RE: Social Security Roundtable

["Steven H. Johnson" <info@sscommonsense.org>]

Mr. Shea-
Your comment suggests that the solvency issue could be solved
for quite a long time if the nation takes two steps.  1) Adopting
President Clinton's plan to contribute 62% of the surplus to the
Trust Fund.  2) Raising the earned income cap.

My question is this.  Aren't you confusing "actuarial balance" 
with genuine solvency?  Actuarial balance, as Social Security
actuaries use the term, simply means that the system won't be 
bankrupt for the next 76 years.  If it's due to go bankrupt 77
years from now, it would still be "in actuarial balance."  At 
least as of today.

Genuine solvency, to the man on the street, is quite different.
Genuine solvency means that the Social Security Trust Fund is
just as strong in 2075 as it is in 2050.  Genuine solvency means
that the flow of earnings from the Trust Fund (or from PRA's, or
from a combination of the two) is sufficient to finance the full
gap between receipts from taxpayers and expenditures on 
beneficiaries, not just in 2050, but in 2075 as well.

It seems clear to me that you're relying on the first definition,
the actuarial balance definition, in making your point.  What
you propose isn't really a solution, it's merely a postponement
of the bankruptcy date.

A true solvency test is a stiffer test.  I don't think your 
proposed solution passes it.  If the nation adopts your
proposal, I don't think we'll have a Trust Fund that's just as
sound and durable in the year 2075 as we'll have in 2050.
In fact, I think we'll have a Trust Fund that's on the verge
of bankruptcy in 2075, if it hasn't already gone bankrupt.

I look forward to reading your response.

-Steve Johnson