6/21/2012 4:02 PM ET|
The great Social Security lie
If you think the retirement of baby boomers is the problem, perhaps you should know about the real root of the problem -- and how it needs to be addressed.
The headline machine was in overdrive earlier this year with the arrival of the latest Trustees' Report on SocialSecurity and Medicare. And while much of the media continues to herald the coming bankruptcy of Social Security, they do so at the risk of ignoring the real story -- a story that is neither difficult to explain nor hard to understand.
Technically speaking, an entity is deemed bankrupt when its obligations exceed its revenues. Therefore, if the projections are accurate, Social Security will, indeed, be deemed bankrupt in 25 years -- absent modifications to resolve the funding problems.
However, that does not mean that the money will be all gone come 2035. Nor do the headlines explain why we have the projected shortfall.
Subsequent to the projected expiration of the period where the trust can pay out 100% of the promised benefits, the fund will then be in a position to pay out 75% of promised benefits for the foreseeable future -- and that is not OK. Clearly, there need to be some changes made to Social Security so as to make up the 25% annual shortfall in benefits we anticipate will begin a quarter of a century from now.
The cause of the shortfall
But if we are to hope to make these adjustments in a sensible and realistic way, it might not be a terrible idea for the American public to actually understand the real causes of the shortfall in anticipated trust revenues.
We are consistently led to believe that it is the "aging workforce" that rests at the heart of Social Security' funding problems. Tune in to any of the media reports covering the numbers just out and this is what you are going to see and hear.
The claim, while legitimately representing a small piece of the problem, fails to explain the lion's share of the crisis we will experience in the Social Security Trust --and by lion's share, I mean a full 60% of the entitlement's funding shortages.
The "aging workforce" narrative serves to encourage and support the critics who claim that our problem is too many retirees lining up to collect their entitlements only to find that the government has failed to properly manage the Social Security Trust -- leaving the next generation of beneficiaries to be shortchanged 25 years down the line. As a result, the privatization pushers argue that Americans would be far better off looking out for their own retirement accounts so that government mismanagement will not come between hard-working citizens and their retirement money.
This is the Great American Social Security Lie.
It is a lie concocted by those seeking to fulfill Wall Street's eternal quest to get its sweaty palms on trillions of dollars of our retirement cash, allowing them to expand their casino operations beyond their wildest imaginations -- and Wall Street has a very healthy imagination.
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Freedom and Liberty, I take you back to the old statement...if it walks like a duck and quacks like a duck, its a duck...FICA is a tax. The point that the author made is absolutely right and shows that SS is a regressive sucking hole. The rich will get out much more than they paid in...known fact! Wonderfully written and correct article.
I love it when mentally challenged Left Wing reporters try to explain Economics.
It is like a turtle trying to explain the inner workings of a Swiss watch.
not a socialist 2012
I'm 53, I work in the same field for 35 years (3 in high school) in the same field. I made over 1 million dollars in my life. I pay taxes every year. As I got older walking got harder. Three an a half years ago working at my job got so hard I just couldn't do it anymore. I had some test done and it was found I had a condition that had caused me to lose all muscle fuction for my knees down. What I have is progressive, At some point I will not to be able to walk. If you had to live with a disability. And you paid into Social security all you life, I'll bet you wouldn't be so self centered.
Something is NOT an entitlment if you have been paying into it for years !..So STOP Calling it that Republicans !!!
Welfare is an Entitlment, Not Social Security..I have been paying into it for 30 years and that is MY MONEY when i am too old to work anymore !
and in regards to the articles comment about privatization..I totally agree, I would not trust Wall Street with my Retirment Money....the market is far too untrustworthy to gamble with the money i need to live on later in life !!!
The author gets some things right, particularly that the problem has many causes, but fails in the analysis which places 60% of the shortfall as a consequence of changes in income distribution. The reason is this: Just as the tax is limited to the first 110k or so, the future benefit one can receive is limited as well. That is, unless those who didn't pay on all their income while working get back a benefit greater than their tax would cover, then the fact they didn't pay more isn't the problem. That solution, that the cap be lifted, would change the program even further in the direction of welfare, of shifting wealth from those who earned it to those who didn't.
Maybe that is the direction we will end up going, since obviously this is not a nation where most people want to raise taxes on themselves when they could raise them on someone else instead, but it fundamentally changes Social Security, which is a collossal failure for many reasons, from a retirement insurance benefit, to a social welfare benefit. Maybe digging that hole even deeper isn't the solution?
More importantly, what's with the lady picking her teeth?
I do not think that Social Security is the great lie but the way Congress has messed with it the true potential of the program is limited. Congress has stolen the money and not adjusted the program for the extended life of Americans today.
I put my money in and now I am collecting my Social Security check every month. I worked many years and two of my places gave me annuities because they were bought out multiple times. Seventeen years for two places gets me $238 a month that will never change. I then invested in 401K plans but several recessions and stock market corrections have done little to make my money grow and in some cases, I lost money.
How is the average person going to save for retirement these days. Social Security has given millions of Americans at least a minimum base line to live on. We, who live on Social Security, are not exactly living the good life.
People cannot count on a company pension, they cannot count on the stock market as the insiders seem to really control the action and they cannot count on the government, what a fine pickle we are in today. Ever wonder if those clowns in Washington spent some actual time working on the problems of the nation instead of blowing all their time screwing the other party and running for election?
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