On May 1st, Treasury Secretary John Snow reported that the Social Security, and its companion Medicare, trust funds will go broke earlier than previously predicted. As it’s common knowledge that neither program is sustainable under current funding arrangements, and that the assets in these trust funds consist of nothing but government IOUs, the announcement was little more than the proverbial third shoe dropping.

There seems to be a difference of opinion on the future of both programs. Administration officials predict “a looming fiscal crisis as the baby boom generation moves into retirement.” Opposition leaders, such as Rep. Pete Stark (D-Calif), contend: “There is no crisis. There remains plenty of time to mend rather than end.” And as the controversy rages, it’s business as usual as American workers continue to pour out their substance in a never-ending cascade of FICA taxes.

Here’s a third opinion for your consideration. As the money runs out, benefit restrictions will be imposed. Within a generation means testing, and eventually assets limitation, will convert both into systems to which all will continue to pay, but only those who qualify as needy will receive benefits. The pity is that today’s young and middle age, middle class, middle income citizens are being bled to death to sustain a fiction from which they will receive, at best, a pittance. Perhaps the saddest part of all is that for the mass of you paying the bill, there is nothing you can do about it. You will continue to sustain the labyrinth until its eventual transition into the welfare system it will become.

A concluding thought:
There is one positive note. A small but select group—generally the self-employed, with a certain amount of investment or other non-earnings income—has the ability to opt out. For details, you’re invited to visit my website, www.onthemoneytrail.com, click onto Newsletter Archives, and read February 2005, Opting Out of Social Security: The Well-Kept Secret.