God bless you, Jacoby

I hate to even think about Social Security, let alone write about it, although I recently did penance by proposing a far more thoroughgoing overhaul of the system than Bush proposes.

But I didn't really touch on the grinding insane thievery that the current system represents. For me that can be like opening a crypt where the mummified body of American freedom lies in stark fixed horror, right next to the mummified body of American genius. For Social Security is at once the death of both, a wicked scheme that filches from the young in order to maintain the old in poverty.

Jeff Jacoby, in his column, bravely says the magic "P" word that causes the stone slab to move, giving us a look at the mummies. The magic word is "Ponzi." I'll let Jeff take it from here:

Social Security wasn't always a sucker's game. As with all Ponzi schemes, players who got in early made out like bandits. For many years, Social Security deductions were minuscule. Until 1949, the combined employer/employee tax rate was only 2 percent, and it was imposed on just the first $3,000 of income, for a maximum payroll tax of just $60 a year. The first Social Security recipient was Ida May Fuller of Ludlow, Vt., who retired in 1940 after having paid a grand total of $44 in payroll taxes. By the time she died in 1975, she had collected $20,933.52 in benefits -- a return on her "investment" of more than 47,000 percent.

It wasn't really an investment, of course. It was a forced transfer of wealth from younger persons to an older one. And as the number of Ida May Fullers grew, and the value of their benefits increased, the amount of wealth that had to be transferred kept climbing. By the time I entered the workforce in 1975, the Social Security withholding rate was 9.9 percent, applied to wages of up to $14,100. Maximum tax bite: $1,395 a year -- more than 23 times the $60 of a generation earlier.

And a generation later? Today Social Security skims off 12.4 percent of the first $90,000 earned - one-eighth of every paycheck. There are no exemptions, no deductions. It kicks in from the very first dollar of income. It is the biggest tax the average American household faces -- 80 percent of us pay more in Social Security taxes than we do in income tax.

One tiny notch at a time, payroll taxes have been ratcheted up to a level that would have been unthinkable in Franklin Delano Roosevelt's day. No wonder Social Security is so unpopular among the young. It provides no security for their retirement, while it impoverishes them in the present. In exchange for an eighth of their earnings today, it guarantees nothing but higher taxes tomorrow. That there are politicians who defend so regressive an arrangement wouldn't have surprised FDR. But how shocked he would be that they call themselves Democrats.