Red White & Blue Hens

College students in Delaware who think right is right, and left is wrong. We study hard, party hard, and play hardball.

Saturday, March 12, 2005

Social In-Security

In Ten Common Myths.. Brian Reel discusses the fiction that has overtaken the minds of many Americans regarding the way the economy functions. Consider the logic used by the US government in his illustration regarding the Social Security "lockbox" (i mean "trust fund"):
[Picture] ...a family that borrows money from its retirement fund each year to pay for vacations and expensive dinners. When they finally retire, their retirement fund consists of nothing more than paper IOU's promising to repay the fund.
What would you think about someone that did this? That they're morons? That they need to go back to high school? That the logic bus passed them by? That they deserve what happens to them?

My friends, let me present to you: The United States Government.

You see, rather than use wisdom and deposit the money taken in through social security taxes into the, unfortunately, mythical trust fund, it is placed in the general fund, which allows all surpluses, by Congress, to fund current government programs or to pay down the national debt. The surpluses have been, and will continue to be, spent on programs, regardless of the presence of a deficit or tax cut.

Of course, the Treasury does give bonds to the Social Security Administration to replace the surplus it spends, due to the aging population. However, the SSA must begin to cash out these bonds in 2018 in order to pay out benefits.

So yes, my darling obstructionists, the "money" is there, and we aren't going to run out. Only one small problem: it's in the form of a little piece of paper that the government cannot afford to convert to actual money. Unless we're going to start giving benefits to seniors in the form of little pieces of paper, something must be done to fix this problem.

Something must be done now.


Oh - and send FDR my love.

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