by Maya del Mar
In thinking about Social Security, we forget that it is a money collector (via special taxes and the interest from their investment), and a LENDER to the government (which was not part of its original intent).
It is not a spender of the governments money. It spends only its own money, which was collected for the purpose of pension and survivor insurance, and is supposed to be held and invested for that purpose. The Trustees have made sure that it collects more than it spends, and it always has a large surplus. Currently, the fund can pay full benefits until 2042, or 2052 with no fixing (because theres nothing wrong with it). It could continue indefinitely paying full benefits with just a little tweaking, such as raising the cap on income taxed (currently at $90,000) or raising the retirement age a bit.
The problem is with the U.S. budget, an entirely separate thing. For decades, the U.S. Congress has borrowed money from the Social Security Fund to help meet its own deficits. The amount has skyrocketed since the Bush ascendancyalmost $1 trillion.
The Social Security Fund holds those IOUs in the form of U.S. Treasury bonds, which do come due. U.S. Treasury bonds are the gold coin of investments. The only way they would not be paid is if the government defaults. Which is currently unthinkable. (Also, that is the only way Social Security could go broke.)
The amount by which Social Security taxes exceed benefits is beginning to shrink. By 2018, the flow reversesmuch sooner if private accounts are created. This wont be a problem for Social Security, but it will be a big one for the GOVERNMENT. Instead of spending the Social Security surplus, the government will need to begin paying off IOUs. Repaying Social Security will become a huge drain on a government already under fiscal stress. Deficits will skyrocket. Confidence in the U.S. will further diminish.
The U.S. budget IS in crisis. And Bush does not want to admit this to the public, especially since his tax cuts, his war, and his spending on expanding government have contributed mightily to it.
Instead, we have, as Jim Hightower says, as with Saddam and WMDs, the Big Lie of the Looming Crisis, and the demand that Congress authorize the Big Rush into the ideological abyss where the Big Mess awaits.
If this country is rushing into bankruptcy, it has nothing to do with Social Security. The governments financial policies are the problem. Next time well look at Social Securitys solvency, and the threat of private accounts to that solvency.