AJ Ericksen's Blog World

Wednesday, December 27

Prepare to Get Robbed

It appears that Republicans, led by George Bush, will be willing accomplaces as Democrats and the AARP conspire to rob younger workers. Opinion Journal reports that many inside the GOP have indicated a willingness to increase the Social Security payroll tax cap from $94,200 to as much as $150,000 in order to get future benefit cuts. So to claim a legacy of saving a program not worth saving, Mr. Bush and company are willing to subject an additional $55,800 of my wages to the 12.4% payroll tax and simultaneously cutting my benefits.

But Opinion Journal really sums up what really bothers me:
But wouldn't this all be worth it if we could take those future, unfunded liabilities off the books? Only if you think a tax increase now is worth a promise to cut benefits later. No one serious thinks those benefits will be paid anyway, so why make young current workers pay twice for the sins of their fathers?

Such a tax hike-benefit cut compromise would only exacerbate the generational inequity of Social Security. The paramount scandal of Social Security is not its insolvency but rather its abysmally low rate of return for new workers. Even if the payroll tax were left alone and all promised benefits were eventually paid out to young workers, these workers would get a tiny real annual rate of return of 1% to 1.5% on average, according to a Cato Institute analysis. Even a risk-free government bond pays 3% to 4%.
I am so disgusted by paternalistic politicians who want to take my money to buy old people's votes. They think that me and millions of my contemporaries are so incredibly stupid that we couldn't provide for our own retirement if they would just keep their filthy hands off our money.

By simply keeping the roughly $3,000 per year that Congress wants to take from me and investing in an S&P 500 index fund, that money would grow to over $500,000 by the time I retire. Much better than an empty promise from that lout Uncle Sam.