RE: Financing of Social Security

[Michael Jones <powderfinger99@yahoo.com>]

<<<
Where has all the money gone?
>>>

This is a good question. I don't know where all the money
goes that is paid out in benefits (it wouldn't surprise me
if they abuse the system).

But, the system currently pays out more than it takes in.
By law, all excess contributions are "invested" in treasury
bonds. Currently, the SSA has about 800 Billion in treasury
bonds which are the excess contributions (plus interest), 
accumulated since 1983.

There is quite a bit of political rhetoric about how the 
financing is an accounting "gimmick", or that the government
"raids" the system to pay for other programs. The rhetoric
hids the real issue.

Bill Clinton, Rep. Thurman, Dick Gephardt, and most other 
liberal Democrats are fighting a battle to keep control of
this money inside Washington. And it's incredible sums of money.

The Social Security system starts to go broke in 15 years. But
before that happens a liberal Democrats dream will occur. For
the next 15 years the SS system will not only be running surpluses,
but the other part of government will also be in surplus (the
non Social Security operating budget), starting at about 2001.

The total amount of excess money is expected to be TRILLIONS
over the next 15 years. Now, do you think that any self-serving
politician would let that money be invested outside of government
if at all possible? Remember when you or I, or Social Security 
buys a bond from the government, you are loaning the government 
money to spend. Why would Rep. Thurman want to let this money go
to private investment? What incentive does she have? None. She
and the other Democrats want to continue to spend all the excess
receipts on government programs.

Clinton's plan to "save" Social Security does carve off some small
percentage of excess money to create USA's. From the looks of
the plan, most people will get accounts invested in government
bonds, unless they chose otherwise. The plan effectively allows
the government to continue to spend not only the excess from the
12.4% payroll tax, but all the expected operating budget surpluses.
If his plan ever went into law it would effectively make the 
surpluses a "new" tax, since all that money would be spent and
committed by law on the new program. 

It's all about the money. They want to continue to "invest" all
the excess money in government. Reformers offer a very simple
alternative: contributions should be invested in private 
market enterprises which create real wealth. We can argue about
whether this should be stocks, bonds, or whatever. We can
argue about what money and how much. What you won't find
an argument about is that investing in government is not
the solution.

The government can only pay back those bonds a couple of ways:
tax more, spend less, borrow more, find more tax payers. It this
the path we want to take to secure our retirement? Where will
we get the money to pay back all those bonds, if in fact all the
excess money is invested in government? There are only four
choices listed above.

Privte sector investment creates real wealth. Government does not.
Think what all those trillions could do for the US and world 
economies.

Michael