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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: RMF who wrote (375901)	4/3/2008 12:25:29 AM
From: i-node	Read Replies (1) \| Respond to of 1578283

I'm pretty sure that Social Security STILL brings in more than it pays out. The trouble with it is that it has never been allowed to use it's surplus to create income, isn't that true? If they had kept the funds Totally Segregated from the beginning wouldn't they have Trillions of dollars in there now? No, it doesn't work that way. Segregation of funds really doesn't matter, because when SS funds are spent for other purposes, there is a receivable created and that receivable will be paid when the funds are needed for paying benefits. It is one of the ways SS earns money -- by lending out its cash reserves. The real problem is the confusion over the term "surplus". You can have a surplus of cash (SS does have that now) yet still not have sufficient funds to pay future liabilities. This is the situation with SS. The basic problem is that money being contributed to SS now should be going to fund the pensions of people who are NOW contributing the money; however, that isn't what's happening -- the funds that are being contributed now are going to pay the benefits of CURRENT retirees. When the term "surplus" is used with respect to SS, it is referring to cash in the bank. But if you consider the amount of money that is owed to future retirees, SS is technically insolvent now. This is why accountants don't use cash to measure income; cash is not an appropriate measuring stick for a "surplus"; you have to take into account (in the case of SS) any unfunded future pension liabilities, which are not reflected in cash. Use of the term "surplus" to represent "cash" is merely a way of keeping commoners confused. Back in the early 80s, the problem was the same -- and when Congress "fixed" SS then, it was still actuarily unsound, and the actuaries knew it at the time, but Congress was convincing with its claims about "surpluses" (which really weren't; they were merely an excess of cash collected to date over money paid to date, which doesn't give account to the money owed the baby boomers).