<<Yes, the first recipients paid little into the system compared to the benefits they received. That is where the actuarial unsoundness first crept in.>>
It's not unsound when you see it as it is: a program that transfers wealth from one generation to the next.
<<I personally don't put very much faith in a "contract"
which has terms that can be changed based on the whim of politicians!>>
I agree. But i'm not stressing the concept of contract as much as i'm pointing out that SS isn't a retirement program.
It's a transfer from one generation to the next, there's no interest to be earned only the expectation that the following generation will subsidize you when you retire.
SS also pays benefits to widows, orphans, and the disabled. So it's an insurance program too.
<<And the American people naively voted for politicians
to confiscate their money in the form of SS taxes with no _real_ contract to ever receive a future benefit. They were too stupid or lazy (or both) to care.>>
They trusted Reagan. He raised payroll taxes substantially supposedly with the intention of shoring up the system. But now his political heirs are running around saying, "that money isn't really there."
<<Pinning the entire problem on George Bush is ludicrous. This problem has been building for decades. What about people who have had their benefits reduced (and their SS taxes increased) by prior actions years before Bush even came into office? Do you not consider these prior actions
to be "broken promises"?>>
No, Bush is the fist one to have a Presidential commission say that SS is in trouble in 2016. Why 2016? That's when SS will begin to redeem its treasury notes.
If the full faith and good credit of the US government can be counted on and we honor the portion debt held by SS, then the program is entirely solvent until 2042 and that's using conservative growth projections.
If they use growth projections more in line with what the Bush administration uses for budget forecasting, SS never goes broke.
<<Bush has advocated some form of privatization, which
would be a start of "giving it back" to people>>
Privatization is just completing the theft.
<<The Treasury debt will be honored.>>
Then why did Bush's commission say SS is in trouble in 2016, when that debt will start to be redeemed?
<<SS is supposed to be a self-sustaining program. That is the "big lie" that the politicians have been touting for years.>>
If SS can count on that more than $1 trillion in surpluses that the fed has borrowed, then it is self-sustaining for at least 40 years, and probably much longer.
<<The level of income taxes (or estate taxes) is supposed to have no bearing on the SS program.>>
Exactly! And this is why using SS surpluses to justify cuts in income and estate taxes is so dishonest and irresponsible.
Those Bush deficit projections would be another $200 billion higher if they didn't count the SS surpluses.
And when you consider that his projections don't count the cost of the war, or the making permanent of his tax cuts which he has already said he wants to make permanent, you can see how much higher our debt is going to be. And when you realize that that the administration has been constantly low-balling their estimates, well who knows just how bad this will get.
Steve |
