Tuesday, July 27, 2004 | 8:57 a.m.
Social Security is a giant Ponzi scheme in which early entrants benefit handsomely because they are funded from the taxes paid by later entrants. Without the force of government to support them, such scams eventually fall apart once the growth in contributions from new entrants fails to match the increasing claims against the program.
In February Fed Chairman Alan Greenspan testified before the House Budget Committee and warned that changing demographics threaten to burst the Medicare and Social Security bubble: "In 2008 -- just four years from now -- the first cohort of the baby-boom generation will reach 62, the earliest age at which Social Security retirement benefits may be claimed and the age at which about half of prospective beneficiaries choose to retire; in 2011, these individuals will reach 65 and will thus be eligible for Medicare. This dramatic demographic change is certain to place enormous demands on our nation's resources -- demands we almost surely will be unable to meet unless action is taken."
The only genuine solution is to recognize that the program is fundamentally flawed and must be phased out in favor of private alternatives.
FRANK M. PELTESON
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