RE: Trust Fund cynicism - right mood, wrong target

[James <jamesk_51@hotmail.com>]

>From: "Steven H. Johnson" 

>>>>The short answer is that, yes, there's a serious phoniness problem, but the phoniness is with the Congress, not with the Trust Fund. And the fix is to take Social SEcurity completely off-budget, require it to buy all its investment securities on open capital markets, and end forever the practice of commingling retiree funds with government operating funds.  

>>>>If this isn't done, if a Chinese Wall isn't built between Social Security and the government's operating budget, then the American people will never trust Social SEcurity to invest their money safely.

>>>>Suppose an alternative arrangement had been created in 1983.....I'd prefer this.  It would be a cleaner arrangement.  But it wouldn't really make a nickel's worth of difference.  Not to Social Security.  Not to the Treasury.

>>>>What we're dealing with here is not fraud.  The assets are real.

>>>>No, the issue is not the phoniness of the Trust Fund.  The Trust Fund is real.  The issue is Congressional lying.

>>>>The cynicism around the Trust Fund is understandable, but misplaced.  It is not the Trust Fund we should be cynical about.  We should be cynical about the Congress. 


I agree with your point that the SS Trust Fund is real.  I have been fighting that battle myself.  But I am frankly puzzled by your assertion that the Congress is 'phony' or 'lying'.  Your own example demonstrates that the trust fund is indeed everything it should be.  It was private economists in the early '80's who convinced Congress, in a very public debate, that this was the proper way to account for gov't surpluses or deficits.  Indeed, the current 'surplus' indicates how much money the gov't will be ADDING to the capital markets this year.

Certainly there is something to be said for the alternate accounting.  No matter which method is used, the reality will be (and has been) fully disclosed in the accounting.  It always has been for those who are truly interested.  The people who allege that if we only knew that we really had a 'deficit' this year, we wouldn't have spent as much, need to get a grasp on reality.  For the last 30 years, we have spent money we didn't have, sometimes $300 billions worth in a year.

I am skeptical of anybody who tries to make a scapegoat out of the politicians on this matter.  We have had many elections since this decision was made.  Plenty of time for the people to have 'showed' the Congress that this is not what they wanted.  It doesn't seem to have been an issue that mattered to anybody.  There was no real reason for the Congress to 'lie' about anything.  The money in the trust fund is all there.  If the attitude of the masses was to leave all the minor accounting details to the politicians and beauracrats, as long as everthing was accounted for properly, then they got their wish. If they want to change their minds now, they can't blame the Congress.

If people are not capable of understanding a simple matter like this (and I believe they ARE), then there can be little hope for an intelligent discussion of the real issues surrounding SS reform.