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Aug-16-2010 17:05printcomments

Social Security: If It Ain't Broke, Don't Fix It

We may need to strengthen an already solid Social Security program but one thing we must not do is privatize it.

Social Security
Salem-News.com

(SAN FRANCISCO) - Privatization of the Social Security program (Program) raised its ugly head again. The annual report of the trustees of Social Security (Report) states that, because of high unemployment, the Program will pay out more this year than it collects in payroll revenues.

If the current rate continues, the report goes on to say, the Program's reserves will be exhausted in 2037. Of course, no one can predict the path of the U.S. economy between now and 2037. If we have a series of boom years, the annual reports for the next several decades might show a reversal of payouts versus payroll revenues. Seizing on this Report, the Republicans threaten to revive efforts to privatize Social Security if they gain control of Congress.

There are many untrue myths about Social Security that have been floating around for years. The organization MoveOn.org provides "reality" answers to five of these myths ("Top 5 Social Security Myths.") The first old myth has been seized upon again in light of the release of the recent Report. That is, Social Security is going broke. As MoveOn notes, by 2023, Social Security will have a $4.3 trillion surplus. It can pay out all scheduled benefits for the next twenty-five years with no changes whatsoever. After 2037, it willl still be able to pay out 75 percent of scheduled benefits without any changes. Why? Because the Program started preparing for the Baby Boomers retirement decades ago.


The second myth states that the U.S. will have to raise the retirement age because people are living longer. This is simply untrue. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is largely because fewer people die as children than they did 70 years ago. What's more, what gains there have been are distributed very unevenly. Since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half. Raising the retirement age would be the same as an across-the-board benefit cut.

The third myth states that the only way to fix Social Security is to cut benefits. But as indicated above, if Social Security ain't broke, don't fix it. However, if the U.S. wants to strengthen Social Security, there is a better way to make the wealthy pay their fair share. Right now, high earners pay only Social Security taxes on the first $106,000 of their income. If the very rich paid Social Security taxes on all of their income, Social Security would be sustainable for decades to come. But conservatives insist that benefit cuts are the best solution because they want to protect the super-rich from paying their fair share.

The fourth myth states that the Social Security Trust Fund has been raided and is now full of IOUs. This is simply untrue. The Social Security Trust Fund isn't full of IOUs. Rather, it contains U.S. Treasury Bonds backed by the full faith and credit of the U.S. The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. Remember when President Bush wanted to put Social Security funds in the stock market, which, given the recent financial crisis, would have been disastrous? Luckily, he failed. Thus, the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are safe from stock market ups and downs.

The final myth states that Social Security adds to the deficit. Untrue. By law, Social Security funds are separate from the budget, and it must pay its own way. That means that Social Security cannot add to the deficit.

We may need to strengthen an already solid Social Security program but one thing we must not do is privatize it. If the Democrats are smart, they will use this Republican threat to privatize to shore up their standing with retirement-age voters, which make up about 40 percent of those who vote in midterm elections.


Salem-News.com writer Ralph E. Stone was born in Massachusetts. He is a graduate of both Middlebury College and Suffolk Law School. We are very fortunate to have this writer's talents in this troubling world; Ralph has an eye for detail that others miss. As is the case with many Salem-News.com writers, Ralph is an American Veteran who served in war. Ralph served his nation after college as a U.S. Army officer during the Vietnam war. After Vietnam, he went on to have a career with the Federal Trade Commission as an Attorney specializing in Consumer and Antitrust Law. Over the years, Ralph has traveled extensively with his wife Judi, taking in data from all over the world, which today adds to his collective knowledge about extremely important subjects like the economy and taxation. You can send Ralph an email at this address stonere@earthlink.net




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Ralph E. Stone August 18, 2010 6:39 am (Pacific time)

First, I have a problem with commentators hiding behind an anonymous label. Have the courage to come out an identify yourself. You obviously did not look at the citations for Moveon.org's debunking of common social security myths. Look at the MopveOn website. Moveon.org did its research. Where's yours?


Anonymous August 17, 2010 12:08 pm (Pacific time)

TREASURY BONDS??? LOL, LOL, LOL, LOL!!!! china just got rid of 80 billion and plans more, the dollar has dropped and continues...the federal reserve bank has to print money to buy them because nobody else will, obama had to push people to take bonds for their tax return because they are worthless to anyone who actually understands monetary policy.. If ANYONE thought that t-bonds were going to be lucrative, the federal reserve bank would not have to print up money out of thin air, devaluing the dollar, to buy them. They are worthless. I am sorry Ralph, but you should really do your research, and NOT USE MOVEON.ORG TO DO IT!


Anonymous August 17, 2010 12:02 pm (Pacific time)

moveon.org is where you get your info? Dear lord help us all. I dont get my info from left or right wing extreme websites. I search for independent truth, and this article has so many holes in it...dear lord. This is exactly why I say forget this left/right, domocratic/republican hoax that was created to blind people from the truth. It was friggin planned.. Clinton spent the surplus, research it, social security is broke, and now they want your pension plans. People better wake up. Fast.


Anonymous August 17, 2010 8:48 am (Pacific time)

What reserves? Is that the "Lockbox" cash Gore was talking about? Considering that over 100 million Americans have a vested interest in the stock market, and investments in a multitude of other areas, we are all in the same boat. When you take in spouses, children and other family members practically all Americans are involved in the above mentioned investments. The increasing demand on SS, which will soon shoot up even more next year when the first baby boomers turn 65, we need to re-think this system. It will go belly-up long before the time the writer here has suggested. Many ideas out there on how to do it, and most make it a total volunteer process. I recall when Bush pushed for Medicare Part D, everyone, in all parties, stated that it would go way over budget. Just the opposite happened. The same people who designed that program also have ideas on how to re-design SS. We should air all ideas, and keep the politics out of it. To think a radical group like moveon.org can provide any rational analysis to the SS proces is absurd. They are poliical hacks, and very bad ones at that who are funded by a naturalized felony-convicted pro-Israeli, who profits on selling U.S. stock and dollars short. He did the same thing in Europe, he is a person who lives off misery.

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