Social Security is in Trouble!
(June, 2011) According to experts, we have a broken entitlement system and Social Security is on the list. It has often been repeated that for our Social Security to continue in its current form, our government needs to supplement the funding. Of course, since our national debt is so large, conventional wisdom would say that our government cannot
afford to add the needed monies into the system. The experts conclude that we cannot kick the can down the road anymore; we need to act before it is too late. We need honest and tough politicians who will step up and make tough decisions.
Social Security is an issue that affects everyone and our elected officials do not seem to be working on a solution. In this light and since this is not a new problem, the PEA Party (People for Ethical America) decided to examine the problem and suggest some solutions. Our first stop was Google, and we found some very interesting facts. The history of
Social Security is actually very good, considering it is a government program. In 2010 Social Security was 75 years old and it was self-sustaining and never cost the tax payers a dime except for our payroll taxes. In fact, the estimates are that Social Security will be solvent until 2037. You may be saying to yourself, if Social Security is good until 2037 (that’s the next 26
years) why is it in trouble?
"You see, a lot of people in America think there's a trust, in this sense, that we take your money through payroll taxes, and then we hold it for you, and then when you retire, we give it back to you. But that's not the way it works. There is no trust fund, just IOUs that I saw firsthand, that future generations will pay." President George W. Bush,
April 5, 2005
Well, about 30 years ago, according to what we found on Google, Social Security had such large surpluses that our government started borrowing the money and replaced what they borrowed with IOUs. Our government is now saying that there are no current Social Security surpluses and for the program to continue, they, the government, would have to add
money (pay back) each year, money they do not have. This is like putting money in the bank to save for retirement and then the bank telling you they do not have it when you want to take it out. Actually, it is not like that because the banks are insured by the FDIC (the government). This might be a good argument for putting Social Security in a bank, I think… maybe - or just
Another way to explain this is that over a 30 year period the government has borrowed 2.5 trillion dollars from our funds. That is a lot of money. And each time they borrowed it they spent what they borrowed. To our government, the surplus Social Security funds were like their own slush fund. They did not even include the surplus in our national
budgets, that is until recently; this was probably just a little oversight. And now that the surplus slush fund has dried up they want to change the program. This sounds reasonable. If you ran a country and owed 2.5 trillion dollars and you could not afford to pay, what would you do?
Maybe the government does not understand that an IOU means I (the government) O (owes) U (us) the money! Of course these are not ordinary times, with the treasury empty and a national debt of over 14 trillion, of which 2.5 trillion is owed to Social Security. Actually the total public debt, (held by the public) is only 9.4 trillion. Does that make you
feel better? Another positive is that if the government defaults on the Social Security debt, the National Debt would be reduced by 2.5 trillion dollars. Conversely, what this also means is if the government would pay back the IOUs, they would have to borrow the money from another country to pay back the money they borrowed from Social Security. The Pea Party does not think
that borrowing money to repay money that was borrowed is a good idea.
Maybe, just maybe if our elected officials created a fix for the program - the result will be less Social Security funds for us, with a little left over for the government slush fund, then we could start all over again. No matter how congress would fix the program, if the program generates extra funds, congress would use them and we would be back to
our current problem.
If someone owed you money and they could not pay you, you could go to court and attach their salary – and in this case that might be a good idea. We, the people, could attach the salaries and retirements of every congress person, active and retired, along with the former presidents, until the 2.5 trillion dollars is paid back. If you think this is not
a good idea, then how do you describe "Being Responsible?" Another idea is that we could raise the maximum contribution level. Everyone pays Social Security up to an annual income of $106,800, which is a substantial amount. The problem could be fixed by raising the annual income level. Incomes over $106,800 could pay at half the rate and when the system is balanced, (when we
have sufficient funding) the rates could go down. The idea being to maintain a balanced system, so slush funds do not exist and we eliminate the temptation from congress to borrow our money. I am sure this idea would be met with resistance as an increase in taxes. However, this is an easy idea for me because I do not make that much
There is a constant debate in our society about how inefficient our government is and how government programs waste so much money. In a strange way, and it is strange, Social Security is a government program that worked for over 75 years. It worked so well it accumulated over 2.5 trillion dollars in surpluses. If the politicians had not borrowed the
surpluses it would have continued for another 26 years, without needing any changes. It sometimes appears that our government is very good at finding solutions to problems that do not exist, or problems that did not exist - until they fixed and/or created them.
"Things that are obvious are not necessarily true and many things that are true are not all obvious" Dr. Joseph LeDoux
Read other articles by Shannon Bohrer