The Social Security Private Account Fraud - and How To Explain It

[ThomWV]

I found a way to explain the fraud of the Private Acounts for Social Security to people that sinks in for everyone who sees it. You need a small group of people, 4 works nicely, to demonstrate it.

Pick one of your 4 people and tell the others that that person is the retiree. Tell the other three that every week they have to pay into the Social Security system, and that they have to give $0.15. So $0.45 is collected in total. Tell them that $0.35 of that will be paid out to the retiree and that $0.10 goes into the "trust fund" (which you might point out is constantly being raided). Tell them that is how the system works now - which is true.

Now, tell them that Private Accounts are now available and that they will still pay in $0.15 each. However now their $0.15 contribution will be distributed with ten cents going to pay the retiree and the remainig $0.05 going into their private account. Now, tell me how much is available to pay the retiree their retirement benefit. The answer is $0.30, no matter how rusty your math it comes up a reduction in the money available to pay the retiree.

You can also explain that we can continue to pay the retiree their full $0.35 for a while because of of the trust fund but that because of the increasing number of retirees and the relative decrease in fully empolyed workers that the fund will rapidly be depleted. That means that only one of two things will have to happen. First that retiree's benefits will have to be cut because not engough money is being paid in, or second that the social security payin, by either or both the empolyees of the future or the employers of the future, will have to go up. Follow that up with a reference to the steller performance of the Stock Market over Bush's time in office and you pretty much will have made your point.