RE: REFORM GRADUALLY

[Michael Jones <powderfinger99@yahoo.com>]

<<<<
Perhaps it would be unwise to
make major changes to the SS program too soon. 
>>>>

For the younger workers, reform can't come too soon. Any reform
for these workers will offer them a real possibility of getting a
benefit in the future. Since time is on their side, the cost for
these workers is relatively low. Waiting will cost these workers
more.

<<<<
There is great 
concern that the Trust Fund not be used to fund other government
projects and that interest be paid on funds borrowed and allowed
to compound.  Wouldn't that go far to ensure adequate funds at a
future date?
>>>>

There are many good posts on the other forums which describe the
mechanics of the SSTF. In a brief summary, the SSTF is just an
obligation to be paid from the Treasury. There are not real assets
in the trust fund, just obligations from the Treasury. All the
money put into the SSTF is spent by the government on other programs.
The SSTF holds IOU's from the Treasury which are to be paid in the
future with interest.

When the SSTF is used to pay benefits, they call in their bonds
which are payable by the Treasury. Under this scheme, the real test
for solvency is the date at which SS will need to call in these
bonds. At this point, the Treasury will need to come up with the
money to pay the bonds + interest. On or about 2014, the FICA taxes
will not be enough to pay benefits and bonds will have to be redeemed
by the system. It is at this point that the Treasury will need to
come up with the money to pay back the bonds. This is the date when
the system starts to go bust.

Michael