Should Social Security be Privatized? Many people don’t understand how the Social Security system really There are no separate Social Security "accounts" set up for eachtaxpayer to which he contributes his Social Security "tax" each year. Manypeople believe these accounts exist, that the money they pay into theiraccounts grows each year until retirement, and when they retire they getback what they paid in with interest. This is not true. Most people areunaware of the fact that our current Social Security system is a"pay-as-you-go" program, which means that the revenue the federalgovernment raises each tax year for Social Security benefits is paid outthat same year to beneficiaries. Many economists believe that our Social Security system is in need of amajor overhaul if today's workers are to receive future benefits. Thomas R. Saving, Director of the Private Enterprise Research Center atTexas A&M University says, "What is wrong is that the Social Securitysystem was never set up to be a sound investment-based retirement system." Karl Borden, professor of financial economics at the University ofNebraska recently wrote, "Social Security is an unfunded pay-as-you-gosystem, fundamentally flawed and analogous in design to illegal pyramidschemes. Government accounting creates the illusion of a trust fund, but,in fact, excess receipts are spent immediately." Robert M. Ball, former commissioner of Social Security said, "Some ofthe trust fund money should be put into the stock market. I want to do itto get a better return for the Social Security system. Historically,long-term government bonds have had a real return, after inflation, of 2.3percent a year, compared with 6.3 percent for stocks." Paul W. Boltz, economist for the T. Rowe Price mutual fund said, "Whenwe examine the pending financial crisis of our Social Security system, wefind, in effect, the characteristics of a government sponsored Ponzi-typescheme." Michael ...
