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Tom Adkins - Contributor

Tom Adkins is Executive Publisher of and frequent financial commentator on Fox News. [go to Adkins index]

Saving Social Security?
Fixing the old clunker...

[Tom Adkins] 1/25/05

My old neighbor Bill had a 1968 Buick Electra. Big, roomy and about 5 miles per gallon on the freeway, it could be described as the blue collar Queen Mary. It broke down so often, Bill should have bought one for the road and one for his mechanic. But he loved it. Vowed he’d never sell it. Long after it rusted and began falling apart, he nursed it together with junkyard parts and duct tape. On a good day, the Green Monster chugged out of his garage in a cloud of carbon monoxide that resembled Krakatoa. On a bad day, he borrowed his wife’s car for work, and spend the rest of the week under the hood swearing up a storm as he sheared a few knuckles with his ratchet. A week later, the old tank would clank to life, and he’d defiantly proclaim, hands on hip, “See? This baby is PERFECT! Not a THING WRONG WITH HER!!!”

He had sworn to everyone he would keep that car forever. And he upheld his promise. Today, it wallows embarrassingly next to his garage, one wheel on blocks, partially covered in bushes. But he made that commitment, you know.

His wife, a lot smarter, buys a new car every four or five years. First, it was a mini-van for the kids. Later, they switched to a comfy mid-sized. Now, she tools around in a sporty little model. All along, she always got where she had to go, didn’t need extra trips, never got under the hood, spent less on gas, and always had exactly the right car for their lifestyle. She was pretty smart. He was pretty dumb.

And so today, we face the same situation with Social Security, another great liberal program that never worked. Oh, they’ve slapped on a few coats of paint, then proclaimed the greatness of this mammoth Ponzi scheme. But it’s the same old bad idea. Except it keeps getting worse.

Finally, someone has the guts to fix it. And the battle lines have been drawn: George Bush and his supporters want to update the program. Everyone else is reaching for the duct tape.

The case against Social Security is fairly obvious. When the program was created, a 1% tax permitted 12 workers to support every retiree. But life expectancy rose 15 years, and birth rates dropped as contraception and abortion became popular. Today, 3 workers pay for the ever-dwindling benefits to the retirees. In a decade or so, the massive retirement of the Baby Boomer generation will force two workers to pay for every retiree. It can’t work.

In fact, it never has worked. That original 1 % tax eventually ballooned to 12.6%. Social Security has failed 48 times since its inception, rescued by jacking up taxes and cutting benefits. The program will start taking in less than it pays out in 2018, and somewhere around 2050 it will be flat broke.

So why would anyone oppose privatizing Social Security? After all, it returns a meager 2%, while the stock market returns about 12%. That means if you chose your stocks with a blindfold and darts, your return is 6 times greater than Social Security. And unlike Social Security, you have money left over for relatives when you die. And ironically, it shafts the most vulnerable. If a man works for 30 years, but dies before he gets Social Security, his family gets nothing. In fact, it screws the most loyal Democrats the worst. Black Americans pay out the greatest percentage of their lifetime income, but get the lowest benefits due to shorter lifespans. Black men die before they even get a check, leaving their widows nothing.

Democrats argue that the program isn't going broke until 50 years from now. They deceive us by ignoring the fact that the program starts emptying out the "trust fund" a decade from now. And besides, there is no trust fund. It's been raided over the last four decades to fund the "Great Society" welfare state. You know, that other liberal program that spent trillions and didn’t work.

Bush has it right. The elderly who greedily scammed their kids and now grandkids won’t see a change. The younger people will get to invest their money in the marketplace. Yeah, there’s a financial cost. But it’s way less than if we don’t change the system. And if you think the stock market is risky, there is nothing riskier than forcing people to spend 12% of their money into a Ponzi scheme that has already reached saturation point on Day One. And can you imagine injecting 14% of the nations salaries into the capitalist machine, creating unprecedented low rates for business borrowing, and high returns on investing.

And that, of course, is what Democrats fear most. Allowing people to make decisions for themselves frightens every Democrat. That’s every defense against privatizing Social Security always offers two options: raise taxes and cut benefits. The day America discovers Social Security is a fraud, and they can make way more with their stocks in the market, another swath of voters will wonder, “Who needs Democrats?”

The most overriding question is this: Why would anyone want to force the entire nation to perform amazing feats of financial sacrifice for a program that not only has never worked, but could be done so much better? Ask Bill. He’s still got that 1968 Electra. Looks like hell. Doesn’t run. Probably never will. But he made a promise, and by golly, he’ll keep it. And he’ll never admit he was wrong. tRO

copyright 2005




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