Herman Cain's victory in Florida's straw poll is notable, among other things, for his advocacy of "Chilean Model" Social Security reform in a state filled with retirees. It ought to be a wake-up call to all candidates.

Aside from the insta-analysis about Cain's victory being a protest vote against Texas Gov. Rick Perry, it's worth noticing that -- in Florida, no less -- both Cain and Perry, who finished first and second in the weekend's GOP straw poll, were the two most outspoken candidates about confronting the U.S. crisis in Social Security.

It completely ends the notion that addressing the issue of unfunded pension liabilities -- in Social Security, Medicaid and Medicare -- is the third rail of politics.
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Chile's system, enacted in 1981, took government out of the pension business altogether and replaced it with a system of personal retirement accounts.

It's one of most successful fiscal reforms in history.

It outperforms Social Security on returns, yielding about 9.23% compounded annual returns over 30 years under private management.
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Would it work here? Chilean economists, such as Pinera, believe it would. Something similar has already been done in more than 30 countries, most of which were in far worse financial shape when they started.

Rick Perry has gotten a lot of heat for describing the Social Security system as "a Ponzi scheme," and he deserves it. The Texas governor owes a big apology to Charles Ponzi. Sure, Ponzi fleeced investors, but they at least had a choice about participating. Social Security operates on a compulsory basis.

In other respects, though, Perry has a point. In a Ponzi scheme, new investors have to be continually recruited in order to provide fat returns to earlier investors. It works fine until you have so many investors to pay off that you can't find enough new ones to cover the cost.

Social Security is like that.
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Is this issue so politically explosive that Perry has done himself serious harm? We don't think so. Americans are not full of naive illusions about Social Security. They grasp how unlikely it is that the program can continue without major reforms. And they may be prepared to contemplate what those might be.

This campaign could begin an adult conversation on this vital subject. Let's see if [Mitt] Romney wants to be an adult.

Social Security status-quo defenders have assured us for the past 25 years that Social Security is fully funded -- for the next 25 years, or 2036. So if there are real assets in the Social Security Trust Fund -- $2.6 trillion allegedly -- then how could failure to reach a debt-ceiling agreement possibly threaten seniors' Social Security checks?

The answer is that the federal government has borrowed all of that trust fund money and spent it... And the only way the trust fund can get some cash to pay Social Security benefits is if the federal government draws it from general revenues or borrows the money -- which, of course, it can't do because of the debt ceiling.
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And here's the real irony: Anytime someone has proposed personal Social Security retirement accounts as a way to ensure that people have real assets in their own account without bankrupting the government or future generations, defenders of the status quo would pounce, calling such a reform, in Al Gore's words, a "risky scheme." They have vociferously claimed that those trust fund assets are real and that only by having the government manage and control the accounts would seniors be guaranteed to get their retirement checks.
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If the budget crisis has done nothing else, it has exposed the decades-long lie about the solvency of the Social Security trust fund. The trust fund may be backed by the "full faith and credit of the federal government," as defenders constantly remind us, but if it had real assets the president wouldn't be talking about seniors missing their checks.

We don't call Social Security "welfare" because it's a pejorative term, and politicians don't want to offend. So their rhetoric classifies Social Security as something else when it isn't.
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Since the 1940s, Social Security has been a pay-as-you-go program. Most benefits are paid by payroll taxes on today's workers; in 2010, those taxes covered 91 percent of benefits. The trust fund's $2.6 trillion would provide only 3.5 years of benefits, which totaled about $700 billion in 2010.
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Benefits shift; they're not strictly proportionate to wages but are skewed to favor low-wage earners -- a value judgment reflecting who most deserves help; and they aren't paid from workers' own "contributions." But we ignored these realities and encouraged people to think they "earned" benefits and that Social Security is distinct from the larger budget. Politicians, pundits, think-tank experts and journalists engaged in this charade to spare Social Security's 54 million recipients the discomfort of understanding they're on welfare.

Six Senate liberals on Thursday [held] the inaugural meeting for the newly formed Senate Social Security Caucus.
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Sen. Bernie Sanders (I-Vt.), a self-described democratic socialist, hosted the first meeting, and Sens. Charles Schumer (D-N.Y.), Debbie Stabenow (D-Mich.), Barbara Boxer (D-Calif.), Sherrod Brown (D-Ohio) and Sheldon Whitehouse (D-R.I.) attended.
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Representatives from the AFL-CIO, the Service Employees International Union, the American Federation of State, County and Municipal Employees, and Democratic pollster Celinda Lake were also expected to attend.

In a move as predictable as Lucy pulling the football away from Charlie Brown, Democrats are using Social Security scare tactics to gain ground before the November election. President Barack Obama is not only tolerating this classic old politics maneuver by his party -- he is leading the charge.

Amid a flurry of Democratic Party news releases and press conferences warning voters that Republicans are targeting Social Security for destruction, the President devoted his radio and Internet address last week to commemorating the 75th anniversary of the signing of the law that created the program. He cautioned that "some Republican leaders in Congress don't seem to have learned any lessons" from the past and are "pushing to make privatizing Social Security a key part of their legislative agenda if they win a majority in Congress." This familiar refrain might indeed help the Democrats limit their midterm losses, but Obama's involvement shows that on this issue he is putting party before bipartisanship ... Obama is living in a parallel Vulcan universe if he thinks he and his strategists can spend the next two months using campaign appearances, advertising, robocalls and other voter communication to demonize Republicans on Social Security, and then turn around in January and try to make a deal on that same issue.
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It is hard to imagine that Obama can be the leader of such a process in 2011 if he takes the current, sky-high level of personal and political mistrust and elevates it further by using Social Security as a weapon of distortion in September and October. And yet it appears that the White House believes there is no contradiction or connection between those two sequential presidential goals.

Last weekend, President Obama pandered for votes by trashing Social Security privatization.

"I'd have thought that debate would've been put to rest once and for all by the financial crisis we've just experienced," Obama said. "(N)o one would want to place bets with Social Security on Wall Street" (http://tinyurl.com/28mkgqs).

Such demagoguery sells. It's probably been poll-tested. Many Americans fear privatizing anything they've come to view as government work. They object to privately managed roads, independent charter schools, private prisons, etc., despite private companies' repeated success at providing better service while lowering costs.

Private retirement accounts seem particularly threatening. Rep. Paul Ryan includes a version in his budget-reform package (http://tinyurl.com/2u6jaw7). But as The Washington Post said, "(F)ew GOP lawmakers today support the idea...."

What a shame.

My 26 year old son got the most extraordinary letter from the Social Security Administration last week. In plain English it admitted that the system was a Ponzi scheme destined for bankruptcy more than a decade before he reaches retirement age. It warned that if he is to have any hope of retiring he'd better start saving on his own. Anyone who wasn't personally hypnotized by FDR knows this to be true. Yet I was still surprised that such a frank government confession didn't make national news.

The two-page pamphlet entitled "What young workers should know about Social Security and saving" reminds us that 50 million, or one in six, Americans will collect more than $614 Billion dollars in Social Security benefits this year. It informs young people that the Security Taxes they now pay go into a "Trust Fund" that is used to pay current beneficiaries. Paying off early investors with funds taken from later investors is precisely how Wikipedia defines a Ponzi scheme. The pamphlet advises that the Social Security Board of Trustees estimates that the "Trust Fund" will be depleted before my son's 54th birthday. Because people are living longer and the birth rate is low, it goes on, taxes paid by workers in the future will not be enough to pay the benefits promised in his personalized retirement account statement enclosed with the pamphlet. Imagine what hell would break loose if Schwab or Fidelity Investments enclosed a confession like this when they mailed investors their 401(k) statements.
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Why do kids put up with this? Last time I checked they were old enough to vote. An entire generation is being systematically robbed by their parents with nary a peep. Why aren't they marching in the streets like we did? When they do show up at the polls like sheep ready to be shorn, they pull the lever for kumbaya politicians promising to stick them with the bill for an ever-expanding menu of unfunded middle class entitlements.

There only conclusion I can come to is that we Baby Boomers have infantilized our children into idiocy.

Our kids got so used to being taken care of, educated, clothed, entertained, and driven to the mall that they somehow got the idea that this life of Reilly would go on forever. Little did they know that we were luring them into an adulthood of intergenerational slavery. Baby Boomers made a mess out of what was once the most productive economy in human history. Rather than atoning for our errant ways by paying our own bills, we seem determined to use Congress to squeeze every last bit of cash out of anyone we can get our hands on before we shuffle off this mortal coil. Apr?s nous, le D?luge.

Impoverished by our incessant demands for free government services, our children will most likely get revenge by not providing us with any grandchildren. Even if they wanted kids, how will they afford them if half their paycheck is confiscated to take care of us? As the most self-absorbed generation in American history, I suppose Baby Boomers will find it easy to live out their days bereft of grandchildren, much as the French and Italians have. Can this really be the Great Society we've been promising to bequeath to posterity?