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
How does that happen? Mostly, it's the result of a mixture of hubris and inadvertence. Humans, stuck on themselves, think they know it all. Others are convinced "all it takes is the idea" (the ExxonMobil slogan) and, as it was in the beginning, man says the word and nature is obedient. Fortunately, the age of electronics has made it possible to virtually eliminate inadvertence. We can look ahead and simulate what will happen, if we repeat the mistakes of the past. That's what James Holland is doing with the various projects at Cannon's Point in the marshes on the coast of Read on →
When you get interested in painting you naturally look around to see what others who got this bug have done. Finding out what painters are doing in the U.S. today is like listening to rock on the radio. You have to wade through a lot of “forgettables” before you hear one that will be an “oldie” in ten years. Museums show oldies. Most of their collections have been filtered. The forgettables have been thrown out. On this painting journey you will run across an opinion that painting is dead, irrelevant, old paradigm. You can ignore that, and be sure you will en Read on →
One wryly fascinating aspect of achieving "seniority" is that my senses have become more adept at finding free entertainment. Locating alternative sources of amusement has become almost a necessity these days. Daytime television remains abominable, cable TV is objectionally priced (probably by those same pirates who sell inkjet print cartridges) and the ransom one has to give up for seats to professional sporting events is unconscionable. Also, our local news daily, though not unreasonably priced is but a shell of its former self. It is no longer a joy to read. One amusing activity, I find, involves no equipment, no cover cha Read on →
It is the morning of October 3rd. As I have for the past more than forty October 3rds, I take from the cupboard a special kind of candle and light it. As I do so, I think about my father. It was in the early morning hours of October 3, 1967, in a hospital in Minneapolis, that my father died. It was a great loss. He was not yet 49, I was 21, and his death came way too soon for me to be done needing him. The candle burning on my countertop is called a yahrzeit candle. (yahrzeit literally means “year-time.”) Bur Read on →