The Largest Ponzi Scheme in History

Your government is operating a brazen Ponzi scheme that would make even Bernie Madoff blush. Yet no Congressman will ever face prosecution. No federal bureaucrat will ever go to jail. And the current administration denies taxpayers are being scammed.

What's this scandalous fraud? Social Security. Americans have been duped into believing the money deducted from their paychecks for Social Security benefits are being deposited in a trust fund for safekeeping until they retire. It is a bald-faced lie perpetuated by the current administration.

Payroll deductions are funneled to the Social Security trust fund. However, Congress has regularly raided the fund to spend your retirement income on government largess. As a result, it is currently insolvent. If Social Security were an investment fund, the Securities and Exchange Commission would have shut it down for fraud.

How did this happen? Congress has "borrowed" from the fund for decades. When it takes Social Security dollars, it deposits a government IOU in the account. These are nothing more than useless pieces of paper that promise the government will pay back the money when you retire.

For years, the Social Security payroll deductions were more than the dollars paid out to beneficiaries. As the ratio between workers and retirees has shrunk, the situation has reversed. The government is now paying out more money than it receives through payroll deductions.

Social Security reached a tipping point last year. It ran a $37 billion deficit. The government had to borrow money to make up the difference. The money did not come from the federal budget. Because of the huge federal deficit, Social Security is actually being financed by China, Japan, Saudi Arabia and other countries that purchase our debt.

The Congressional Budget Office projects that Social Security will run a $45 billion deficit this year. Every year hereafter the red ink will gush. By 2021, the CBO estimates the deficit will balloon to $118 billion. Simply put, the Social Security fund does not have the money to meet its financial obligations.

Unfortunately, the problem will only grow worse. If nothing is done to fix Social Security, the system's trustees estimate that benefits will have to be cut by 22 percent in 2037 and more each succeeding year. These are dire predictions that have daunting consequences for Americans if Washington continues to keep its head in the sand.

Yet, here was President Obama's own budget director Jacob Lew tugging on the wool that covers Americans' eyes. He recently wrote in USA Today that the Social Security Trust fund is "solvent until 2037." Lew apparently doesn't understand the definition of the word "solvent."

Here's what makes Lew's assurances so sinister. As budget director under President Clinton, this same Lew explained in 2000 that the Social Security trust fund "balances" were nothing more than a "bookkeeping" device. In his own words: "They do not consist of real economic assets that can be drawn down in the future to fund benefits."

Lew's weasel words mean that there is no money sitting in some vault ready to be paid out. The fund is bankrupt. Each year it depends on the payroll deductions to meet current obligations. Now the obligations exceed the income.

It is time to end the lies about Social Security. President Obama and Congress need to admit the obvious and tackle the issue by raising the retirement age for future beneficiaries and changing the indexing formula that pegs benefit increases to inflation. Just those two fixes will go a long way to restoring solvency.

However, don't hold your breath waiting for that to happen. President Obama wants to use protecting Social Security entitlements as a linchpin in his 2012 election campaign. That's why he trotted out Jacob Lew to lay the groundwork with his ridiculous claim about solvency.

Bernie Madoff must be shaking his head in disbelief. He sits in prison for a scheme that bilked people out of billions of dollars. Meanwhile, the Congressmen and women who stole trillions of dollars from your Social Security trust will never face jail time.