There is a great deal to be done if SS (and the other entitlements: medicare & medicaid) 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 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 (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 government 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 by more than $70 billion from 1/1/98 to 12/31/98; go figure!
The problem will 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, Americans 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.
