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What just ain't so:

  • "Social Security is in crisis; it is headed for bankruptcy."
  • "For young people, SS just won’t be there for them when they retire."
  • "The Social Security Trust Fund surplus is just a pile of worthless IOUs for money that the government has collected and already spent; it will renege on them rather than paying them back when due."
  • "Because everything the gov’t administers is inefficient, the gov’t paying for health care would be far less efficient than paying via private health insurance companies. "
  • "Clinton reversed the trend and moved the US budget from big deficits to big surpluses."
  • "It is well established that tax cuts increase government revenue."
  • "Free markets and free trade make everyone better off because they increase GNP and “a rising tide lifts all boats.”

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March 24, 2008

Comments

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Tom Hagan

Ken, you may have saving/borrowing reversed. The SS Trust Fund is not borrowing, it is saving, by collecting a surplus from 1983 through about 2012 that is saved by purchasing US Treasury bonds, which represent borrowing by the US Treasury, as do all Treasury bonds. In effect, the baby boomers are buying U.S. Treasuries to save for their retirement.

That money is indeed invested by the SS Trust Fund in U.S. Treasury bonds, at a decent interest rate.

The problem is not with SS, it is with the Bush administration, who simply added this money to money it was already borrowing rather than cutting that other borrowing, as was done under Clinton, leading to the so-called Clinton "surpluses".

They were not really surpluses at all, but displacement of normal borrowing with receipts from the SS Trust Fund, for which bonds were issued. Total U.S. debt did not go down, as it would if there had been real surpluses. But Clinton at least flattened the total U.S. debt, while Bush has allowed it to climb precipitously. And the surplus receipts from FICA are declining, will go to zero around 2012, at which point the Trust Fund will begin redeeming its bonds.

There is no evidence that the administration has a plan to deal with this drying up of SS surpluses. Total fiscal irresponsibility on the part of Bush and Co.

Kenneth Moyes

Social security Trust Fund bonds are a liability. So we are financing our retirement system with borrowing. Borrowing has an expense. How many of us wish to fund our retirement with borrowed money to be paid back by our children? To say that the fund is not going to go broke, because we will just borrow the funds, hints of a weak economic policy. What is wrong with placing the "fund" back on a solid footing, having it earn at a public investment market rate, and forbidding the Congress from using the FICA collected funds as general tax revenue - as it is this is a regressive tax. Letting the Congress continue to spend it on other than Social Security is like giving your 12 year old your AMEX Gold card and telling them to use it wisely.

http://brokengovernment.wordpress.com/2008/02/01/social-security/

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