Financing of Social Security

[Stephen Cohen <aaces@hotmail.com>]

Six questions:

1) FICA taxes were designed to be sufficient to provide a benefit 
to the non-working spouse of a working spouse.  Now both husband 
and wife work and contribute. What has happened to all the 
additional funds from the previously non-working, but now-working, 
spouses?

2)In the FAQ it is stated, "What interest rate does Social 
Security earn on our money?
"According to the 1998 Trustees Report, the effective annual rate 
of interest earned by the assets of the Social Security 
retirement and disability funds during 1997 was 7.5%"

The latest data I've seen stated that the current rate of return 
is 2% or less, compared with 5+% for private investors in Federal 
securities.  Please explain the discrepancy.

3)  The Administration admits it sometimes improperly pays 
benefits.  As it has a fiduciary responsibility, shouldn't any 
improper payments be reimbursed to the fund through general 
revenues or legal actions?

4) Senator Moynahan, a few years ago, was seen on several 
nationally televised programs claiming that the SS tax was too 
high--more was being collected than was needed.  

What happened to all those "unneeded" contributions?

5) Almost half the time that I have requested SS earnings reports 
on my and my wife's contributions, the values quoted us were 
wrong--low each time.  One can therefore surmise that the SS 
Administration has paid less benefits than it should have to all 
those people who never had their contributions corrected.

Where has all the money gone?

6) We are told that there are an unusually large number of 
children reaching school age.  At about the time the SS account 
is suppoosed to be inadequate, they will be adults with jobs, 
contributing to the account.

So what is the problem?  Could it be that there is an 
expectation in the Administration that either the jobless rate 
will be high or that the median income will have declined due to 
global competition?

Sincerely,

Steve Cohen