Social Security con job.(Correction, Please!)

ITEM: "Democrats and their allies launched an ad campaign Thursday to warn voters about any new Republican effort to privatize Social Security," reported the Associated Press on August 3. Beginning in Pennsylvania, Missouri, and Ohio, the "ads are two 15-second spots aired back to back showing an elderly couple in a modest home sharing a hot dog. It shows an older woman splitting a pill in half as the narrator says: 'If George Bush and his backers in Congress privatize Social Security and cut benefits in half, what will you have to cut in half.'"

ITEM: The White House website, in a section called "Strengthening Social Security for Future Generations," boasts: "Social Security was one of the great moral successes of the 20th century by providing a critical foundation of income for retired and disabled workers."

CORRECTION: With Democrats claiming that the president and the GOP are going to slash benefits for the elderly, and the White House praising the "morality" of the Social Security program, Americans are once again being presented with false alternatives. The missing alternative, ignored by both major parties, is to phase out the Social Security System over time while honoring commitments to retirees and near-retirees.

This is one case where maintaining the status quo makes the situation worse, since it will cost taxpayers an extra $600 billion each year that the inevitable reform is delayed. The government continues to promise to pay trillions of dollars more in benefits than it is collecting. By 2017, according to the Social Security Trustees, the system will literally start paying out more each year than it collects. With the first of the baby boomers to retire soon, the inexorability of demographics will add to the problem. In 1950, there were about 16 workers forced to pay for each Social Security beneficiary; today, that ratio has fallen to 3.3:1; by about 2025 or 2030, that will reach the 2:1 range--meaning, in essence, that each married couple in the country will have to pay for their own expenses plus the benefits for one retiree. As it is, most Americans already pay more Social Security taxes than income taxes.

Social Security was long billed, wrongly, as an insurance program, where premiums were built up in some sort of trust fund. Of course, it is nothing of the sort. Taxes collected are paid out immediately, with the government leaving behind IOUs.

Though the demographics of the American population assuredly have helped exacerbate the situation, economist Thomas Sowell has correctly observed that the "only reason changing demographics are a problem is because Social Security was never insurance in the first place, even though it was politically expedient to describe it that way." (Basic Economics, Basic Books, 2000)

Democratic and Republican politicians alike have much to answer for in establishing and perpetuating this fraud. The Democrats have indicated that they are going to try to make the supposed threat of privatization of Social Security a major issue in the 2006 elections. Yet, even Democratic President Bill Clinton acknowledged that the Social Security program is in trouble when he said that there were only three ...