Not to mention that there are going to be a bunch of us around in 2042. I'll be 78 then, and I plan on being here then and for a while after.

Gee...2018. Lemme check...yup, thought so, my projected retirement date is 4/1/2018. Yes, I purposely chose April Fool's Day.

It is almost depressing that so many ostensibly educated people cannot grasp that Social Security bonds are merely a promise by future Congresses and, in turn, future taxpayers to fund the lifestyle of retirees at some future date, and that defaulting on such promises will carry very different ramifications than a default on bonds held by entities other than the U.S. government. In fact, it may turn out that defaulting on the S.S. bonds makes the U.S. more credit-worthy, and lowers interest rates; precisely the opposite effect of a default on "real" bonds.

Shhh! The voters aren't supposed to know that about the trust fund.

Signed,
Democrats and Republicans

If social security is to ease the poverty of eld, then it should be means tested. Calling it "insurance" is just plain quaint.

We've all heard about the trust fund and how it's full of IOUs. But are these IOUs actual T-bills? Does this represent money the government is lending to itself and accounting for? If it is, then we're okay -- because those bills aren't forever, they're 30 or 50 years in maturity and they pay interest. At the moment, the government may be sucking the money up again as fast as those bonds come due (simply by rolling the bills over another 30 years) but when we move into crunch time, we could simply stop "borrowing" from the trust fund.

That will be painful, sure, but it's a far cry from having to actually fund the thing from scratch.

If, however, they have created some kind of non-interest-bearing, non-callable, open-ended security in lieu of a plain old T-bill and stocked the Social Security trust fund with those, then we're in deep shit after all, and we have to accept that the only way to make Social Security payments after 2018 will be to have them come out of the general fund -- i.e., discretionary spending, paid for by this year's income and payroll taxes.

"No taxation without representation" was a pretty good slogan (still is, in DC). What about the converse? "No representation without taxation." Senior citizens in the U.S. vote like crazy. They dominate Florida. They have such huge voting clout that politicians are incapable of saying no to them. Prescription drugs, free. Social security forever. Don't worry about paying for it.

That's going to get much, much worse when the baby boomers get old. I don't want to be paying their alimony checks and their viagra bills out of my taxes! They're the ones spending their Social Security surplus now -- why should they then be allowed to collect it later, out of my paycheck?

So how about this: restrict voting privileges in the U.S. to members of households with earned income above $5,000 per year. Interest, dividends, Social Security don't count. No representation without taxation.

Ben

No, ben, these are not the same intruments sold on the open market; if they were, interest rates would be considerably higher. Furthermore, it makes no difference if they are "interest-bearing", since it simply remains a promise to be fufilled by future taxpayers.

Any bond, whether it be, corporate or government, is simply an I.O.U., a promise to repay at a future date with some amount of interest tacked on. The only thing that makes this promise worthwhile is the deterrent effect on the bond issuer, in the form of the cost of default. The U.S. doesn't default on the bonds it auctions because the net cost of doing so, in the form of higher interest rates and economic chaos, vs.the savings gained from no longer making interest payments, would be extraordinarily high. SS bond default is much more possible, and, in fact, probable, particularly when the cost of honoring the bonds becomes more costly than defaulting on them. As I stated above, defaulting on the SS bonds would probably make the U.S. government more credit worthy, and actually lower interest rates. There isn't a chance in hell that those promises will be completely honored.

A scene from "Dumb and Dumber" comes to mind regarding the "and the Treasury bonds in its trust fund" line.

What we need is a lock box. Yeah, that will do the trick...

But even under their rosey projection, taxes need to be raised now.

AND

they assume savings from reduced educational costs.LOL

Each accounting entry has two sides, so does the trust fund:

The flip side is that the national debt is overstated by the debt to the trust fund. We don't owe as much as we say we owe, because some of the debt is fictional debt to ourselves.

Bill Buckley put it brilliantly when he said that the 'Lock Box' bore as much resemblance to reality as thirteen-year-old girls writing Valentines to themselves.

Hey, all we need is those 2.6 million or whatever jobs to appear out of nowhere, and the problem will be solved! _Their_ payroll taxes will cover the SS shortage! I know - let's build a new Cabinet department for securing our homeland, and the gummint can hire 2.6 million people to run it!

Aw damn....

Legion, keep pointing out your ignorance; I love it. There is no current shortage in SS. It's all about demographics. 100% employment wouldn't help (as if that would even benefit the economy), that's why we're concerned.

TO: Stephen Green
RE: My Limited Understanding....

...of the Social Security system tells me that the way they collect the money is not in need of an overhaul. That seems to work VERY well.

The problem is that Congress needs to stop ripping the Social Security funds off and misallocating them to unrelated activities.

Regards,

Chuck(le)