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Fri Dec 30, 2011, 03:01 PM

Let's try this again: No, Social Security is NOT insolvent. [View all]

Today I keep running into this stubborn insistence by some on DU that Social Security is really insolvent, despite the $2.6 trillion dollar Social Security Trust Fund; or that the payroll taxes which supply Social Security and other programs are taken to pay for the Defense Department or other government spending. Both of these statements are amazingly false.

The Social Security Trust Fund was created for the express purpose of saving up enough money to get the system through the wave of baby boomer retirements. Prior to that, Social Security was entirely "pay as you go," with there being no buffer between what was collected in payroll taxes and what was paid out as benefits. To pay for the boomers, payroll taxes were hiked and the SSTF was created to store the surplus against the day when there would be too many retirees for those currently working to pay for.

Now so that the Social Security Trust Fund money wasn't just sitting there doing nothing, and for it to make more money to pay out later as benefits, that money was invested. But it had to be invested in a way that would present no risk of losing the money which had already been entrusted to the system from people's taxes. Therefore, it was invested into US Treasury bonds, which are a famously no-risk investment, and pay a healthy return in the form of interest. When you see people mention the US government paying the interest on it's debt, a large chunk of that interest goes into the Social Security Trust Fund.

Which brings us to the claims that because the money has been invested, somehow the Social Security system is bankrupt or that the money has been "stolen." To apply this same standard to day to day living, you would have to believe that you're giving away your money to the bank when you put it in a savings account. This seems fairly absurd on the face of it, but some people really believe it about the Social Security Trust Fund, simply because it's "the government." But no, SSTF funds and payroll taxes aren't "hiding deficit spending," or being given away, or anything so absurd. Like any good retirement program, it's growing every day until the day it's actually spent on sending benefits to a senior.

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Reply Let's try this again: No, Social Security is NOT insolvent. [View all]
TheWraith Dec 2011 OP
girl gone mad Dec 2011 #1
TheWraith Dec 2011 #3
dionysus Dec 2011 #10
girl gone mad Dec 2011 #20
TheWraith Dec 2011 #25
girl gone mad Dec 2011 #27
TheWraith Dec 2011 #36
elleng Dec 2011 #5
rhett o rick Dec 2011 #2
Scuba Dec 2011 #4
TheWraith Dec 2011 #11
wiggs Dec 2011 #6
PATRICK Dec 2011 #8
TheWraith Dec 2011 #9
elleng Dec 2011 #7
TheWraith Dec 2011 #12
Snake Alchemist Dec 2011 #13
gratuitous Dec 2011 #14
TheWraith Dec 2011 #15
econoclast Dec 2011 #16
exboyfil Dec 2011 #18
sendero Dec 2011 #19
girl gone mad Dec 2011 #22
sendero Dec 2011 #33
girl gone mad Dec 2011 #21
TheWraith Dec 2011 #35
lacrew Dec 2011 #17
TheWraith Dec 2011 #26
Justice wanted Dec 2011 #23
joshcryer Dec 2011 #24
Fumesucker Dec 2011 #28
Taitertots Dec 2011 #29
muriel_volestrangler Dec 2011 #31
Taitertots Dec 2011 #32
muriel_volestrangler Dec 2011 #34
Taitertots Dec 2011 #38
TheWraith Dec 2011 #37
Taitertots Dec 2011 #39
Yo_Mama Dec 2011 #30