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Stew Lilker’s

Columbia County Observer

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Will Social Security Last for Gens X, Y, Z?
Some say no; Some say fixes are minor

Posted May 07, 2012  07:40 am

By Stephanie Carroll Carson

WASHINGTON, D.C. - Social Security is going broke three years earlier than last year's projection, according to the annual report by the Social Security Board of Trustees. Some are sounding the alarm bell for major changes, while others say needed fixes are minor.

Links of interest:
• Social Security Works
• Daniel Patrick Moynihan "The Fox Is Back In The Chicken Coop"

The report released last week predicts that trust fund will be exhausted by 2033, compared with 2036 in the 2011 projection.

However, Social Security Works co-director Nancy Altman says the program's foundation is strong, and can be made solvent with some modest changes.

"There are many, many ways to bring that additional revenue in. It is a program that works and we should be strengthening it and building it, rather than dismantling it."

One suggestion by some policymakers is to increase the tax cap, which now stands at $110,000 per year; no contributions go into Social Security for annual income above that amount.

According to the National Academy of Social Insurance, three in four Americans - across age groups and party lines - say it is critical to preserve Social Security even if it means asking working Americans to pay higher taxes to do so.

Some economists and policymakers suggest keeping the current program for those 55 and older, while offering younger workers the chance to invest over one-third of their Social Security taxes into private retirement plans. Altman sees this as the wrong approach, adding that the program is efficient the way it is.

"It covers everyone on a mandatory basis. So, if you start allowing people to opt out, it sounds good, but it would ultimately cause the whole system to unravel."

Altman believes the program is strong, and provides guaranteed benefits - unlike people's 401(K)s and home equity. 

Links of interest are added by the Observer

Comments  (to add a comment go here)

citizen49a takes exception to Social Security, posted May 10, 2012:

Excuse Me

"Social Security Works co-director Nancy Altman says the program's foundation is strong, and can be made solvent with some modest changes."  Excuse me!

The Social Security system operates on the model of a classic Ponzi scheme, with payments from the new suckers going out the door to satisfy claims of the seasoned suckers. How long can this continue in an era where population is declining and incomes and employment are falling?

Maybe it has somehow escaped Ms. Altman's notice, the federal debt has more than doubled in the last ten years and the Federal Reserve now has to employ all sorts of trickery to purchase much of the new debt issued by the government because nobody else wants it.  Social Security is like an add-on to all this existing debt liability. It doesn't get counted when they are toting up what the feds owe.

Does this sound like a "strong foundation"? It looks more to me like a slow motion train wreck that is past the tipping point and heading into terminal acceleration to destruction. I think it's self evident that there are changes afoot, but I don't see how they can be characterized as "modest."

"Increasing the tax cap." I think this "suggestion" pretty well sums up the basic mechanics of all the ways to bring in additional revenue. They all involve some variant of taking money from someone else and redistributing it to Social Security recipients. How long are the young people in this country going to put up with having the blood slowly squeezed out of them by the older cohort as their wages decline, unemployment persists, and the tax base further erodes due to declining population?

Social Security is part of the legacy of the era of the welfare state. It is based on piling up debt to give money to one and all, while perpetuating the privilege and wealth of those at the very top. That game is over.

What comes after is not clear yet, but propagating the myth that Social Security is going to exist in it's current form, distributing funds with it's current largess to the senior class, the disabled, and others is misleading, dangerous, and irresponsible.

There are people who plan their lives based on this sort of misinformation, but that doesn't bother people like Ms. Altman who propagate it.

 

 
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