Is Social Security Really in Crisis?

23 Apr

I am with those who believe it is.  Social Security (SS) has lately turned the corner — it now pays out more than it takes in on a yearly basis.  In theory, that means it starts pulling from the “trust fund” that liberals and conservatives constantly argue about — Is there a SS Trust Fund, or isn’t there?

In theory, of course, there is.  The problem is that it is full of IOUs, since the Congress long ago tapped the fund to meet other expenditures.  The problem with this is that the US government does not HAVE the money to pay those IOUs, now that we need to tap the fund.  So we must borrow the money.  This just worsens our nation’s deficits and debt.  I’m with those who argue that if we have to borrow money in order to meet SS obligations, then there is really no SS Trust Fund.

Let’s say you are saving money for your kids’ education.  But somewhere along the line, you have to “borrow” from this college fund to pay immediate bills, and you’ve had to live “on the edge” ever since, being unable to replace the money.  When it’s time for the kids to go to college, even though you only “borrowed” the money to meet other household obligations, if you did not actually replace the money you “borrowed” from your fund, there really is nothing there.  So you have to REALLY go out and borrow the money from the money-lenders.

Same thing with SS and the government.  There’s no money in the SS Trust Fund.  And since the government is not living within its means, it has to borrow money on the open market to pay SS benefits.  So . . . 1) even if the gov’mint DOES borrow the money, the amount represented by the IOUs will run out sometime in the 2030’s without modification to the system soon, and 2) even paying current entitlements is adding to the deficit and debt each year from here on out until we bring SS revenues and expenditures back into balance.

So it would seem that, contrary to what I hear from many liberals, the SS system really is in danger.  Yes, we could wait another 10 years to fix it, but the fix will be Draconian at that point, rather than fairly straightforward if we do it now. 

My great fear, though, is that as a combined group, our elected officials do not have the resolve, the fortitude, to put in a fix now.

Can anyone explain why I should not be concerned?


4 Responses to “Is Social Security Really in Crisis?”

  1. semmie2616 April 23, 2012 at 1:29 pm #

    This may be a stupid question, but why can’t the Social Security fund be paid back with stimulus money? After all, other organizations are being bailed out. We all should be very concerned…

    • illero April 23, 2012 at 3:28 pm #

      My guess is that one reason why SS can’t be bailed out with stimulus money is that whatever stimulus money is unspent isn’t real money at all. In order to “spend” it, we’d have to borrow it first. And then we’ve come full circle — no money is no money. Other views?

  2. Ed McLaughlin April 23, 2012 at 1:57 pm #

    Doug You are correct there is no SS Trust Fund and there is no lock box. Yes there is a crisis and I worry for my kids what will be left. We should offer younger workers an opportunity to establish their own retirement fund and a fund that passes on to heirs and not disappears at death. With fewer workers funding more retirees we have one giant Ponzi scheme.

  3. illero April 23, 2012 at 5:23 pm #

    One of the things that really bothers me about SS is that I gather that many Dems/Libs either 1) think there really is real money set aside in some SS fund, or 2) think that, since the IOUs will carry us into the 2030’s there is nothing urgent about fixing this program. They also like to emphasize that the fixes are straightforward. While I agree that the fixes should be straightforward NOW, they will not be as straighforward 3 years from now, 10 years from now, or 15 years from now.


    I am convinced that this should be of prime importance to all Americans, but clearly it does not seem so to Obama or to Congress.

    I’d love to hear from someone who does NOT think SS is facing a crisis.

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