Posted on 02/17/2005 10:14:06 PM PST by Former Military Chick
2042. I do not know if President Bush's Social Security reform will pass, but if it does not, its demise will be traced to that point in the president's State of the Union address when he warned that the system would go bankrupt in 2042. It was a disastrous moment.
First, it is hard to rally people to a crisis that you have located 37 years out. People 45 and older figure they will be dead anyway. And younger people have such a short time horizon that 37 years in the future is utterly meaningless. It does not matter if you have young children. A parent with young children can barely imagine them as teenagers, let alone as pre-menopausal fortysomethings.
Moreover, the new millennium was always a science fiction idea, and now that we are there, years beginning with a "2" still seem fictional. Even 2011, the first boomer retirement year, has a Stanley Kubrick feel; 2042 lies somewhere in the Matrix.
It gets worse. If 2042 were an actuarially significant date, all of this could be forgiven. The president would simply have to work extra hard on getting us to imagine it. But pointing to a date that will instantly lose 90 percent of the audience is doubly crazy when that date is meaningless. 2042 is the fictional date for the fictional bankruptcy of a fictional trust fund.
Let's start with basics. The Social Security system has no trust fund. No lockbox. When you pay your payroll tax every year, the money is not converted into gold bars and shipped to some desert island, ready for retrieval when you turn 65. The system is pay as you go. The money goes to support that year's Social Security recipients. What's left over is "lent" to the federal Treasury.
(Excerpt) Read more at washingtonpost.com ...
Even Krauthammer's date of 2018 is too far removed, even if it is important.
The really important year is 2009, in my opinion. That is when the social security surplus begins to decline. Annual Social Security receipts will still be larger than the outlay, but not by as much as the year before, and that means that the government will have to scramble to make up the funds.
This will only get worse each year after 2009, In 2018 when the surplus goes negative, the government will have to start reedeeming treasuries, but the problem starts long before that.
We need to focus on 2009. It is just around the corner.
Amazingly clear - and from the Washington Post!
If there is such a crisis, why did Bush give Social Security to Mexican Nationals? If it was broken before, that little move disintegrated it entirely.
"Amazingly clear - and from the Washington Post!"
If there were more Krauthammer's at the WAPO they might actually make some money.
Why is it so difficult to understand ? In about 13 years the Social Security "program" is going to go "cash flow negative".
The government has squandered away all the cash flow positive (about 2 or 3 trillion dollars) revenues in prior years and now we have to pay it back.
Thank you very much Lyndon B. Johnson.
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