Ron, the "surplus" was $237 billion, but surplus was $87 billion. What's the difference? The Treasury borrowed $150 billion from the SS Trust fund. Where does he (and Bush and everyone else who wants to refund that money) think the money to repay SS will come from later when payouts require that money to be available to SS? Answer, in case they don't have an inkling -- income tax! Maybe that's when a light will go on for some people that the money was actually borrowed from somewhere.
wilmingtonstar.com
Suppose in 2001, the US Treasury again ended up ahead $87 billion dollars, but that the SS Administration needed to fork over $300 billion more than this year. That is, they not only didn't run a surplus, but needed every extra cent they took in during 2000 as well. That extra $150 is in the SS Trust fund, of course, in the form of IOU's received from the US Treasury. So, the Treasury gladly pays them back after issuing $63 billion dollars of T-bills.
So the way the government would report this, if they were consistent, is that 2000 had a surplus of $237 billion, and 2001 would have a deficit of $63 billion.
But in each year, the US Treasury took ran the same surplus of $87 billion.
In effect, what they are doing is shifting the burden for the SS payouts from now to the next generation via future income tax surcharges (or an acceleration of reported future deficits). And by depriving the SS Trust fund of interest (or the ability to invest), they are ensuring that the fund will go bust sooner.
Why would they do this, when it seems contrary to all the talk of shoring up the SS Trust fund? Why, it lets politicians say we have a huge surplus to brag about (Clinton) or refund (Bush)!
If there was a refund now, why not reduce the tax rate for SS? That would refund it to the very people who created the surplus. But you can't use trickle down hand waving and hand it to the wealthy if you do that... never mind!
So in the last 30 years, only 3 years of surpluses, including SS Trust windfall. In the last 30 years, including about 8 straight years of boom, only 1 solitary year of true surplus. Does that sound alarming, or what?
I think when boomers are retiring in droves, this situation will be horrific. Not only will there be a drag on the economy from the reduction in work force, but the necessity to issue debt to pay back the SS Trust fund at the same time could be overwhelming. |
