SS needs...

[Stephen Wyman <swyman@altavista.net>]

Folks,

There is a great deal to be done if SS (and the other "legs of the
retirement stool;" a.k.a. entitlements) are to continue to fill
their intended purpose of providing a safety net against poverty
for older Americans.

First, a reality check.  Government "Trust Funds" are so unique
that a private individual or company would be breaking the law to
run their Trust Funds in the same way.  The SS system is operated
as a "pay as you go" system.  In any given year the government
spends your FICA withholdings as they are received to pay out to
current beneficiaries.  If there is a surplus of SS funds, as there
has been every year since FICA withholdings were increased (early
in the first term of the Reagan Administration), the money is sent
to the Federal Government's General Fund and spent on current year
expenses.  The goverment issues special Treasury Bonds (a.k.a.
IOUs) to the various "trust funds" so that a pretense of a balance
is maintained in the "trust funds."  As expenses grow for SS (when
we Baby Boomers join our parents in retirement), and the day to
day expenditures exceed 'FICA withholding' revenue, the SS
administration will take their "bonds" back to the Treasury to be
cashed-in.  If there is no money available in the General Fund to
redeem the "bonds", then new bonds will be issued to pay off the
"special bonds" (same as paying off the Visa with the MasterCard).

All the politicians will tell you that there is a budget surplus,
so don't worry.  But while the elected ones were saying there was
a surplus the Federal Deficit grew over $70 billion from 1/1/98 to
12/31/98; go figure!

The problem is going to lead to a big economic melt-down (that'll
make Japan's current economic troubles pale by comparison) early
in the next century (before 2025) unless reality is faced, and
corrected.  If the problems are properly addressed within two years
there may not be any short/long term economic problems generated
by SS.  However, solutions require some tough steps  be taken by
our elected officials, and that may not be popular with large
segments of the electorate.  Since keeping one's job has proven
more popular with politicians than actually doing it, don't expect
much.

Historically, American's have been extraordinary at solving huge
problems, but only after the "fan" has been organically soiled
beyond deniability.  It would be truly wonderful if this forum
could help problems be averted, rather than waiting.