’ solution -- naturally -- is tax hikes and cutting off wealthier people who paid most social security taxes, Trump wants to shift it towards the 401k and IRA models where you actually invest the money -- and keep it.
That model has generated nearly $30 trillion of assets in IRA’s and 401k’s -- compared to $29 trillion of debt in social security.
Now the details are still coming since Trump accounts for kids were just launched, which seed $1,000 into essentially an IRA for kiddos, to which you can contribute another $5,000 per year.
That may not sound like much, but if you’d done that for today’s 18 year old they’d have $409,000 dollars -- not a bad way to start out.
In fact its enough to buy a house with cash to start a family. And it shows the power of compounding money rather than handing it to Congress to waste.
More important, starting with $409,000 gives young voters a stake in the free-market system Democratic Socialists are currently trying to replace with bread lines.
Trump Accounts for Grownups
Trump wants to do something similar for the grownups modeled on Australia’s superannuation system where social security taxes go into an account you own and invest like IRA’s and 401k’s.
The idea is it would work like Social Security, but instead of taking your money for Congress to spend the money would go into your account.
In Australia it’s built up over $4 trillion Australian -- in US terms about $45 trillion US.
Translated per American household, that would be about $350,000 in assets intead of $200,000 of social security debt.
If this sounds like a lot, consider if social security was run like a 401k or IRA, replacing social security’s 1.5% returns with 4.5% from a 50/50 stock/bond portfolio (4.5%) or full stock portfolio (7%) the average social security check today would go from $2,084 to between $7,960 (stocks and bonds) and $23,615 per month.
That’s the average check.
Put differently, Congress has effectively stolen between 74% and 88% of your social security dollars. And will keep stealing it until we get private accounts.
The Road to Private Accounts
Now, the devil’s in the details. First because Trump needs Congress, who enjoys blowing your social security on Leering Centers and wars. Especially Democrats, who’ve fought private accounts for decades since apparently they do not want workers to own the means of production.
Second, because the existing $29 trillion hole in social security means Congress would have a big hole so they’d have to slash spending for a couple decades.
This is certainly painful for Washington’s drunkest sailors, but keep in mind that $29 trillion hole is projected to increase to $72 trillion if nothing’s done.
What’s Next
For 90 years Congress raided social security, leaving it with IOU’s that are about to run out. Shifting to an IRA type system would turn Social Security from a black hole to a respectable retirement.
And it gives young Americans a stake in the system that keeps us all from starving.
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Peter
Sure thing...and it will still be controlled by your loving government. They will still be able to steal your assets at will. Freeze your bank account and investing account. Then what? The real problem is not social security or medicare. It is that we were and are being forced to participate in these lousy schemes. We are forced to accept that this government was born with some magical power over its slaves. Not true...not true at all.
How can we say "Social Security is going bankrupt," when they won't get rid of the fraud, which is far more abuse, than taxpayers who paid in wanting to get it back. They should've never taken it from us so that we could have invested it ourselves. They'll pay illegals but they won't pay Americans who worked for it and from whom it was confiscated?