Entitlements promised by politicians, but never paid for. Do we all live in a dream world? Pie in the sky? From Biggs' Why Does Government Grow and Grow and Grow? (h/t, Insty) a quote:
As I noted in a recent National Review column on why Social Security reform has proved so difficult, shifting from a pay-as-you-go program to a funded system entails significant “transition costs,” which are borne by the very citizens who would decide to make the change. Since today’s Social Security, Medicare, and Medicaid benefits are paid from today’s taxes, if we decide to pre-fund these programs then the current generation must pay twice: first for current beneficiaries, and second for their own benefits. Put simply, to shift from an unfunded program to a funded program, someone must contribute extra funds. When the defining characteristic of domestic policy has been for voters to shift their own cost burdens to future generations, it is highly optimistic to expect current voters to accept a double burden. The expected result is to kick the can down the road, such that deficits grow and future taxpayers become even worse off. My own take: it was the transition costs associated with Social Security personal accounts, more than the risk of investing Social Security taxes in stocks, that doomed President Bush’s 2005 reform drive to failure.
Read the whole thing, because it is the best explanation I have seen. I do understand that pols seem to want to keep their big shot jobs in DC, but, in the process, China will ending up owning us.
By the way, I would like my lifetime net Social Security contributions as a lump sum, please, at age 65. That's all I ask for. You can even ignore inflation, so it's been my free long-term loan to you, Uncle Sam. It is my account, right? Just hand it over, and I won't give you any more trouble. I'll use it to pay off my mortgage, and live happily ever after...
