New Jersey Libertarian Party

On March 3rd, 1882 Charles Ponzi, the creator of our modern Social Security system was born. The Ponzi Scheme is now used to describe any scam that pays early investors returns from the investments of later investors.

A primary trait of Ponzi schemes is that eventually the number of investors collecting money outnumber the number of investors paying into the system. The result is normally a collapse of the system or extremely negative returns on investment

According to the Social Security Administration for a person who is now 27 years old:

Unless changes are made, when you reach age 60 in 2041, benefits for all retirees could be cut by 22 percent and could continue to be reduced every year thereafter. If you lived to be 101 years old in 2082 (which will be more common by then), your scheduled benefits could be reduced by 25 percent from today's scheduled levels.

This is not the first time that the Social Security scam has been in trouble. The Social Security scam has been held together so far by forced coercion and continuously increasing premiums. Original investors were forced to pay only 2% of their income, current investors pay 12.4% of their income.

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Congress must now consider a drastic overhaul of this scam. Unfortunately if they repeat the mistakes of the past we will only end up paying more in taxes or slashing payments to the ederly.

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1. Social Security tax rate history. Note the words "employee and employers, each" in the table. To get the true rate of taxation, you must double the amounts shown.

2. Real Rate of return analysis discussed in Heritage Foundation 1998 analysis.