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To: CSM
I don't think it is good. I know that in order for the generation after mine to meet the government's obligations to us Baby Boomers the Social Security tax will have to be raised. That is wrong. The government never should have dipped into the Social Security Trust Fund. However, what do you think it will do to the Baby Boomers to lose the money that we were not allowed to invest and not receive the Social Security that we were promised? This is a lose/lose situation, isn't it? What is the answer? Sacrifice my generation? Let us live in poverty until we die off? Is that what you want?
232 posted on 05/27/2005 9:30:16 AM PDT by Goodgirlinred ( GoodGirlInRed Four More Years!!!!!)
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To: Goodgirlinred
The government never should have dipped into the Social Security Trust Fund.

If you are going to use the USG's SS theology, you have to get it right. According to the USG, no money was taken from SS. All the SS revenue taken in is used either to pay benefits or put into the SSTF in the form of (non-marketable) T-bills, which accrue interest. Thus, the SS surplus remains with SS.

The SSTF actually represents an unfunded liability, which is why it is listed as part of the national debt under intragovernmental holdings as distinct from publicly held debt. The Debt to the Penny and Who Holds It The SSTF was setup so the USG could use SS as a cash cow, i.e., they could borrow the money (SS surplus) and use non-marketable T-bills in the form of IOUs, which would avoid incurring publicly held debt. Currently, 17 cents of every dollar in the Federal budget is used to service the national debt (publicly held). If the SS surplus were actually used to buy real T-bills, the debt servicing costs would increase.

SS is unsustainable in its current form. Something will have to be done prior to 2018, the date the SS surplus evaporates and we start paying out more than we are taking in. Congress than must borrow or find money elsewhere to honor the phony T-bills in the SSTF.

The pinch will be felt even sooner than that. In 2008, three years from now, the SS surplus starts declining, which means Congress has to start finding the revenue to cover the difference or cut spending. This happened in 1983, which forced Congress to raise the retirement age to 67, raise the fica tax, include all new federal workers in the system, increase taxes on SS earnings, and link the cap to the COLA.

The easiest solution (for Congress) is to increase taxes, raise or lift the cap, and raise the retirement age, all phased in. This will just postpone the problem for another 30 years or so. Personal accounts can solve the problem permanently if they are linked to a reduction in the defined benefits portion of the program. Over 30 countries have privatized their government pension programs inclding the UK, Chile, and Sweden. We are talking about partial privatization--at least initially.

235 posted on 05/27/2005 10:09:17 AM PDT by kabar
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