But the 1970s became a decade of soaring inflation, and Social Security payments, now indexed, soared along with it.
By 1982, Social Security was nearly bankrupt. A commission led by Alan Greenspan was appointed to save the system. This was done by raising the Social Security tax rate and tax base, and modestly increasing the age of full retirement. Americans were living longer.
However, something else had been happening to the Social Security trust fund. The hundreds of billions that poured into government coffers in Social Security taxes each year had been borrowed by the U.S. Treasury and used for operating expenses—fighting wars, funding food stamps, etc.
Thus today the Social Security trust fund consists not of gold, silver or tradable commodities and securities, but of special-issue government bonds, IOUs, a promise by the Federal Government to pay back what it has taken out and spent.
If Ford Motor did what the U.S. Government has done—borrowed and spent all the cash the company, its employees and workers had contributed to their pension fund, and used it for wages, salaries and expenses, leaving IOUs in the vault—the executives would go to prison.
What is Social Security today?
Basically, it has become an inter-generational income-transfer program where working people contribute 6.2 percent of all wages, and their employers match it, and the money is then sent to the Treasury, which sends it out in monthly checks to the 50 million on Social Security.
If incoming funds don’t match what Social Security recipients are entitled to, the Feds borrow the money from China or somewhere else. If incoming funds exceed what has to go out in Social Security checks, the Feds use the surplus to cover the deficits, and leave an IOU.
And there are other and serious questions raised by the Ponzi scheme controversy. Is grandma’s generation, which fought World War II, Korea and the Cold War, more alarmed by Rick Perry’s red-meat rhetoric than by President Obama’s refusal to address the entitlement crisis threatening the fiscal and financial future of the republic?
Is political correctness more important to Americans than hearing the unvarnished truth about the condition of their country?
If so, the country is in trouble, not just Rick Perry.
Another Texan from another time, “Cactus Jack” Garner, once said, “Sometimes you have to give it to ‘em with the bark on.”
For an America going steadily downhill, such a time is now.
Daily updates with TM’s latest