Skip to comments.Carrie L. Lukas: Guess what else is structurally deficient
Posted on 08/17/2007 9:35:27 AM PDT by ReleaseTheHounds
People wonder how government could ignore problems like those that led to the Minneapolis bridge collapse, but the truth is that officials have long been turning a blind eye to many looming disasters besides the nations roughly 75,000 structurally deficient highway spans.
Consider our Social Security system. Each year, the nonpartisan Social Security Trustees details the programs sorry financial prospects. The latest report concluded that the program which consumes more than one-fifth of the total budget will begin paying out more in benefits than it takes in as taxes in just 10 years.
At that time, Social Security will begin drawing down its trust fund, which means it will demand additional tax dollars from the general revenue to meet its obligations. By 2041, when the trust fund is exhausted, Congress will have to hike payroll taxes or starting slashing benefits for seniors.
Congress has known about this problem for decades. You could choose any trustees report from the last 10 years, and, while the dates and numbers may change slightly, the bottom line remains the same: Social Security is structurally deficient.
Social Security isnt like climate change, where countless factors affect weather trends, human action competes with nature, and trend lines must be discerned from thousands of years of information. Social Security is straightforward. How much money goes into the system depends on how many people are working in the United States. How much is spent depends on how many people qualify as beneficiaries.
The trends that determine these outcomes are already in motion. People are living longer, which means they are collecting more Social Security checks. The baby boomers are getting ready to retire, dramatically expanding the ranks of the retired.
And fertility rates in the United States have been, and remain, relatively low, which means there are not enough workers coming into the system to pay for the growing number of beneficiaries.
Unless there is a major, unexpected demographic shift, we can predict Social Securitys future. Social Security began as a pyramid, but increasingly resembles a tower. The pyramid, with its wide base, could stand; a top-heavy tower cannot.
Policy-makers know this but have failed to act. Of course, a financial crisis in Social Security isnt like a bridge collapse. No one will lose his or her life. Yet it will have serious consequences for the economy. It has real meaning for those who are counting on Social Security for retirement income and workers who will have to pay to prop up the ailing system.
There have been countless hearings and commissions to study the problem and consider potential solutions, but the essential options are limited. Policy-makers can increase revenues into Social Security by raising taxes, issuing new debt or cutting other programs to free up money.
They can also reduce benefits by raising the retirement age or providing lower subsidies to more affluent seniors. Or they can fundamentally alter the system to prefund future benefits so that beneficiaries no longer depend on incoming tax revenues for their payments.
Only the last option will make this program structurally sound. So long as Social Security remains a transfer program, taking from one group to give to another, it remains vulnerable. The only way to know that obligations will be met is to prepare to meet those obligations immediately.
This year, once again, the trustees calmly urged policy-makers to take action to address Social Securitys looming problems. Doing so is fairer: It will allow for a gradual phasing in of the necessary changes and for adjustments to be spread over more generations. There is another virtue in timely action.
Ten years down the road, policy-makers wont have to answer the most uncomfortable question. Why have you ignored this problem for so long?
Carrie Lukas is the vice president for policy and economics at the Independent Womens Forum and the author of The Politically Incorrect Guide to Women, Sex, and Feminism.
If they're doing such a p@ss poor job of managing the money they already have, what makes them deserving of more?
When Bush proposed looking at private accounts for social security a couple years ago, Democrats were against it, and many denied that Social Security has any funding problems. Nancy Pelosi has said that funding for S.S. is fine until 2041, meaning the date of the trust fund being exhausted. Unfortunately, the politicians kick the can down the road.
As they say, there are a few basic options, and one or a combination of them will happen.
1. Start raising the retirement age for full benefits.
2. Make Social Security “means tested” so that more affluent people get a lesser benefit.
3. Reduce benefits
4. increase payroll taxes
5. have the system sell bonds on Wall Street to raise money
6. invest the trust fund money in the stock market to get greater returns.
7. Run the government money printing presses overtime to pay all promised benefits, but increase inflation by doing so. This results in paying all promised benefits in dollars with less buying power.
Some combination of the above will happen in the future. Some future presidents and Congresses will have to do something to “balance the budget” of the Social Security fund.
Where in your list is the “allow workers to establish private accounts with a portion of their social security taxes” and allow them to be invested in our capital markets? That option would (along with some of the modifications in your list), over time, transition the system to being self-funded and without the mega-shock that the system will have to go through since the required reform has been “kicked down the road”.
Notice that the Dems just can’t bring themselves to address this obvious “structural deficiency”. They are happy to embrace the call for massive policy changes to address “man-made global warming” (based on those flimsy climate models) but ignore this looming crisis. I guess they know the mainstream media will never hold them accountable.
Everyone who already knows this has an alternate retirement “plan”.
When Social Security was established it was set up as a trust — it didn’t take long for the politicians from both parties to loot it.
The brains of moonbats, Democrats, and RINOs are structurally deficient. Unfortunately, there are a large number of politicians that fall into one or more of the aforementioned categories.
You’re probably right... Any thoughts for the tens of millions of Gen-X and Gen-Y adults who will face tax-rate rises of 10-20-30% in order to pay the Social Security benefits for us Baby Boomers? Hopefully, they are saving as much as they can for their own “alternate” plans, but the Social Security System they will inherit will probably have negative returns for the 13-15-20% of their income that will get siphoned off from their wages and the contributions of their employers. Not a very good deal, eh?
The reason SS began as a pyramid is real simple - IT IS AND HAS ALWAYS BEEN A PYRAMID SCHEME! Sooner or later all of them go belly up.
If this were done by a private entity instead of the gov't, everybody from FDR on who has served in this gov't would be cooling their heels in a jail cell.
I figured this out in my early '20's when I started to wonder where the $ went that I never saw in my paycheck, and I began to make some inquiries. It's not like the info hasn't been available since day # 1 of this gov't PYRAMID scheme; nobody asks because they don't want to hear the answer and choose to be surprised when it hits the fan and everybody discovers they've been ROBBED.
*APPLAUSE* Carrie tells it like it is, as always. Thanks for the ping! :)
As for me and my house, we’re not counting on dime-one from SS, even though we’ve both paid in tens of thousands of dollars over the years. We’ll be of retirement age around 2025, so I’ll consider it “gravy” if one or both of us can claim it. Right now, my husband and I are both working to support SIX of our parents (three originals, three “steps”) and most likely a few other strangers as well. Between the six of them, they’re siphoning off about $5K total each month, tax-free from the SS Coffers.
Now, multiply that by the continually growing population of Seniors and the dwindling number of Worker Bees out there and you can easily see the problem!
I, too, would like to see SS completely abolished, except for widowed women raising their offspring, or the truly disabled, and any Veteran with any problem from a hangnail to mental illness. ;) (I’m a Vet.)
And NO money whatsoever in any form to illegal criminal invaders of the USA or their Anchor Babies!
Anyhow, I just paid in another 50 bucks that I could’ve had in my OWN pocket to invest in my OWN retirement fund this past pay period.
Thanks again, Big (Useless) Government! Grrrr!
It’ll be certain death for any national health care plan.
No, SS was never a trust. It was a Ponzi scheme from the get go. Google on Ida Fuller.
If you think SS was indeed set up as a “trust fund” simply because FDR put “trust fund” in the title, I have a bridge to sell you.
What does the Dept.of Treas. really do anymore? I don’t think they are nearly as powerful as they once were. But social security contributions were budgeted separately (honestly that is) until 1968 when Johnson administration budget officials wanted to tidy up the books. It’s really no different than local city officials who raid one solvent department to pay for another budget hole.
No, Social Security was never a trust fund. It was pay-as-you-go from the beginning. FDR labelled it a “trust fund” as a means of selling it to an American public that hadn’t yet been habituated to the dole, but that didn’t make it so.
My husband and I, both genX, are certainly trying to save on our own,but you know how difficult that is. Once we shell out monthly for taxes and SS, health insurance, dental insurance, and all of life's other necessities, there is hardly anything left over. And by necessities, I mean just that: Mortgage, auto payment and insurance (for just one vehicle), utilities, groceries. I can't remember what "disposable" income is. I don't know that we ever had it.
Hubby has our retirement savings auto-deducted from his pay, at a rate (IIRC) of 1.5% of his gross, with his company matching funds. In six years, that has come to a current total of jsut around $11,000. Sure would be a lot more if we could divert some of our SS snatch into the mix, but the gubmint doesn't trust peons like us with our own damn money.
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