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March 22, 2008
Social Security – What to Know Before You Vote
Posted by Tina Grazier
Fortune Magazine is featuring a very informative (and easy to understand) article on the pending problems of the Social Security system. It describes the problem, proposed unworkable fixes, and finally a sound solution. Read the full article to discover the “tell”…that one thing that will tell you which of the candidates takes this issue seriously.
Here’s the reason we should be concerned:
Because the trust fund is invested in Treasuries, the real problem starts not in 2040, but a decade or so from now.
Social Security's negative cash flow becomes so horrendous - hundreds of billions of dollars a year - that our nation's twenty- and thirtysomethings aren't going to let the government cover it, regardless of how many Treasuries the trust fund holds. ** You see that the system's cash flow is projected at about positive $92 billion this year. Nice. But by 2020 it's negative $96 billion, rising to about negative $280 billion in 2025, half a trillion in 2030. That is unsupportable, unless we plan to devote the federal budget to baby-boomers' retirement. ** I'll spare you the history lesson about why no one worried much about how to invest the huge - albeit temporary - surpluses that Social Security began to rack up in the 1980s, when Social Security taxes were raised and future benefits trimmed as a result of the famous Greenspan Commission report. It would be nice to have $2.3 trillion in useful assets in an equivalent of a sovereign wealth fund - but we can't turn back time. *** We can still buy time by investing current cash surpluses in non-Treasury assets. But that would require a change in the law and a change in the Washington mindset, neither of which seems to be in the offing.
We the people can make this issue a high priority...we can demand change. To do that effectively we must be informed and resolute.
Find the story posted at money.cnn.com/ - “Social Security's running out of time,” by Allan Sloan, senior editor at large
Posted by Post Scripts at March 22, 2008 03:51 PM
Comments
We all knew that the Social Security fund did not exist. It was a pay-as-you go welfare plan for the elderly, but it seemed justified since those people had worked and paid into the plan. What astonished me was learning how many people are receiving Social Security benefits who never paid anything into it. When my wife started receiving her measley SS check because she had always worked at low-paying jobs, she talked to her old friend from high school, who had never worked for wages even one day in her whole life. She was also receiving SS, but at a higher rate (spousal SS based on husband's earnings, even if the husband was still alive). That is only the beginning. There are all kinds of people getting SS checks who never paid anything into the "fund." It gets worse. Just yesterday, the Senate voted to allow illegal aliens to receive SS benefits based on their illegal wages, working illegally at jobs they had no right to, using phony SS numbers. That is felony upon felony, but it was rationalized because they had "earned" it. As one person put it, it is like making sure that someone who hijacks an airline plane at least gets his frequent flyer miles. Our hero, John McCain, voted for it too.
Posted by: Dan at March 22, 2008 07:54 PM