The truth comes out, there is no Social Security Trust Fund; time to go private

Here is the current situation in regard to the debt ceiling issue:

The nation Wednesday edged closer to a catastrophic default, as the two parties continued battling each other and themselves over how to raise the debt limit and as Sen. Charles E. Schumer warned the stalemate could prevent Social Security checks from going out next week.

House Republicans warmed to Speaker John A. Boehner's latest proposal for cutting government spending and raising the debt ceiling in two steps, a measure the House is set to consider today.

Boehner, R-Ohio, was direct in a meeting with rank-and-file GOP lawmakers as he urged reluctant conservatives to back his plan. "Get your a... in line," he told them. "I can't do this job unless you're behind me."

But tea party conservatives continued to harbor doubts about the Boehner plan, which both President Obama and the Democrats controlling the Senate have rejected -- leaving Congress with no clear path to raising the debt ceiling by the time the Treasury reaches that limit Tuesday.

That fact sent the Dow Jones Industrial Average plummeting nearly 200 points.

And that could just be the beginning of the dire consequences of the debt-limit stalemate, Schumer, D-N.Y., warned. With the government facing $306 billion in payments in August and only $178 billion in revenues coming in, a default would force the Obama administration to decide which bills to pay and which to let slide."There's a potential, unfortunately, that Social Security benefits wouldn't go out," Schumer said. "There's a potential that veterans benefits wouldn't go out. If you paid those, you might not be able to pay the creditors."

First note that it would be King Obama who would decide if Social Security checks went out or not.

And why would we need to use the $178 billion to fund the Social Security checks? The pro-Social Security crowd said there is a "Trust Fund". Check this out:

Social Security status-quo defenders have assured us for the past 25 years that Social Security is fully funded—for the next 25 years, or 2036.  So if there are real assets in the Social Security Trust Fund—$2.6 trillion allegedly—then how could failure to reach a debt-ceiling agreement possibly threaten seniors’ Social Security checks?

The answer isthat the federal government has borrowed all of that trust fund money and spent it, exactly as Krauthammer asserted.  And the only way the trust fund can get some cash to pay Social Security benefits is if the federal government draws it from general revenues or borrows the money—which, of course, it can’t do because of the debt ceiling.

Thus, the answer to my initial question is that the president is telling the truth now in the sense that he is conceding there’s no money in the trust fundto pay benefits; but he and other Social Security status-quo defenders have been deceiving the public for decades.

And here’s the real irony: Anytime someone has proposed personal Social Security retirement accounts as a way to ensure that people have real assets in their own account without bankrupting the government or future generations, defenders of the status quo would pounce, calling such a reform, in Al Gore’s words, a “risky scheme.”  They have vociferously claimed that those trust fund assets are real and that only by having the government manage and control the accounts would seniors be guaranteed to get their retirement checks.

Well, we have the status quo and seniors may not get their checks.  Had we shifted to a system of pre-funded, personal Social Security retirement accounts years ago, this wouldn’t even be an issue—because retirees would have their own money in their own accounts.

So lets raise the debt ceiling and make the government return our Social Security taxes and put them into private accounts. Then we can shut down the Social Security ponzi scheme once and for all. The working class would receive a 7% pay raise, and business would have a 7% reduction in their labor costs. Imagine what that would do to the economy? We would have billions of dollars available for capital investment to the private sector for expansion by using cheaper labor (who are getting paid more) instead of automation.

Comments

[social security disability benefits]

I think it's important for them to reach a understanding so that the social security payments go out. It could be allot of trouble for people if they do not go out.