RELIGION or POLITICS ??? Social Security Trust Fund...Myth????

Hello good friends, welcome. I was going to start my run on the Constitution today, but ran across this article by E.Thomas McClanahan of the Kansas City Star.   It seemed so appropriate that I just had to put it our for you, some of whom believe that Social Security is safely funded.  It Aint  !!!!  So go read.


ARTICLE.......

     Imagine a parent who, faced with the duty to build a college fund for his child, writes himself IOUs instead of putting real money aside for the future. 

That's what Social Securtity has done, except that it calls its stash a "Trust Fund".

Many people believe the trust fund contains securities that have real economic value. IT DON'T.

AARP, to cite a more well-known example, has actively spread the notion that Social Security's financial footing is quite strong, perfectly healthy -- nothing we need worry about right now -- because the trust fund contains trillions in government bonds.

This belief is one of the reasons entitlement reform has been so difficult. Those who subscribe to the myth accuse reformers of seeking to destroy one of America'smost cherished programs.

But reformers are correct in arguing that if Social Security isn't fixed, and soon, it will be difficult to shore up without threatening the benefits of people already retired.

In most years, the payroll tax dedicated to Social Security produces more money that the government needs to pay benefits. When that happens, the revenue is spent by Congress and the Social Security trust fund is credited with "special issue", non- marketable, U.S. government bonds.

Many people point out, correctly, that the trust fund bonds, like publicly traded bonds, are backed by the full faith and credit of the government.  They conclude from this that social Security is on a solid financial footing.

But like the foolish parent who builds a college fund of IOUs written to itself, and then on some future day expect to use those IOUs to fund benefit checks.

To turn trust fund bonds into real money, the government must do what it would have to do if the trust fund did not exist: borrow, cut spending somewhere else, or raise taxes.  The trust fund bonds may be assets from the point of view of Social Security, but they're a liability for the government as a whole, and for us as taxpayers.

These bonds represent "the debt to American workers" who have paid the payroll tax. And right--the Trust is full of debt.

Social Security is not a pension program as we commonly under-stand it. It is a pay-as-you-go program.

Current recipients must be paid with current tax revenue.  Future recipients must be paid with future tax revenue.  This year, the Social Security trustees said revenue from the payroll tax would  fall short by $41 billion.   That cash deficit is expected to shrink in 2011 as the economy strengthens (hope). It will vanish for a couple of years, then reappear with a vengeance in 2015, when Social Security begins running permanent cash DEFICITS.   By 2020, the annual shortfall will balloon to more that $78 billion.   A decade later it will top $267 billion. (A mere quarter trillion).

McClanahan comments in closing that, it could not be more clear that Social security reform should and must be phased in now and gradually, so that benefits for retirees and those nearing retire-ment aren't cut. 

BUT,  if government waits too long -- should they listen to those who subscribe to the trust fund myth -- the borrowing needed to finance benefit checks will rapidly push us closer to the growth-killing tax increases and benefit cuts that no one wants.

Hey, people, heads up here and pay attention, and there are even more problems that this, just to be cheerful to the end,  so if you still think this admin is going to take care of things in years ahead, better buy a ticket to another world somewhere, as long as you are dreaming. Anyway, I will really get started friday on the Constitution eye opener.  Meantime, take care, and as we say in Nichiren Buddhism, "Enjoy what there is to enjoy, suffer what there is to suffer, consider that joy and suffering are a fact of life, and keep on chanting  'Nam Myoho Renge Kyo" no matter what happens." .   Then remember that FAITH alone is all that really matters.     Cheers     CJ