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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: seventh_son who wrote (18801)12/16/2004 9:32:01 PM
From: CalculatedRisk  Read Replies (3) of 116555
 
Any underfunding of Social Security depends on the time frame used. In 1983, when Reagan addressed SS, payouts were within 5 months of surpassing income. That was a pressing issue.

Here are some simple facts under current assumptions (that are not in dispute):

1) Social Security currently takes in about $200 Billion surplus per year.

2) SS will continue to run a surplus until 2017. If you include the interest on the "trust" (all that surplus money that workers are currently paying), SS will run a surplus until 2026.

3) The SS Trust will be exhausted in 2042.

Obviously SS is not in "crisis". There is no immediate problem like in 1983. For those that claim we do not have to honor the SS Trust, let me ask: Why are we having workers overpay today? The SS tax falls mostly on lower and middle income workers (as a percentage of their income). If this is just another General Fund tax, then lower / middle income Americans should have a tax revolt!

To address a specific calculation, I would have to see their math. What time frame are they discussing? I've seen some people use 75 years; others have used 200 years to calculate the unfunded portion. That is crazy - things will be very different in 200 years!

I am a proponent of SS reform, but I think Bush's proposal is not helpful.
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