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The Social Security Lies Are Falling Apart

The Washington Post has finally laid it out: Social Security is a Ponzi scheme, not a prudent savings program.  As the Post special report points out, Social Security has now gone “cash negative“: the payroll taxes coming in are not enough to cover the pension payments going out.

Ah, you say sagely, but that is not a problem.  The Social Security trust fund has been carefully putting money aside for decades.  Now we will simply draw from the savings account to cover the extra costs.

Not exactly.  The government has been spending the money that came in as Social Security payroll taxes for years.  It has “invested” the payroll tax revenues in Treasury bonds: that it, the government has been ‘saving’ money by investing in IOUs to itself.

Now that the program is cash negative, annual social security payments result in a net flow of cash out of the government every year.  As the Post puts it,

The $2.6 trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.Many Democrats have largely chosen to ignore the shortfall, insisting the program is flush, citing the existence of the trust fund. They argue that fixing Social Security can wait, perhaps for years.

That “trust fund” is a myth, an accounting trick.  Note that if the money had been invested in stocks or other assets, the government could now be selling those assets to cover the Social Security costs.  But that would have forced spending discipline in the past; Congress was too busy ladling pork to cronies and ginning up popular new entitlements to face up to the troubles ahead.

Now those troubles are here.  In the future, more and more money will have to be diverted from other priorities — education, defense, tax cuts, health care — to cover hundreds of billions of dollars in Social Security costs every year.

While quacking disingenuously about a valuable ‘trust fund’, the government has already spent the payroll taxes you and your employers paid to provide security in your future.  The money is gone, exchanged for Treasury IOUs.  It really was a Ponzi scheme, and the bill really is coming due.

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  • Whit

    Its going to take sacrifice. Younger folks may not receive anything. Folks nearing retirement may have to step up and delay their retirement. People already on it may have to accept no increases. Everybody needs to have skin in the game. We can blame it on the politicians but people who have received Social Security currently and their deceased siblings and parents voted for these people and beneifited from the pork while receiving the benefit of SS

  • Charles R. Williams

    Whether the trust fund is a fiction or a reality is a political question and not a legal one or a question of what the trust fund is invested in. The US is a sovereign nation and there is no authority to appeal to to determine its status.

    Is the trust fund a fiction? It’s assets are counted as public debt for debt ceiling purposes.

    Will we starve grandma to pay our debts? Will we empty grandma’s savings account to pay our debts? Time will tell how this will play out.

    I suspect there is no scenario under which the federal government will be able to make good on its promises to grandma and grandpa. But what will happen along the way?

  • David

    If you think the Treasuries held by the Social Security trust fund are so worthless, perhaps you’ll sell me your own Treasury holdings for say 10 cents on the dollar. Of course you won’t, because the market is making all-time high bids for publicly held debt, *knowing full well* that (as you say) all that non-public debt held by the trust fund must eventually be redeemed via taxes, expenditure cuts or exchange for publicly held debt. The numbers involved are also not very frightening over time, provided some sensible changes are made in retirement age, tax ceilings, etc. This is a non-issue and certainly bears no resemblance to a Ponzi scheme. Try leaving this topic to *qualified* analysts like Dean Baker and stick to foreign affairs, which is what many of us read you for.

    • Walter Russell Mead

      They are not worthless in that they don’t have a market value. But an IOU to yourself is not the same as a claim on someone else’s assets. Otherwise, we would not need to increase the debt, raise taxes or cut other spending in order to fulfill these obligations as they come due. If there was no problem with the size of the federal debt, the problem would be academic, but it seems pretty clear that we have gone well past the point of fiscal prudence. I don’t think you can escape the conclusion that Social Security payments will be an increasing drag on the government’s ability to spend money for general purposes.

      I agree by the way that Social Security can be fixed much more easily than Medicare, but that doesn’t make it any less evident that the public has been systematically misled about Social Security. And the looming problems with Medicare will make it harder, not easier to manage Social Security in a sensible way.

      We are in a big mess, and the designers of the entitlement state have much to answer for.

  • Kenny

    “Ah, you say sagely, but that is not a problem. The Social Security trust fund has been carefully putting money aside for decades. Now we will simply draw from the savings account to cover the extra costs.”

    Please list the names of the nitwits that actually believed this Democrat lie.

  • Jimmy J.

    This refrainn has been sung over and over again for the last thirty years. No one’s been listening. At least no one who could do anything about it. Best it be cut now. If not, the market will make the cuts and they will hurt much more than taking action now.

  • Luke Lea

    Gee, Prof. Mead, on this issue you’re talking like you were born yesterday. Of course there is no Social Security trust fund, at least not in the sense that term is generally understood. by the man in the street. There have been surpluses, true, and politicians sometimes refer to them as a trust fund. But it is nowhere near enough to finance future retirement benefits, nor was it designed to be. This is standard boilerplate policy design.

    Instead one generation devotes a portion of its wages to support the one before it, more or less as done in traditional societies. That is not the definition of a Ponzi scheme.

    Yes, there are problems with the falling ratio of retirees to wage earners, and no doubt adjustments will have to be made. The last time I heard, the fund should be solvent for another generation at least, unlike Medicare which is really in trouble.

    As for using the Social Security surpluses to finance the federal budget, those debts should be treated no differently that other parts of the debt. In other words they should be paid back out of general revenues, which means under a system of progressive taxation. You do support progressive taxation I presume?

    Now, the fact that payroll taxes have recently been suspended to stimulate the economy is troubling, I grant, for it presages one more cynical attempt by the wealthier and more libertarian classes in America to pawn off their political and financial irresponsibility on the unsuspecting public.

    Your evident glee here is not very attractive — nor very honest (or else poorly informed) when you get right down to it.

    • Walter Russell Mead

      You don’t seem able to distinguish between sorrow and glee very well. There isn’t a single piece of me that is happy about Social Security’s problems. And, as you say, the “man in the street” doesn’t understand the real state of the system. That is not because he is stupid; it is because politicians have found it convenient to promote a set of illusions about how the program has been handled.

  • Luke Lea

    Maybe this is as good a place as any to share my response to Rich Lowry’s charge that the Occupy Wall Street “manifesto” is “rancid, leftover Marxism.” This should give you and your readers a better idea of where I’m coming from, and where OWS too seems to be coming from unless I am mistaken:

    “I wasn’t aware OWS even had a manifesto. That is one of its strategic strengths. Still, I have a minor quibble with the way OWS frames the issue in terms of the so-called 99%.

    My quibble is this: it isn’t the top 1% who are so different than you and me. It’s the top .01% or, roughly speaking, the 10,000 wealthiest families in America (together with their counterparts overseas). These are the families that NYT financial reporter David Cay Johston labels “the donor class” because they bankroll both political parties and thereby control the political agenda, on issues of trade, immigration, and tax policy particularly.

    Why is this distinction important? Well, mainly because you don’t want to multiply your opponents unnecessarily. There’s quite a difference between families with a net worth around $5 million and those whose net worths are $50 million and up.

    In the first place the first group generally pays its taxes. The second group does does not. According to Johnson as of 1996 they escaped paying roughly $300 billion annually which they legally owe. (It’s no doubt a good deal more than that now — enough, in fact, to close the annual budget deficit of our federal government in ordinary years.)

    How do they do it? Principally by concealing most of their incomes in in a nest of shell corporations and overseas tax havens, using a small army of lawyers and tax accountants to bring it all off. Plus of course by buying off both political parties, thereby making sure our elected officials don’t even think about sicking the IRS on them in any serious or systematic way. That NYT reporter spells it all out.

    Those million families worth $5 million on the other hand are, thanks to inflation, today’s haute bourgeoisie. They are your typical Main Street business people, local merchants, small factory owners, the decayed descendants of former wealth.

    Now the fact is these Main Street millionaires don’t wield near the influence on our political process as the super-rich do. Which leads to the question: How can we identify members of that more exclusive elite?

    Well, there are only about 200 of them per state on the average. It is not a big group, and if you’ve lived very long in any typical metropolitan area in America you can probably name half of them just by reading the local society pages. They “are” local society for all intents and purposes. You can even find out where they live if you just ask around (hint, hint).

    But if instead of targeting this upper-upper crust you target the million or so families who compose the haute beorgeosie, then you are asking for a lot of unnecessary trouble. Particularly if your idea is to make them “pay” for the sins of their betters.

    These people will fight you with every fiber of their being and, based on historical experience, will probably prevail. For which reason their betters will be more than happy to encourage you in your misguidedness, the bigger guys hiding behind the littler ones as they always have.

    Bottom line: Know your enemy. That’s the first rule of war, including class war. And that, dear readers, is the sum and substance of my quibble. Change those signs to 99.99%!

  • WigWag

    After all the rude and unpleasant things Professor Mead has said about Al Gore, it’s entertaining to see Mead agreeing with him.

    When Gore ran for President against George W. Bush (the man who squandered the Clinton surplus) he was widely ridiculed for suggesting that the social security surplus be sequestered in a “lock box.”

    Gore’s point was that if the social security surplus was spent and not sequestered, we would end up in exactly the situation that Mead bemoans now.

    Gore’s call for a “lock box” was ridiculed by George W. Bush, by the Republican Party, by conservatives in general and by a press suffering from Clinton derangement syndrome. Gore’s position was even parodied on Saturday Night Live.

    While there was no Via Meadia at the time, if there was, it is easy to envision a post by Professor Mead where he joined in with his right wing fellow travelers having a good laugh at Gore’s expense.

    The question is, who’s laughing now?

    • Walter Russell Mead

      This IS Gore’s lockbox: it is just stuffed with government IOU’s to itself, which is exactly the paper Gore wanted to stuff it with. If Gore had proposed investing Social Security funds in other assets, and sequestering that money, I would have supported it.

  • Corlyss

    I’m still waiting for a commentator, any talking head will do, to note the fact that the “payroll tax holiday” bruted about for the last several years, means that payroll taxes are not being paid to cover the current SS payouts. Less money coming in = less money going out + bankruptcy sooner.

  • Mrs. Davis

    There has been much boomer bashing here and I have done my share. But it is on this decision and this alone that the judgement of history will be made on the boomers. They will die in poverty either way, but they can do so with honor or with the fate of the republic on their hands.

  • dearieme

    It must have been about 60 years ago that a British Labour politician explained things to his public: “The secret of the National Insurance Fund is that there ain’t no fund”. How on earth are there any Americans so dim that they think that there is a Social Security Fund? Isn’t that taking arrested development a little far?

  • WigWag

    What other assets do you wish the trust fund had invested in Professor Mead?

    The S&P 500 is 20 percent below where it was in 1999; had the trust fund invested the social security surplus in the stock market it would be dramatically more depleted than it is now.

    What other assets could the surplus have been invested in? Commercial or residential real estate? That would have been disastrous. Mortgage backed securities? That would have been calamitous.

    Gore’s point during his election campaign was precisely the one you are making now. He insisted that while the Clinton Administration had made enormous progress in reducing the federal budget deficit the deficit appeared bigger than it was because of the social security surplus. Gore suggested that the social security surplus should be sequestered from the rest of the federal budget and that when it was, it would be apparent that even more fiscal discipline would be needed.

    Bush and the Republicans scoffed. They said the fiscal surplus should be returned to the American people (mostly the top one percent) in the form of a tax cut. Their purpose was not to stimulate an economy that was imploding which was Obama’s motivation for massive deficit spending; their motivation was ideology. They simply believed that the rich were entitled to more than they already had.

    You’ve regaled us Professor Mead, with some recent posts that ridiculed the idea that the manner in which public employee pension funds were invested could ever be expected to be profitable enough to pay the benefits that employees were promised. Why do you think that had the social security trust funds been invested in a similar way that the result would have been different.

    The record is clear; Gore was right; the people who opposed him are the very same people calling social security a ponzi scheme now. They were wrong then and they are wrong now.

    Here’s an idea you might be able to sign on to, Professor Mead; let’s eliminate the child labor laws. They’re nothing but pesky regulations enacted by the federal government that make running a business a little harder. If we put a million ten year olds to work maybe they will pay enough into the trust fund to get it back in balance. It’s a solution that an Al Gore opponent just has to love.

    • Walter Russell Mead

      Interesting: the deficit was worse than it looked when the system was cash positive; now the system is cash negative and it is still making the deficit grow. The generational imbalance makes the system unsound (though repairable); the method of funding the imbalance by investing in the securities of the same government that is obligated to pay future costs eliminates one kind of risk but creates many others that I suspect we will experience in due course.

  • Luke Lea

    Dear Walt, If that’s not glee and schadenfreude you’ve been expressing over the demise of the blue state model these past few month, then my apologies. I mean that sincerely. Could it be that what I am interpreting as a celebratory note is in reality nothing more than the half-suppressed pride of the I-told-you-so variety?

    Or maybe I just have a tin ear!

    • Walter Russell Mead

      Your choice.

  • Jordan

    @Whit: “Its going to take sacrifice. Younger folks may not receive anything. Folks nearing retirement may have to step up and delay their retirement. People already on it may have to accept no increases. Everybody needs to have skin in the game.”

    Yeah, wow, what a sacrifice! I have to pay for the current and upcoming generation of retirees and then when it comes my turn, I get nothing? Sacrifice for thee but not for me, huh Whit? It’s a good thing I saw through that SS Trust Fund crap about 15 years ago and decided to save for myself, so I am actually planning on $0 from SS.

    The current generation of retirees have seen dramatic gains in the economy and the stock market in their adult lifetimes, so I’m having trouble conjuring up any sympathy.

  • Luke Lea

    Dean Baker, who is certainly competent to judge, makes a habit of exposing the Washington Post’s egregious economic illiteracy. Here is his post on this particular story.

  • JoeCitizen

    You are just such an utterly dishonest hack. The Social Security Administration owns Treasury bills, legal obligations in the same sense as the T-bills in your own portfolio. They will be cashed in, just as was always planned, over the next few decades – unless the Federal government declares bankruptcy.

    This is not “the government” lending itself money. It is a separate legal entity, the Social Security Administration, lending money to the Treasury, and now getting paid back.

    At the end of those 30 or so years, then the worst case scenario – if nothing else is don in the interim – is that the benefits will have to be cut by 25%. Then the system is balanced indefinitely. But minor tweaks in the interim will make the necessary cuts even less drastic.

    If you wish to advance the argument that the Treasury is looking at severe problems, then fine, make that argument. The problems you seem to be referring to are theirs (the Treasury), not the SSA.

    It is utterly dishonest of you to try to muddle these two – to use the more general fiscal imbalance to advance arguments that seek to destroy the Social Security System.

    You may have some success convincing the knuckle draggers who sop up the propaganda on the radio, but you are not going to fool most of the people.

    • Walter Russell Mead

      Fine, but creating shell corporations and shuffling assets between them is not normally considered the soundest of financial practices. And a suggestion: it’s possible to disagree with people without calling them names. Sometimes it even makes your points more convincing. Just a thought.

  • J R Yankovic

    As usual I’m completely lost.

    Suppose that the “salvaging” of Gore’s otherwise useless and foolish idea of lockboxing the “social security surplus” (do we even KNOW there was such a surplus?) lay in diverting it into productive investment. If the solution was in fact so simple and transparently obvious, where were its proponents at the time? It would also be interesting to know what investments they might have had in mind. Or was that precisely the problem? Could it be that those who might otherwise have “upgraded” Gore’s proposal had also much better estimate of its REAL viability – i.e., a much surer grasp (than the rest of us) of the REAL long-term strengths of our gangbuster-performing stock and other markets even at that time? And looking at the table’s odds – perhaps even on just a gut level that they couldn’t articulate – they simply said “No dice”?

    Then again, it may be that nobody at the time of Gore’s proposal had the wisdom or insight (or simply the compassion?) to “tweak” it in this manner. Or at least nobody armed and fortified with the properly impressive credentials. And if so, might THAT not be a hint of the real moral and spiritual poverty at the base of our economic culture, and not just today but over at least the past 15 years?

  • Jordan

    @JoeCitizen: “The Social Security Administration owns Treasury bills, legal obligations in the same sense as the T-bills in your own portfolio. They will be cashed in, just as was always planned, over the next few decades – unless the Federal government declares bankruptcy.

    This is not “the government” lending itself money. It is a separate legal entity, the Social Security Administration, lending money to the Treasury, and now getting paid back.”

    This is the same tired rationalization that I hear over and over again. And you seem to draw a meaningful distinction between the finances of the SSA and the Treasury. Where do both of those entities get their money? (Answer: the same place)

    And I find it interesting how people are so comfortable with letting SS recipients take a 25% haircut sometime in the future. Try cutting SS benefits by 1% or 2% or 5% today. Enjoy all of that outrage amongst retirees. Where’s the outrage amongst the younger generation today? Perhaps too many of them are convinced by the JoeCitizen sort of nonsense.

    Fortunately, I don’t buy it at all and am planning accordingly.

  • torabora

    It’s unbelievable that libtard nitwits believe that tax money gathered and spent is available on demand.

    …do the math/ SSI collects surplus, loans to Treasury/Treasury gives SSI a bond/ Treasury spends/ SSI asks Treasury for funds back as it is now cash flow negative (redeems bond)/Treasury has to sell another bond to pay cash back! So the bond pile gets bigger!

    You libtards are amazingly stupid.

  • DavidM

    No WigWag it is the GOP who is laughing. They suggested partial privitization and were demonized for it by Democrats who claimed there was no SS problem at all.

    Even if the money you are whining about had been put into it, the system would be coming apart in 18 months from now. What would your blame game shift to then? Follow the meme: Democrats do no wrong and the GOP causes all our ills.

    Why didn’t Gore insist on a lockbox when his party controlled the purse strings for about 30 years? The last time SS was going broke REAGAN fixed it, not Democrats.

  • BethAnne

    Nixon took us off the Gold Standard in 1971. We stopped using Federal taxes to fund the Federal Gov’t at that moment. SS is not broke, the Federal Government is not broke and this depression is caused, in part, by Clinton’s balanced budget years – google Modern Money Theory, Read William Mosler’ blog –, the University of Missouri Kansas City Economics blog –

    Hayek understood and did not like money based on the full faith and force of the Fed government for philosophical reasons I agree with but he admitted it exists – and it does here and now….folks who understand human nature must get control of the Modern Money Theory narrative or creeping socialism continues…

  • Kenny

    Mr. Mead is exactly correct when he writes, “This IS Gore’s lockbox: it is just stuffed with government IOU’s to itself, which is exactly the paper Gore wanted to stuff it with.”

    For ideological reasons, Democrats can never iumagine, let alone be trusted with a true ‘lock-box.’ They mhave to spend ever dime the government can get its hands on and then print up more to cover their excess spendings.

    Yes, The Republicans do the same, but they do it orders of magnitue less than the Party of Obama.

  • Steve C.

    I remember when the Greenspan Commission, appointed by Ronald Reagan “solved” the social security system problem by raising taxes, making the system as it was described at the time “actuarially sound”. A typical Washington solution to a Washington created problem.

    A major reason why social security had to be “saved” was because the government, the engine of inflation, did retirees a solid in 1972 by legislating automatic cost of living increases. (see the history at

    I don’t think it’s fair to say social security accounts are a Ponzi scheme. I prefer to import a Gorism and call it a risky scheme. As it was constituted, the government extracts hundred of billions of dollars from the economy and they are faced with only two options. One, they can stockpile it in a vault somewhere which amounts to destroying the money (i.e. subtracting it from the economy) or two, they can recycle the money by spending it. Option two is problematic when the demographics shift from many payers to fewer and fewer payers complicated by the cost of living adjustments. Option one is bad because taking money out of the economy means money becomes scarcer and because money stored in vaults does not grow.

    Is there an altenative? Several in fact, each with associated risk. We could cause the government to invest our retirement dollars in the capital markets. I hope I don’t have to outline the reasons why this would be bad. Look at the impact of the activism propounded by state pension funds like Calpers. Plus the corruption seen in outsourcing the investment decisions of state and local pension funds from New York to Illinois.

    Another alternative would be to give payers options about how their money would be invested. This is important for several reasons. First, just like the 401K or self directed IRA, people could choose investment based on their risk tolerance. Some, maybe even many people, might choose a form of guaranteed investment contract or Treasury bonds. Others might choose an S&P 500 fund. Young people might invest for growth, older people for income.

    Critics of this type of account note that markets don’t always go up. True, but social security benefits are tied to contributions and government inflation calculations. A market alternative would return, over time, at least the same amount. Average returns over the past 70 years are approximately 6% annualized. More importantly, private accounts provide one thing people don’t have today, property rights.

    The US Supreme Court has ruled that payers have no ownership right to their social security accounts. If I pay $200,000 into social security over my lifetime and I die after collecting my first check, who gets the balance? The government. True, some would argue, but if your spouse can collect at a lower rate on their own account, they can collect on your account. That is correct, it’s written into the law. But suppose your spouse dies after collecting the second check? Who gets the money? The government.

    If social security was an annuity, a highly regulated form of investment contract, the payee could opt for a variety of payout options, including a lump sum payment upon retirement or a lump sum payment on death. None of these are features of social security.

    Never forget, social security is a government program where the government writes the rules and can change them at any time.

  • Jeff77450

    I’m 52 and I’m always baffled when we Boomers are blamed for the pending train-wrecks known as Social Security & Medicare (re. Mrs. Davis’ comment #10). We didn’t create either system and we weren’t given a choice about participating in it. I don’t think that I’ve ever met anyone, of *any* generation, who wouldn’t have opted out of them at the beginning of their working-life if they’d been given the choice. But again, we weren’t given a choice.

    What follows is my plan for phasing out SS:

    1. Effective 31 December, 2011, everyone 55 and older would be fully-vested in the existing system.

    2. For each year under 55 a person’s payroll-tax contribution to SS would decrease by 4% down to age 34. Their paid benefits would decrease by the exact same amount. Thus someone age 34 would only be paying 20% of what they currently are and when they started to collect benefits it would only be 20%. People age 33-and-below would pay *no* SS payroll tax and would receive no SS benefits. They would be reimbursed for the contributions that they have made with the appropriate amount of interest (paid out of the so-called trust-fund).

    3. The amounts that people can contribute to the various non-government retirement systems, like IRAs & 401(k)s, would be increased based on the formula cited above.

    4. Did you know that if someone ruins their health by smoking and substance-abuse they can qualify for SS disability benefits? I had two uncles who were hard-core alcoholic chain-smokers who ruined their health and got on SS because of it. That and some other blatant abuses/loopholes would be done away with.

    5. Effective 01 JAN ’12 receipts from payroll-taxes would decrease immediately and dramatically (but benefits paid out would continue to increase for years). How to make up the short-fall? SS begins to cash in its IOUs and at the same time we establish a floor under the price of gasoline at, say, $4.00 a gallon, indexed to inflation. The revenue from this gasoline-tax could help fund any short-fall and would have the added benefit of encouraging energy-saving & pollution-reducing behaviors like buying more fuel-efficient vehicles and not exceeding the speed-limit. It would have the potential to improve the trade-deficit as well. Possibly some kind of tax-credit for the poor.

    The plan described above involves some “pain” but so does the existing system and any other fix that might be applied. The numbers that I’ve used could be tweaked & massaged.

    Medicare is, of course, the (much) larger problem. I’m all for phasing it out too. Alternatively, out of sheer necessity we’re probably going to have to go to some kind of voucher-system whereby each year people are given a lump-sum and told “good luck.”

    My two sons have heard me say the following so many times that they’re probably going to have it ingraved on my tombstone: “Life’s not fair–but that’s the way it is.”

  • Jordan

    @Jeff77450: “I’m 52 and I’m always baffled when we Boomers are blamed for the pending train-wrecks known as Social Security & Medicare (re. Mrs. Davis’ comment #10). We didn’t create either system and we weren’t given a choice about participating in it.”

    Yes, but you have been responsible for voting for those who had the opportunity to fix it, but declined to. You were also responsible for voting for those who ran up the non-SS federal budget deficit, which is the reason why any surplus from SS taxes that was supposed to be kept safe and sound for your generation in real assets was actually spent and left with just IOUs from the other hand of gov’t.

  • Jon Schwarz

    “Note that if the money had been invested in stocks or other assets, the government could now be selling those assets to cover the Social Security costs.”

    Well, from an economic perspective, the government investing the surplus payroll taxes in stock would make no difference whatsoever. Stock certificates are no more “real” wealth than are government bonds (or the ability to tax). All are simply claims on the underlying productive economy.

    From that perspective, ANY Social Security trust fund would be a “myth,” no matter what investments it held. Societies can’t invest for the future in the same way that individuals can. So what Mead is (unknowingly) doing here is engaging in exactly the same “accounting trick” as those who say the Social Security trust fund is real.

    That said, while the Social Security trust fund doesn’t have much economic significance, it is a *political* agreement about who’s going to contribute to the cost of the program. In essence the trust fund is the IOU from a loan of about $2.6 trillion from America’s working people to America’s wealthier people. Redeeming the trust fund will require that wealthier people pay that back.

    So declaring the trust fund null and void would be unquestionably the greatest heist in history, transferring trillions up the income scale. And that, of course, is its attraction to people like Pete Peterson.

  • Jeff77450

    @Jordan: Your argument is asinine and false. Beginning in 1980 I’ve voted Republican in every national election (except 1998 when I moved to a new city and didn’t get registered to vote in time). Republicans are the ones who *claim* to be for balanced-budgets and that government should be pay-as-you-go (but then they get into office and they don’t follow through).

    As I’ve written elsewhere in this forum, I’ve lived my entire adult-life essentially debt-free. My wife & I are debt-free except for our very reasonable pre-bubble mortgage. We’re not rich. For about 13 years I’ve been driving a ’97 Chevy Lumina which presently has 209K miles on it.

    Jordan (and Mrs. Davis): my conscience is clear. By the way, Jordan (and Mrs. Davis), I went to war–did you?

  • Jaybird

    A point of fact has been called into question here. I recall Al Gore’s position was that there IS a Social Security “lockbox,” thereby suggesting we should be satisfied as to solvency. One of the comments above states that Gore was PROPOSING a “lockbox.” There is a world of difference, regardless of what class of assets it contains.

  • Ben

    I’m so old that I can remember when Walter Russell Mead wrote interesting and original things — he was often wrong, but he made one think and understand the world a little differently. Now he is just dull and unoriginal as well as wrong.

  • Carly EngageAmerica

    If the people who have invested into Social Security want to see a return, entitlement reform will have to happen. Currently Social Security and Medicare use 8.5% of nonentitle­ment revenues (federal revenues dedicated to all other programs besides the two). By 2020, the deficits will grow to almost 25%. This means that within 9 years, in order to pay projected benefits to retirees and the disabled, the federal government will have to stop doing about one out of every five things it does today (http://eng­.am/poetWU). The federal and state governments are projected to spend $466 billion on Medicaid this year, with costs rising about 8% a year (

    All of the following solutions will substantially eliminate these problems: Reducing benefit payments by 5% AND increase the retirement age to 70 over time; increasing both the employee and employer contribution immediately by 1.1% for income up to $106,800 (its current limit); reducing benefit payments by 5% AND increase both the employee and employer contribution immediately by 0.05% each year for the next 20 years for income up to $106,800 (its current limit); removing the $106,800 limit and count all income towards the SS tax; decreasing the cost of living adjustment by 1% per year AND raise the retirement age to 67; or taxing income over $106,800 at 3%, index the retirement age to longevity AND decrease cost of living adjustment by 0.5% (

  • SueDinNY

    Who doesn’t know this? The gov’t has stripped at least $2 trillion of our money. Are the facts only legitimate when a paper publishes the obvious? Why do you think we are so concerned about the state of the economy??? The $16 trillion??? The bankruptcy of America???

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