I have met Jay Bullock a few times. He seems like a nice enough guy and I am sure he is a very good English teacher. Heck, he might even the second best English teacher in MPS. (Sorry, Jay, but top honors go to Karra Esenberg at Hamilton.)
But, Jay, you're thinking about this social security thing all wrong.
He seems to think that his insurance company (and mine), American Family, operates its business like the government has operated social security. If I thought that were true, I'd be looking at the Gekko or the ditzy girl with too much make up.
Jay fundamentally misunderstands the analogy between social security and a ponzi scheme. It is not that the government should have kept excess social security dollars locked in a vault. That would have been better than what it did do, but would have been its own piece of mismanagement. Jay says I would have beaten George Bailey to death for putting the money in Joe's house.
In fact, had good old George failed to do so, I would have taken my money over to mean old Mr. Potter. Lending to Joe is how George earns the money to pay me interest.
But the social security trust fund is no Bailey Building & Loan. It did not lend its money to Joe. Lending the money to Joe - and to the Kennedys and Mrs. Macklin and a hundred others - gave that broken down old Building & Loan a claim on someone else's assets (it carries a mortgage on Joe's house) and a right to be paid income on that claim. (Joe owes principal and interest). The trust fund could have invested its money (much like American Family invests its money)in a way that gave it a claim on a someone else's assets. But it didn't. Think of Uncle Billy losing or blowing the money and leaving George with nothing but his IOU. Now that would have truly meant bankruptcy, scandal and prison.
Now, to be fair to Jay, you could operate social security (although not an insurance company) on a pay as you go basis. Insurers don't do that because they can't compel policyholders to stay with the company and can't raise the rates to whatever is required to pay current claims (and because, for those and other reasons, regulators wouldn't let them). The government, of course, has a more or less captive customer base. Taxpayers can't take their business "elsewhere."*
But social security long ago abandoned a strict notion of "pay as you go" and for good reason. We have know for a long time that birth rates following 1964 were far lower than those between 1946 and 1964. We have long known that this was going to result in a reduced ratio of workers to retirees when the little darlings born between 1946 and 1964 hang it up.
Not very complicated math demonstrated that this would result in levels of taxation that would be politically - and perhaps even economically - unsustainable. (Taxpayers may be unlikely to go elsewhere but they can prefer leisure to labor.) So we decided to charge our current "customers" "extra" to fund the largely predictable costs that would be incurred when it came time for them, as a class, to submit their "claims."
The government should not have kept the money in a safe. It should have invested it in conservative investments outside the federal government. This is, after all, what both private and public pension funds do.
Indeed, Jay should probably be a bit more concerned with this than he is. MPS has promised over two billion dollars of unfunded benefits to future retirees. If, in the end, taxes are imposed on city residents to pay those benefits, we should just rename ourselves "New Detroit."
Jay argues that, well, if the government had not done this, every dollar invested would have been a dollar in additional deficit spending or taxes. Another possibility, apparently even too hard to imagine, would have been reduced spending. But to suggest that behaving responsibly would have been hard takes nothing away from Johnson's original point that social security has been operated as a Ponzi scheme.
In the end, Jay succumbs in the end to the Ultimate Stupid Blogger Trick of the left. Concern about social security is, in the end, reducible to fear of the "Brown Menace." He cites Charlie Crist's proposition that we could fix the problem by creating a "path to citizenship." Because some critics of social security don't do that, they are, implicitly, racists or cynical exploiters of racism. I hope he doesn't teach his students to be that intellectually lazy.
Crist's comments reflect a misunderstanding of the problem. He thinks the trust fund has assets. Beyond that, current levels of illegal entry won't fix the problem. Most illegal residents already pay social security taxes. There are many issues surrounding immigration about which reasonable people can differ. Playing the race card against conservatives in general (as opposed to some particular position that might be fairly characterized in that way) fouls, rather than advances, the conversation.
* Of course, increased taxation can result in a reduced tax base.