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Social Security's $20 Trillion Shortfall: Why Reform is Needed
Heritage Foundation ^

Posted on 01/17/2008 6:14:34 PM PST by newbie2008

Social Security faces an enormous future deficit: Between today and 2075, the inflation-adjusted shortfall is projected to reach a staggering $20 trillion. Although the problem with the current system is due in part to changes in demographics, the root of the problem lies in the fact that the Social Security system itself is poorly designed. Workers, particularly those under age 50, are slated to receive very low benefits in return for a record amount of payroll taxes they send to the federal government. 1 These workers could enjoy substantially greater levels of retirement income if they were allowed to place the bulk of their payroll taxes in professionally managed individual retirement accounts, 2 which historically have had significantly higher rates of return.

Defenders of the current system generally admit that personal accounts would make workers better off, but they also argue that the "transition cost" of privatizing would be significant. More specifically, because a major share of the payroll taxes now used to pay benefits would be invested instead in private accounts, policymakers would need to find several trillion dollars to finance benefits for current retirees and those nearing retirement (and, therefore, too old to take advantage of private accounts).

(Excerpt) Read more at heritage.org ...


TOPICS: News/Current Events
KEYWORDS: genx; greedygeezers
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To: Wally_Kalbacken

Please tell me you are kidding...

Look at the SSA FAQ page...http://www.ssa.gov/OACT/ProgData/fundFAQ.html#n5

As stated in the answer to “What happens to the taxes that go into the trust funds?”, most of the money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash, some people see the current increase in the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future. Without legislation to restore long-range solvency of the trust funds, redemption of long-term securities prior to maturity would be necessary.

Far from being “worthless IOUs,” the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government.

Many options are being considered to restore long-range trust fund solvency. These options are being considered now, over 30 years in advance of the year the funds are likely to be exhausted. It is thus likely that legislation will be enacted to restore long-term solvency, making it unlikely that the trust funds’ securities will need to be redeemed on a large scale prior to maturity.


61 posted on 01/17/2008 8:01:38 PM PST by BamaBlue
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To: William Tell
How much is owed to you for paying into a system which any accountant could tell you was unsound?

As$hat: You make it sound like I had a choice! Gee, stupid me … I should have refused.

62 posted on 01/17/2008 8:04:01 PM PST by doc1019 (Rabbit and the Hare … Fred ‘08)
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To: ErnBatavia
ErnBatavia said: "Going on the teat around May 1, 2009"

I'm due in May 2010.

I'm willing to consider any reasonable program to eliminate SS over time by decreasing the payments. But I'm not about to bear the burden alone by refusing the money. I figure the goverment will be trying to get some of it back from me over the coming years anyway.

63 posted on 01/17/2008 8:06:29 PM PST by William Tell (RKBA for California (rkba.members.sonic.net) - Volunteer by contacting Dave at rkba@sonic.net)
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To: Wally_Kalbacken
Congress does not spend the annual surplus in the trust fund. All FICA payroll deductions to Social security are transferred into the trust fund. The only payments made out of the trust fund are payments made to Social Security recipients

Not directly, but it does get spent by going into the general fund.

24.1 Are the Social Security trust funds left untouched and saved exclusively for Social Security purposes?

Social Security contributions which are not needed to pay current benefits are invested in government securities which are required by law to have maturity dates with due regard to the needs of the trust funds. The government also pays interest to the trust funds, at a long term rate determined by law. The government uses the invested funds to finance other government spending. The government owes the money which the trust funds have loaned to it and the government will have to repay it as the securities come due.

So, once again I would ask, how is the government going to meet that obligation?

64 posted on 01/17/2008 8:06:58 PM PST by evad (.)
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To: Poison Pill
Smoke and mirrors. Bonds issues by the U.S government are debts to that government, not assets

Absolutely.

If anyone other that the government tried this, they would be prosecuted for fraud.

65 posted on 01/17/2008 8:09:14 PM PST by evad (.)
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To: doc1019
doc1019 said: "As$hat: You make it sound like I had a choice! Gee, stupid me … I should have refused."

Not at all. You had no choice. I had no choice. But that doesn't change the fact that the unsound nature of the program was discernible since before I was even in the workforce. There is no justification whatever for believing that you would get what was promised and certainly no justification to believe that those who will pay for YOU will get ANYTHING.

You're not going to claim to be surprised in some future year when people who have been paying you become the majority and REFUSE TO PAY, are you?

Our generation, when it was in the political majority, supported perpetuating and enlarging this program. The next generation, when it is in the political majority, will END IT.

Nobody ever deserved a single dime from this unsound program. And this has been clearly known, I think, for at least thirty years, if not longer.

66 posted on 01/17/2008 8:16:13 PM PST by William Tell (RKBA for California (rkba.members.sonic.net) - Volunteer by contacting Dave at rkba@sonic.net)
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To: William Tell
Nobody ever deserved a single dime from this unsound program.

Because it was a government mandate, and it is in failure, I don’t deserve anything? If I had had a choice, I would agree, otherwise … I think I should get, at the very least, my original funds back. I think I deserve that, at least. Fortunately, I was able to see this coming and via 401Ks, investments and general savings I will survive, however … I still think I should get my “forced savings” back.

67 posted on 01/17/2008 8:32:23 PM PST by doc1019 (Rabbit and the Hare … Fred ‘08)
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To: Wolfie
As long as we’re butthead stupid enough to think the Republicans are any better or worse than the Democrats when it comes tp spending and entitlements, we’ll be good and truly screwed.

I cannot disagree with a word of this.
68 posted on 01/17/2008 8:45:52 PM PST by microgood
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To: BamaBlue
They could hold it as pennies or in gold bars I suppose, but unless you want to argue that US Government securities are worthless (which, if it were true would unhinge the world economy) the value is still in the trust fund. To say it is spent (as in consumed for armaments or concrete for bridges and highways) is simply not true. At the end of the accounting year the value of the securities and any cash balances are added to form the current year surplus (or in the future, ceteris paribus, a deficit).
69 posted on 01/17/2008 8:46:57 PM PST by Wally_Kalbacken (Seldom right but never in doubt)
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To: evad
Let's face it, they got us and the really sad thing is the young people of today are going to have a burden with SS that they cannot possibly afford.

There is a reason that I swear when I hear the names of such folks as FDR and LBJ.

70 posted on 01/17/2008 9:35:23 PM PST by rabscuttle385 (It takes courage to grow up and turn out to be who you really are.)
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To: William Tell

Understand, sorry for my confusion.


71 posted on 01/17/2008 9:41:16 PM PST by doc1019 (Rabbit and the Hare … Fred ‘08)
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To: groanup

That’s just the way it is. LOL


72 posted on 01/18/2008 6:17:02 AM PST by EEDUDE
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To: doc1019
doc1019 said: "I still think I should get my “forced savings” back."

Assuming, like me, you very early recognized the injustice of this wealth redistribution, then you do deserve compensation. But the people who owe you are the Boomer politicians who adopted Soviet principles to deny you the benefit of your labor.

The next generation of politicians can justifiably denounce this policy and end it, with very little need to make amends to any of their elders.

73 posted on 01/18/2008 10:10:04 AM PST by William Tell (RKBA for California (rkba.members.sonic.net) - Volunteer by contacting Dave at rkba@sonic.net)
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