We are non-commercial, all volunteer and supported by our readers. Please help sustain the Dew by making a donation.
Social Security and the “Lock Box, A Delayed Solution”
When Social Security (SS) was signed into law in 1935, the poverty rate among seniors exceeded 50%. As far as I know, there were no private retirement programs at that time. Unless a senior was wealthy, they either had to work until they died or depend upon family to care for them. I will not go into the discrimination (against women, minorities, and certain types of employment) that was later legislated out of the original bill but, in general, for the first time this country took a stand that protected many, but not all, of the elderly from abject poverty. Today, it is estimated that all that stands between poverty and 40% of the elderly is Social Security.
As first established, the payroll tax to fund the system flowed into the general revenue fund for the federal government. However, in 1939, Congress created the Social Security Trust Fund to manage surplus funds and this Trust had the power to invest the surplus in marketable and non-marketable securities. In other words, like a private retirement account, the growth of surplus funds was intended to handle future retirements. In 2007, according to one source, there was a cumulative surplus of $2.2 trillion dollars in taxes and interest after benefits were paid.
Unfortunately, the Trust loans any excess money to the federal government in the form of bonds, giving Congress a ready source of funds. Of course these bonds have to be repaid, with interest, by more taxes later. The system is in trouble because the government borrowed the surplus, spent it, and now does not have the resources to repay the Trust. The way it looks, Bush was correct in referring to these bonds as “just IOUs that I saw firsthand.”
In 2000, during the Presidential campaign, Al Gore talked about placing Social Security funds into a “lock box.” Everybody laughed at him and thought the idea of a “lock box” was silly. Essentially, what Gore proposed was to stop lending surplus funds to the government. He wanted SS and Medicare placed off-limits to politicians. If this had happened, and that is a very big IF, projections were that SS would be self-sustaining, essentially forever.
The current debate would lead one to think that SS is a flawed system. Not so. It is the huge debt owed the Trust by the government that is the problem. The flaw is that both parties raped the system by “borrowing” the surplus with no plan to repay it and now we have to deal with the consequences.
Unless the current commission working on the problem demands that any and all surplus funds be placed off limits to politicians, there will be no effective solution. Keep the surplus money in a “lock box” where it belongs. And demand that the government make yearly contributions until the bonds have been repaid. There is no need to increase the retirement age or raise payroll taxes or reduce benefits. Stop lending the excess to fund other programs.
Worthy of Comment
Also on the Dew
Anxious to try out my new East German camera, bought in West Berlin, we drove to Kurfurstendamm to photograph the ruins of the Kaiser-Wilhelm-Gedachtnis-Kirke and then to the Brandenburg Gate. About 200 yards west of the Brandenburg Gate, and near the Reichstag in the British Sector, the Soviets had built a memorial to the Soviet soldiers killed in the Battle of Berlin. In 1959, the memorial was guarded 24 hours/day by Soviet soldiers who marched into the British Sector through the Brandenburg Gate. At night it was lit up and highly visible from far away but the powerful searchlights were Read on →
When I was eight years old, about the same year, more or less, that the mule stepped on my toes, we went to visit my country kinfolk up in west Randolph County at Christmas. Some of them lived sho' 'nuff in the sticks, if that is not a redundancy. One of my mother's cousins lived near the Tallapoosa River, down a narrow, rutted dirt road, in the deep woods, in an old unpainted house, not much more than a cabin. It didn't have a porch, or running water or electricity. She had five kids. There was another cramped hovel within yards Read on →
The outcome of Christie's recent auction of General Robert E. Lee's precious navel lint left even the most jaded “Lost Cause” memorabilia mavens gobsmacked and whistling Dixie. Not to mention afflicting many frustrated, heart-broken losing bidders with a temporary paralysis that baffled emergency physicians compared to the old-timey Southern Belle "vapors." This dream-crushing auction loss brutalized their very star and barred souls. The awestruck winner of General Lee’s coveted navel detritus, said that he did not consider himself to be the “owner” of the singular holy Rebel artifact; only its humble and devoted caretaker until the treasure is passed on to the next wors Read on →
Back during WWII, there was a manpower shortage in the east Alabama cotton mills, and my Grandfather, Jim Strickland, sold his backwoods Randolph County farm, and moved to the Chattahoochee Valley still seeking his fortune. Even at his advanced age, and with failing health, he easily found a job as an armed guard, watching the truck gate at Fairfax Mill. Whether the nation’s Intelligence Services had uncovered an Axis plot to destroy Alabama cotton mills, I couldn’t say. But Papa Strickland spent WWII making sure NAZI saboteurs or Kamikaze pilots didn’t sneak into Fairfax Mill through the truck gate. Suffice it to say, Read on →