Projections of Doom Overstated

Sunday, January 16,2005 "As a matter of fact, by the time today's workers who are in their mid-20s begin to retire, the system will be bankrupt. If you're 20 years old, in your mid-20s, and you're beginning to work, I want you to think about a Social Security system that will be flat bust, bankrupt, unless the United States Congress has got the willingness to act now."

If nothing changes with Social Security, the system will still be able to pay benefits well beyond the time today's young workers retire.

A person who is 25 years old today will be 67 in 2047. According to the Congressional Budget Office, Social Security will be able to pay out benefits at the current level until 2052. After that, benefits would decline to about 80 percent of what's scheduled - still considerably more than today's retirees receive. And that's if nothing changes.

More conservative estimates by the Social Security trustees also refute what the president said last week. By their calculations, in 2042, Social Security will be able to pay about 70 percent of scheduled benefits, without any changes. Taken even further, 68 percent of those benefits could be paid out in 2078. Today's 25-year-old would be 98 years old by then.

Social Security will not go "flat bust" or "bankrupt." It can't, unless the law is changed.

Currently, Social Security runs a surplus, which is held in a trust fund. According to the Social Security Administration, the trust fund holds money that is not needed to pay current benefits. By law, the money must be invested in Treasury bonds, which are guaranteed by the U.S. government.

Beginning in 2018, payroll deductions will not be enough to cover scheduled benefits and the trust fund will begin to be drawn down. Even if the trust fund hits zero, payroll deductions could maintain benefits at a reduced level.

The only way for Social Security to go bankrupt would be for the government to default on the bonds held by the trust fund or to monkey with payroll withholdings. It is, in fact, Congress' willingness to act in the wrong direction that poses the greatest threat to Social Security.

The president has not released details of his plans to privatize Social Security. Instead, he's barnstorming the country trying to stir up a crisis that doesn't exist. But his administration has talked about some of the components of his plan. It includes private investment accounts that would allow participants to invest a portion of their payroll deductions - perhaps as much as a third - into 401(k) type accounts. Down the road, the participants would face benefit reductions in Social Security, the idea being that private accounts would make up the difference.

To continue scheduled benefits for retirees and those nearing retirement, the president would need to borrow a massive amount of money to cover the transition costs to his plan. Estimates put that figure in the $1 trillion to $2 trillion range, and that borrowing would be immediately added to the national debt.

The president talks about more than $10 trillion in unfunded liabilities in the Social Security system. This projection, however, looks at Social Security over an infinite timeline and has little meaning. It's putting a dollar amount on forever. If the projections are narrowed to a more manageable 75 years, the amount falls to about $3.7 trillion - still a lot of money, but not as difficult to manage.

Estimates by the liberal Center on Budget and Policy Priorities put the liabilities in perspective with other Bush policies. The new Medicare prescription drug benefit will cost about $8 trillion over 75 years; making the president's tax cuts permanent would cost $11.6 trillion.

Selling the country on a major overhaul of Social Security requires exaggerating the system's problems and convincing young workers that they can't count on receiving a dime from it. The president is on the road, making his deceptive pitch, trying to undermine faith in Social Security. If he's successful, future retirees will pay the price.

Did you read this? http://www.freerepublic.com/forum/a3b49596420e0.htm It seems even more relevant today then in '62...Perhaps it needs to be published on FR monthly so that everyone is aware of the bigger picture ...if we have to play cards against a "house" using a marked deck...at least "We the People" should be AWARE of the inevitable outcome!

From the article: "Currently, Social Security runs a surplus, which is held in a trust fund."

Kalifornia has been raiding such funds for some time now in order to "balance" the state budget. As a result, many of these funds just contain IOUs owed by guess who? The State of Kalifornia. I read recently that a highway project in the East Bay Area was unable to be funded because there is no money. Most highway contractors will not accept IOUs in place of money.

"Currently, Social Security runs a surplus, which is held in a trust fund."

The fund is in treasury certificates. That means the government spent the money from the trust fund and has promised to pay it from general revenue when they become due. General Revenue means from taxes, which would have to be increased to pay what is due. The really beauty of this theft scheme is as follows:

1. They take the money from your check but it is still considered part of your gross so you taxes go up.
2. They will then pay you years later a small fraction of the amount that it would have earned in the private sector.
3. When they pay you with the money YOU put in it is considered income so it is taxed again.
4. When you die it stops as opposed to a private pension fund that would then become due to your heirs.

If this were a private scheme it would be called a Ponzi and the people at the top would be charged with theft, fraud, larceny, violations of many interstate laws, wire fraud etc.
When it comes to fraud and theft Enron, The UN, Al Capone and Bonnie and Clyde are amateurs compared to Social Security.
THE TRUST FUND IS EMPTY, it is NOT RESTING, it is not PINING FOR THE FIJORDS, it is BERIFT OF LIFE, it is SINGING FOR THE CELESTIAL CHOIR, this trust fund IS NO MORE, this trust fund IS DEAD, Sir, this is a DEAD F---ing
TRUST FUND

So, if I write myself a check for one million dollars and put it in a safe deposit box, I have a 'trust fund' of one million dollars at my disposal. Wow. The level of economic illiteracy in the ranks of 'journalism' is astonishing...JFK

Yep, Treasuries, I.O.U's, a share of the national debt. When the debt is called there are 3 basic places to get the money. 1- Print more, create runaway inflation. 2- Sell off National Properties, (ie.. real estate will be on fire sale.) 3- reduce benefits. All three will have a drastic impact on the economy.

The guy that wrote this is an idiot, plain and simple.

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