Reply #49: Not so

[dpibel]

Originally, when the worker:retiree ratio was high, the program simply paid out this year's taxes to this year's retirees.

Since the baby boom was a neither subtle nor overlooked phenomenon, the changed ratio of workers to retirees was pretty easy to anticipate, and it was anticipated. That's why there was a commission to fix it--I don't recall is Greenspan chaired it, or was just a major participant. The fix was this: The FICA withholding was increased, so the program began bringing in more than it was paying out. That's where the trust fund comes from. Thus, since, IIRC, 1983, workers have been paying for present retirees plus paying into the trust fund for their own retirement.

All this hoohah about worthless IOUs is just that. The bonds in the SS trust fund are not the same as negotiable US Treasuries. OTOH, they're backed by the same full faith and credit. If the US defaults on bonds owed to its own retirees, how's it expect to ever sell another one to China?

As Krugman points out, the only thing required to fix SS into the indefinite future is revoking one-quarter of the tax gift given to those making over $500,000 a year. Not rocket science. Not going to bring the (already screechingly halting economy) to a screeching halt.