I recently ran across this propaganda pamphlet issued by the Federal Government in 1936.http://www.ssa.gov/history/ssn/ssb36.html
GET THIS: "...beginning in 1949, twelve years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay
. " (emphesis added)
That's 3%. Today, you pay 7.65% on every dollar you earn - BEFORE DEDUCTIONS, not after. You pay on your gross, not your net.
BTW, it started out at 1%.
Full vesting occurred at 65 years old. Today it is 67, but politicians are pushing hard to increase it. It is only because senior citizens are such a large part of their constituency that they have not done so already.http://www.ssa.gov/pubs/retirechart.htm
Instead, they have shifted the burden to the middle aged and young earners via the massive bailout programs. How will that money ever get repaid? It is impossible based on any economic production model where the GNP increases (adjusted for inflation) enough to cover new expenses while also paying off debt. The only way is to inflate so greatly that the value of each dollar is severely diminished. The government is only obligated to pay in dollars of the year borrowed. Since current taxes are based on a percentage of current earnings, assuming that earnings rise at the rate of inflation, the government's take is keeping up with inflation, so they collect current value dollars and pay off old value dollar debts. It's a win-for them, while you get screwed.
Think about it this way: Your parent's house payment in 1980 might have been $400/month - a lot of money back then. Today you cannot even rent a 2-BR apartment for that much, but they are still making that $400/month payment at the end of a 30-year mortgage. In 2009 dollars, the equivalent payment is a little more than $1,000.month. So effectively today they pay $400/month to live in a $1,000/month home. In the reverse, that same $400 today would have been just $160.
The Keynesian economic model - like Socialism -has never worked anywhere it has been tried, and yet some people keep returning to it because they believe that it just hasn't been implement by the right people. They consider themselves to be the ones finally smart enough to pull it off.
Hold on, we're in for a rough ride as it proves itself wrong once again.
- Kirt Blattenberger
RF Cafe Progenitor & Webmaster