SS was originally implemented as a private account for each citizen. About 2-3 years later (~1937) it was changed to a pay-as-you-go scheme. My question is:
If, through the unlimited taxing power of the 16th Amendment, citizens were asked to put 12.4% of their income into an FDIC insured savings account, would all such citizens be far better off in retirement? By "asked" I mean, put 12.4% into the FDIC account or give all of it to the government -- your choice.
[Through that very same unlimited taxing power, the government
could prevent citizens from withdrawing any of it outside of today's
Social Security withdrawal rules. -- E.g. Withdraw it at 45 years of
age and it is taxed 100%.]
The 12.4% number is malleable because, as we all know, SS is Old Age, Survivors, and Disability insurance, so some part of that 12.4% would have to pay for the Survivors and Disability Insurance.
Quick version of question:
Had my money been deposited into FDIC insured accounts, would I have been better off with my OASDI investments?
if you actually did everything that OASDI does for you, then I think that you're bit better off with Social Security. The Old Age, Survivors and Disability Insurance program (OASDI) is much more than just a retirement savings account. It is a major insurer for surviving spouses, surviving children, disabled workers, and disabled adult children. If you had to buy that insurance it would be much more expensive fron a private insurance company than SSA basically writing the insurance policy with over 165 million insured. Social Security is run very efficiently and it invests in T-bills, which are better than FDIC savings accounts.