Open Forum: Social Security’s flaw
One of the biggest obstacles to fixing Social Security is that the vast majority of people do not understand what is truly wrong with it. Neither cutting benefits, nor raising payroll taxes can fix this failed program.
Why, you ask? Because there is a fundamental flaw in the way this program is funded. Let me explain. The bonds in this phony “trust fund” (i.e., the purported assets that Social Security has credited to its account) are not true bonds. True bonds are contracts between two parties. The bonds in the Social Security “trust” fund are between the U.S. government, and ... wait for it ... the U.S. government.
There are only three ways the U.S. government can pay for these obligations: 1) by printing money, 2) by borrowing money, or 3) by taxing you again for something you’ve already been taxed for once. All three of these actions have one thing in common —they are going to cost you a bundle.
There can be no cure for Social Security’s ills unless it is treated like a true trust fund for the benefit of its beneficiaries rather than a government slush fund. Don’t believe the lies told by mendacious politicians who’ve become accustomed to spending your Social Security withholding on their pet projects. Investing every penny of Social Security in government bonds so that the government can spend that money as it sees fit is not protecting your best interest. If it were in your best interest, private retirement plan fiduciaries would be required to invest in a similar manner. Instead, private retirement plan fiduciaries are required to invest in a diversified way to minimize risk to plan participants. Think about it.