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 tellthat one thing that will tell you which of the candidates takes this issue seriously.
Heres 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