On 12/17/2012 11:53 AM, Richard Ruquist wrote:
On Mon, Dec 17, 2012 at 2:30 PM, meekerdb<meeke...@verizon.net> wrote:
On 12/17/2012 10:14 AM, Richard Ruquist wrote:
In addition the United States has been borrowing from what we own. Our
indebtedness to ourselves from borrowing from the Social Security Fund
that was set up in Reagan's Administration is double our indebtedness
to China for example. My perspective is that the fund is a Republican
means to limit the effectiveness of Social Security. It's against the
law to borrow from it but that has not stopped the borrowing.
It's not against the law. It's exactly the opposite. The law as set up in
1934 requires that any SS surplus be invested in Treasury Bonds, i.e. loaned
to the U.S. government. This was very sensibly set up so that the SS would
not be influencing the stock market by investing (picking winners and
losers). The SS trust fund is always held as Treasury Bonds. That has no
effect on the debt. If the government weren't loaned that money it would
just have to borrow from somewhere else. And it doesn't mean SS is broke.
SS built up a surplus in anticipation of the baby-boomers retiring. Now
it's paying out the surplus and the Treasury will have to borrow from
elsewhere or tax to meet it's bond obligations (to SS and every other bond
holder).
Brent
You are right about the law. My first article read on the Trust Fund
was incorrect in that regard. But the Trust Fund is "off-budget",
sorta like funding of the Iraq war was off-budget.
Also wiki claims that "However, due to interest (earned at a 4.4% rate
in 2011) the program will run an overall surplus that adds to the fund
through the end of 2021." and Wiki expects the Trust Fund to be
entirely depleted by 2033 at which time benefits will drop by 25%. It
seems unfair if retirees have to take such a cut now to balance the
budget.
The problem is easily fixed by raising the FICA ceiling. It was set at 106K$ the last
time the FICA was adjusted in the 80's. It should have been indexed to inflation at that
time.
Brent
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