Personal savings vs. Social Security: several of the most common arguments for continuing the current Social Security program are easily countered by historical evidence, logic, and common sense.

The arguments for continuing the current Social Security program are so easily dispensed with that it is amazing the program still stands:

1 An investment in Social Security carries the full faith and credit of the U.S. government, while the stock market has too much volatility and risk. Even those private investors uninformed enough to retire on the last year of a bear market would do far better than someone on the Social Security dole. Yes, the stock market has fluctuated down 40 percent or more once every generation or so. But saying the fluctuations of the stock market make it unfavorable compared to the Social Security system is like saying that a bicycle is faster than an automobile because the automobile has to stop to gas up every couple hundred miles.

The truth is Americans cannot trust Congress to manage Social Security, as the history of the program has proven. In the end, letting Congress control your retirement income is the greatest risk of all. The Old Age Survivors Income (OASI) cost just two percent of a worker's income when it began in 1935. But when more and more workers started living to the benefit date, Congress simply raised the taxes in a series of steps--some 16 times by the early 1980s--while promising the same benefits.

Since the 1980s, whenever the program again threatened to go bankrupt, Congress simply cut the benefits. For example, Congress enacted legislation that, in a series of increments beginning this January, will change from 65 to 67 the age when workers may retire with full benefits.

Congress now makes workers pay more than five times as much in contributions as the first Social Security workers and is giving these same workers smaller benefits when they retire.

Taking the lead in defending the structure of the current Social Security plan are liberal Democrats. What's really amazing about them is that they rightfully criticize the current Republican-led federal government for spending us into a huge deficit and emptying out the so-called Social Security Trust Fund (something previous administrations, Republican and Democrat, also did), yet they trustingly place retirement monies in Republican hands. In front of television cameras, they shriek in horror about how untrustworthy the Republican Congress is, except when it comes to the Republican-managed Social Security program. Go figure.

Of course, liberals bent on entrusting their retirement funds to the federal government could still do so in a privatized system by investing the funds formerly reserved for Social Security taxation in low-yield U.S. Treasury notes. They won't have much of a retirement account, however, compared to stocks.

2 What if there is another crash and Great Depression? A stock fund certainly wouldn't be a good investment then compared to Social Security. There has been no "crash" since Social Security was created. Thus, we're not able to gauge for certain what effect this would have on Social Security compared to a stock fund. However, logical assumptions can be made by analyzing the last crash. If the market crashed, a stock fund would lose money; the S&P 500 lost 85 percent of its value for a while after the big crash of 1929. But a crash during the years when the retiring Baby Boomers are already driving the Social Security program into the red would cut revenue dramatically on the already financially strapped program and spike demand for benefits, causing the program to go belly up. The Great Depression saw unemployment levels at 13 percent; none of the unemployed contribute to Social Security. A crash would push those unemployed who are near retirement to file for early retirement benefits to keep some money coming in. The confluence of these events would bankrupt the Social Security program.

The stock market, however, would recover most of its losses in just a few years.

3 If we allow people to invest retirement money on their own, they won't do it, and they will end up on the public dole anyway. This argument assumes several falsehoods, not the least of which is that the same government that last year passed 11,000 pork barrel spending projects in a single bill would spend someone else's money more wisely than the person who earned it.

Additionally, it assumes that it is the federal government's responsibility to take care of the elderly who no longer choose to work. There's no provision in the Constitution that even allows the federal government to assume this responsibility.

Also, the argument that people would not use the money now going to Social Security for a retirement account falsely assumes that they must invest all of that money in order to do as well as Social Security. In fact, anyone who invests even half of this amount would do better than they would with Social Security.

In short, this defense of Social Security is a perfect argument for Communism: the government should control every aspect of society to protect the people from themselves.

4 Social Security will not go bankrupt. There is no day of reckoning when Social Security will not have the money to pay current benefits because Social Security will simply draw more money from the general federal fund (i.e., income tax revenue). It is true that--barring a Great Depression-scale economic disaster--there is no single day when Social Security would go from financially viable to bankrupt. However, the statement above employs several subterfuges. The first is that it changes the subject from the primary question about whether Social Security offers a greater return than a diversified private stock fund. (It doesn't.)

The second as that even without a specific day of reckoning, Social Security will continue to become a worse and worse deal for retirees. The 2004 report of the federal government's Board of Trustees of the Old Age Survivors and Disability Insurance Trust Funds noted that Social Security will exhaust all trust funds during the year 2042. "For the trust funds to remain solvent," the commissioners stressed, "the combined payroll tax rate could be increased ... to an immediate and permanent increase of 1.89 percentage points, benefits could be reduced ... equivalent to an immediate and permanent reduction of 12.6 percent, [or] general revenue transfers equivalent to $3.7 trillion (in present value) could be made...."

The very fact that liberals are talking about using income tax revenues to keep Social Security from going belly up means that the program will have to make workers pay more for the same benefits in the future.

5 Privatizing Social Security did not work in Great Britain, and many Britons are clamoring to return to the state pension system. Also, Galveston County, Texas, which opted out of Social Security in 1981, offers lower benefits to many retirees than they'd get from Social Security, including the poorest county employees. Clearly, privatization is a failure compared with the U.S. Social Security program. The key issue here is a comparison of Social Security benefits with a diversified private stock fund pension, comparable to the Standard and Poor's 500 index, rather than a comparison of government pension plans.

The Galveston County plan (along with two other Texas counties) actually does offer higher initial benefits than Social Security for most workers, but the Galveston County plan doesn't offer generous returns long-term because it is essentially a government-controlled pension plan. Galveston County doesn't allow any investment in stocks, and limits pension investments to low-yield banking securities and bond funds. In short, Galveston County is simply another statist retirement program in the mold of Social Security, rather than genuine privatization.

Likewise, the British "privatization" experience is not a lull privatization either. Under the British partial privatization begun in 1988, workers must still pay for the basic state Social Security program, but have the option (and are required) to invest in either a second level state pension plan, a company pension, or a private stock fund. While a few Britons have been scared by the recent bear stock market and a selling scandal during the transition period, the overwhelming majority of British workers have chosen--and continue to choose--a private stock fund or a company-run pension. Even with a partial privatization, British equity holdings have skyrocketed to more than $1 trillion, larger than such holdings for the rest of Europe combined.

6 The payroll tax is money that doesn't belong to the wage earner but to society. Social Security was created as an insurance scheme, not a pension plan. The benefits disbursed come from a general fund and not from an individual's private account. The essence of this argument is that the money you earn is not "your" money; it is the government's money to play with as it sees fit. "Your" money is only that portion of your income that the government deigns to allow you to keep.

This argument asserts the same type of "logic" that is in argument #3. In this argument, the federal government is to play parent (or dare one say "Big Brother"?) to the childish American people, who can't be trusted to manage their own affairs. People who insist that government treat their neighbors as children will eventually find that government will treat them like children as well. Social Security is indeed an insurance "scheme," but the only thing Social Security ensures is the poverty of America's seniors and working people.

The evidence is clear: the Social Security scheme is a bad deal economically and on principle. It's time to privatize Social Security and end this boondoggle that is impoverishing the American worker.