If you did it soon enough, you wouldn’t even need a 2% increase.
That is basically the reason we have the problem we see today. The projected period of social security payout used to be less than 5 years, now it is mroe than 10.
Those treasuries do not represent a debt on the aprt of the social security trust fund.
WTF do you think a treasury bond is?
Thats right the people who paid $5000 will have $6000 next year (paid for by people who paid in $5,500 next year along with some interest that accrued on the social security trust fund).
You’re just highlighting that the SS is largely a transfer payment system. So?
It is too rhetorically convenient to let go. Without the Ponzi scheme language, SS largely becomes a aseries of transfer payments that are fairly progressive in their distribution of returns to those with less money. Here is what I mean. If I start working at 25 and max out social security and my friend starts working at the same age but earns $25K/year and we both retire at the retirement age and both live to the our life expectancy then my return on social security is going to be around 3% while my friends return on his social security is going to be about 7%.
Only if you labor under the misconception that it is an investment and that you’re getting a return on it, not that it’s a transfer system.
You’re right that the term is rhetorically convenient to purveyors of ignorance about it, though.
They are a debt incurred by the US government. That’s why federal law requires them to be reported as a debt - not an asset.
The Social Security trust fund is in no sense separate from the US government - Algore was lying when he said there was some kind of lock-box where funds were being held. There are no funds, and no lock-box. The US government took money away from the taxpayer that was supposed to be used for Social Security. Some of it was actually used to fund benefits. The rest was spent on everything else. The government has not created an asset out of which benefits can be paid. It has incurred a debt that must be repaid.
So as the number of workers paying into Social Security shrinks, the Ponzi logic on which it is based becomes increasingly unsustainable.
Regards,
Shodan
Please read this thread.
You seem to be confused by the fact taht you can describe those particular securities as the federal government issuing IOUs to itself. I’ll give two examples and maybe they will show you how I see things.
If Allstate (which I believe is a subsidiary if Sears) held its reserves entirely in Sears corporate debt and lets says Sears also guaranteed all the obligations of Allstate, would you say that Allstate didn’t actually have any assets in its reserves? Why then would treasuries cease to be assets because they are held by the ss trust fund?
If Enron had a pension plan and the pension bought some Enron bonds for its portfolio, you would probably call those assets. If the pension put all its money into enron bonds would you cease to call them assets? It might be reckless and irresponsible but I don’t think that these bonds cease to be assets because it is held by Enron’s pension fund. Why then would treasuries cease to be assets because they are held by the SS trust fund?
Of course the treasuries in teh ss trust fund are not liquid, they are non-negotiable United States Treasury bonds and U.S. securities backed “by the full faith and credit of the government”
At a Senate hearing in July 2001, Federal Reserve Chairman Alan Greenspan was asked whether the trust fund investments are “real” or merely an accounting device. He responded, “The crucial question: Are they ultimate claims on real resources? And the answer is yes.”
Yes, but that debt must be repaid to the social security trust fund. In that sense there is a lockbox, it doesn’t hold nearly enough to cover the SS liabilities but there is a store of value that must be repaid to the social security trust fund.
The SS crisis is not teh result of an inherent flaw in the system, the crisis is the result of changes in the underlying actuarial assumption of the system. When the system was devised, the life expectancy for white males was 62 (52 for non-white males) and the life expectancy for white females was 67 (55 for non-white females) and the ss tax rate was 1%. At the time you had to be 65 to collect benefits (later you could colelct early retirement benefits at 62), but you can see that we expected most men to die before benefits were colected and and most women to die after collecting benefits for a couple of years (minorities weren’t expected to collect very much). Since then the tax rate has been raise 20+ times (between SS and medicare).
Currently the average life expectancy is something like 78 and SS full retirement age is 67. So you see when they created SS, most people died before they could collect a dime but with increasing life expectancies (without signifciantly increased retirement ages) most people can expect to collect SS benefits for 10 years or more. We can deal with this the way we have always dealth with this but at some point we have to raise the retirement age because there is a limit to how high the social security tax can get ebfore it becomes a legitimate problem (and not just a sore point for wealthy self insureds).