Social Security is *not* a cause of, and *not* a solution to, national debt...

[ProfessionalLeftist]

Social Security not a cause of, and not a solution to, national debt
10:55 am September 7, 2010, by Jay

It’s not, or at least it shouldn’t be, about Social Security.

Social Security is neither the cause of nor the solution to our nation’s financial problems.

Nonetheless, a bipartisan presidential commission looking for ways to reduce our national debt is making noises about dragging Social Security into the squabble. The Republican co-chair of the commission, former U.S. Sen. Alan Simpson, fed that impression in an email last month when he referred to Social Security as “a milk cow with 310 million tits.” Simpson also argued in that email that Social Security is in trouble unless it can be made sustainable and solvent over the long term.

Fortunately, that is an exaggeration of the program’s condition. The facts are as follows:

1.) With no changes in taxes or benefits, Social Security can continue to pay 100 percent of all promised benefits between now and 2036. It can do so by tapping a $2.5 trillion trust fund created precisely to cover the retirement years of the Baby Boom generation.

2.) Beginning in 2037, and for every year thereafter, Social Security would be able to pay recipients only 76 percent of promised benefits.

3.) That post-2037 gap could be closed with relatively minor fixes. For example, raising combined SSI payroll taxes from 12.4 to 14.4 percent would cover the bill entirely. A combination of a slight payroll tax increase, applying the tax to earned income above the current tax ceiling of $106,000 and adjusting scheduled cost-of-living increases could also eliminate the gap relatively painlessly.

If those are the kind of fixes that Simpson envisions — if his goal is to fix Social Security solely for the purpose of fixing Social Security — then that’s a discussion worth having.

However, if Simpson and others are after larger game — if they hope to tap the $2.5 trillion owed to Social Security as a way to address the nation’s larger fiscal problems, for example — they’re going to have an all-out fight on their hands.




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http://blogs.ajc.com/jay-bookman-blog/2010/09/07/social-security-not-a-cause-of-and-not-a-solution-to-national-debt/?cxntfid=blogs_jay_bookman_blog

[alc]

1. what assets are in the "$2.5 trillion trust fund"?

That's the question that needs to be answered. Avoiding the question is the purpose of all the crap they are pulling. Nobody should be allowed to mention the fund without saying what's in it.

There are a lot of different types of assets with different availabilities. For example my personal assets
1) $100 in savings acct. Available in full now.
2) $50 in checking acct. Available in full now.
3) $1000 in IRA. Available now with penalty or in full 15 years from now.
4) $100 in stock options. Available in 3-5 years
5) $25 loan to friend. Available when/if he decides to pay it
6) $100 municipal bond - available when it matures or for whatever someone else will pay for it now

The SS fund is closest to #5 - loan to friend (or more like a loan to yourself where you transfer $100 to your checking account then show someone yesterday's savings balance and today's checking balance).

The fund has no real assets ($, gold, etc). They can't sell the bonds (they are "special bonds" that nobody can or would buy on open market). There is no maturity date when they are guaranteed to be redeemable. They could give the bonds out in lieu of benefits, but they're useless to you or me. If the federal treasury decides to pay them, they will need to come up with real assets to transfer to the SS fund (that's why they are related to deficit/debt)

The right thing to do is for the treasury to convert the fund assets to real bonds and increase the federal debt by $2.5 trillion. I don't expect anyone in government to admit the truth, much less do the right thing.

[ret5hd]

3. ahhh, the "worthless iou's" canard.

[Warren DeMontague]

2. I think the entire "debate" is just- there's no other word for it- retarded, as long as we spend

more than every other country on the planet COMBINED on our military. As long as we spend $40 Billion a year to throw pot smokers in prison.

Yes, let's fix the deficit. Cut the Military budget in half, stop feeding the prison-industrial complex. Legalize- and tax- marijuana. You're absolutely right that Social Security is not the problem.

[ProfessionalLeftist]

4. Absolutely agreed on that.

The entire debate is assinine as is.