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Mr Hughges:

In your editorial "Three great lies about Social Security", you said:

"The second great lie is that the money paid into Social Security has been stolen from the system. All surplus money received into the Social Security account (revenues in FICA taxation greater than the amount of money due to current retirees) is accounted for in special treasury bonds. They earn interest, and the U.S. government will have to start paying off those bonds in 2018. It is estimated that in 2018 revenues from FICA taxation will not equal the expenditures to baby boomer retirees."

"This surplus – plus interest – is mostly the result of the larger number of baby boomers paying in than their parents drawing out. It is expected that this surplus will run out in 2042."

You're joking right? I cannot believe you are serious in saying that there is really any surplus in Social Security, that the American people can use when the baby boomers retire. What you refer to as a surplus is not a surplus in any economic sense. It is no more than an accounting device that represents how much the American people owe themselves for the excess they need when the baby boomers retire.

Every dime in the "surplus" was spent. It was given back to the congress and they spent it. In its place Social Security got IOUs from the Treasury. A bond, or IOU from the Treasury is never an asset to any part of the federal government. It always represents debt that the federal government - that's the taxpayers to you economic neophytes - agree to pay at some future date. Who has to pay for all outstanding debt of the Treasury? The taxpayers. Who has to pay all the interest on that debt? The taxpayers.

So we, the people, paid our FICA taxes. Then we, the people, used most of the FICA taxes to pay current Social Security benefits. Then we, the people, took back the excess FICA taxes, gave them to congress to spend, gave Social Security some IOUs, and called the end result an "asset". Those "assets" do not represent anything that we, the people, have saved or can use to pay Social Security benefits.

When we, the taxpayers, say we are ready to use the surplus from Social Security to pay benefits, then we, the taxpayers, will take some IOUs we gave Social Security, we will give them back to ourselves at the Treasury and then we will have to raise our general revenue taxes, raise our external debt or cut the federal budget to pay for those IOUs. They do not represent an investment, or money in the bank. They are no more than an accounting device of what we owe ourselves for future Social
Security benefits. The actual important thing about the "interest" rate on those IOUs is that in additon to the principal amount on the IOUs, we have agreed that we also owe ourselves the amounts needed to pay for that "interest". The "full faith and credit" of the U.S. Treasury and its bonds are not some magical place. They are us, the American taxpayer. We are their primary asset, banker, financial source. Anything they owe, we owe.

When we spend money and simply record that expense as an IOU placed from into one of our accounts from another one of our accounts, we are delusional if we think we have any "asset" from that exchange.

Every ten or so years of its existence Social Security has started to run out of "future" money. There has always been some amount shown as a "surplus". It has never and it will never be used to pay for Social Security benefits. It is an accounting of debt we owe to ourselves, and nothing more. Using it has always required, and will require acknowledging that there is nothing there but our own debt. As a result, the "fix" is always in on this ponzi scheme and the politicians scramble to sell the next "fix" on the compassion for the elderly and the retired - all to save their own asses for the lie they maintain.
There is no surplus.

If you want to contribute to solutions, then quit helping perpetuate the myths of the "Social Security surplus".

The Contract Is Broken©Tom Painter

Cut & pasted the following from this web site http://www.ncpa.org/~ncpa/ba/ba215.html

A Private Retirement Plan That Works. The initial Social Security Act permitted municipal governments to opt out of the system - a loophole that Congress closed in 1983. In 1981, employees of Galveston County, Texas, chose by a vote of 78 percent to 22 percent to leave Social Security for a private alternative. Brazoria and Matagorda counties soon followed, swelling the private plan to more than 5,000 participants today. In the private plan, contributions are similar to those for Social Security but returns are quite different.

Initially, employees and their employer were each required to contribute 6.13 percent of income; recently, the counties increased their contribution to 7.65 percent - for a total contribution of 13.78 percent.

Of that 13.78 percent, 9.737 percent goes to the employee's individual retirement account, which pays a 6.5 percent average interest rate, compounded daily.

The remainder pays for disability and life insurance premiums to cover the employee in case of an accident or death.

Workers continue to pay their Medicare payroll taxes and to receive Medicare benefits upon retirement.
But while the cost of the private program, known as the Alternate Plan, is virtually the same to the employee and employer as Social Security, the benefits are far greater. According to First Financial Benefits, Inc., which created and administers the plans:

A person retiring today at age 65 with 40 years of deposits and an annual salary of $20,000 would retire with $383,032 in a personal account.

Someone with a $30,000 salary for 40 years would retire with $573,782.

And a person with a $50,000 salary for 40 years would retire with $956,303.
A personal retirement account this size provides a much larger postretirement income than does Social Security. Moreover, retirees under the Alternate Plan have a number of options not available to retirees under Social Security. For example, those with the Alternate Plan can choose among several annuities or take their money in a lump sum. As the figure shows, under one option:

A retired $20,000-per-year worker with the personal retirement account would receive $2,740 each month at current interest rates, while Social Security benefits would be about $775 per month.

A $50,000 per year worker would receive $6,843 from the private plan, compared to $1,302 from Social Security.
In addition, the employer's contribution pays for much more generous benefits than those provided by Social Security.

The life insurance benefit is three times the worker's salary (with a minimum benefit of $50,000 and a maximum of $150,000); Social Security, by contrast, pays a one-time death benefit of $255 to a surviving spouse.

Disability insurance under the Alternate Plan pays 60 percent of an individual's salary until age 65 or until the individual returns to work and is relatively easy to qualify for, while Social Security disability benefits can be very difficult to qualify for and are unavailable to young workers who have not yet worked the required amount of time.