|Social Security has been going to hell in a distressed Yugo since the days when there actually was a Yugoslavia, and maybe even before. It's common knowledge, and has been for a long time. Our last President, Bill Clinton, himself floated the idea that some of the funds in the Social Security trust fund could be invested in the financial markets. And Republicans called him a liberal! That was in 1998, when a dollar was still worth 82 cents and filling up your gas tank didn't require a credit check. We all owned 10,000 share blocks of Jds Uniphase, or cried in the corner when nobody was looking because we didn't. My living room carpet is still soggy. |
Fat lot we knew. According to Irwin Kellner of Cbs.MarketWatch.com, Social Security isn't going to go bust. Leastways, it looks as though it's going to be solvent for another 36 years, easy -- by which time you and I will be shopping for our Gap walkers.
So who screwed up? Did the General Accounting Office miscount? (A trillion here, a trillion there -- pretty soon you're talking about a B-1 toilet seat.) Or since we're no longer spending time and money and resources impeaching and/or investigating Clinton, did that free up a couple hundred billion?
Maybe it was because cooler heads prevailed and Social Security money wasn't invested in the Nasdaq (currently down 60% from its March 2000 all-time high). Nor was it invested in something more stable, like a utility. Oops, wait: Pacific Gas & Electric just went bankrupt. Or municipal bonds ... some nice, affluent place like Orange County. Remember? The county where the government borrowed itself into default, then refused to increase taxes to pay off its debt? God bless America.
THE FRUITS OF FICA
So relax. You can plan to live off the fruits of your FICA tax. But remember, 36 years is 18 Congressional elections and nine Presidential campaigns away. The future Congressmen who will vote on Social Security in a couple of decades are getting their tongues and navels pierced as you read this. So you can expect to hear stupid ideas like these in future elections:
-Give Fed chairman Alan Greenspan power of attorney for the entire Social Security trust fund. Maybe even after he dies.
-Take it to Vegas and let it ride on 17 Black.
-Give the fund to kazillionaire Tom Hicks, owner of the Texas Rangers baseball team; we can collect our Social Security payments directly from him. He gave shortstop Alex Rodriguez $252 million for six months' work -- imagine what you'll get for 40 years!
-Put weasel Hollywood accountants in charge. The trust fund will expand like Marlon Brando at an all-you-can-eat buffet. Unfortunately, all your payments will come out of the back end, and 0% of $1.2 trillion is still $0.
-Subcontract Social Security out to a private vendor. There are plenty of brokers with integrity who didn't steer clients into stocks like eToys or Priceline.com. Aren't there?
-Let the freedom-loving American people vote on which investments to park the national retirement piggybank in. Hey, it's a democracy (even in Florida). If 23% of the United States wants to put its money into Confederate treasuries, why should someone in a thousand-dollar suit have the power to say no?
-Invest in collectibles on eBay. Not only would we buy tomorrow's valuable memorabilia while it's still today's good-for-nothing junk, but all that Internet surfing currently being done on the taxpayer's dime would actually come to some public good.
-Buy 1.6 trillion PowerBall tickets.
-President George W. Bush will appoint a 14-member commission to examine Social Security and develop plans for personal investment accounts. (No, wait ... that actually happened!)
There's a lesson in this for all of us investors who plan to retire someday: Read. Then pay attention to what you read. Don't let politicians sell you a bill of goods just because it sounds promising. Oh, yeah, one last thing: Keep those little toys you get with the kids' meals at your favorite fast-food restaurant. They may end up being worth more than your entire investment portfolio!
Mike Flynn, through sheer inertia, has a comic book collection that may be worth as much as his investment portfolio. He can be reached at MFlynn@Traders.com.
Kellner, Irwin . "Social Security Won't Run Dry," CBS.MarketWatch.com.
Current and past articles from Working Money, The Investors' Magazine, can be found at Working-Money.com.
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