Reply #18: I think you missed Krugman's point

[happyslug]

Krugman did NOT say Social Security is safe, Krugman admits there are problems with Social Security. Krugman's position is the problems are manageable, with just minor changes in the law. For example raising the Social Security age to 70 (Which was also part of the "reforms" of the 1980s) reduces the number of people on Social Security while increasing the number of people working. The Four workers to one person on Social Security you cite is based on the premise that people will stop working at 65 (as opposed the age 70 that will be effective at that time period) AND that the population of the US would only increase at the rate it was increasing in the early 1980s (The population shot up like a rock in the 1990s do mostly to immigration).

Thus the 4-1 ratio was the worse case scenario and the closer we come to that time period the less likely it appears to be happening. Furthermore if you looked at the "Historical" way to handle the problem of the aged you will find out it often was a four to one ratio (Adult children taking care of their elderly parents). Thus the 4-1 ratio is NOT that outrageous.

The real problem for Bush and Company is Social Security is a program that not only works, but a program where most of the money goes to the people instead of to the accounts of Bush and his lobbyist friends. Furthermore when FDR set it up FDR knew that the GOP will get around to trying to kill SS, so FDR came up with the idea of the "Trust Fund". The "Trust Fund" was to give people the idea that this was THEIR money being kept for THEIR old age. FDR knew how much support there was in the Country for "Welfare" (At the time of FDR none, the same as today). Given that there was no support for "Welfare" but support of your own "Retirement Account", FDR set up Social Security as it is set up. This was to give the middle class a feeling that it was a program to BENEFIT them, and as such has always has massive support.

And let us NOT forget why Social Security is a "Tax". Under the concept of Federalism that existed in the 1930s, it was feared that if the US Government set up Social Security the US Supreme Court would strike the law down as violating the Rights of the States. FDR solved this problem by setting up Social Security Tax as a tax on income, something clearly permitted by the Constitution. FDR than gave each state the option to join in with his Social Security Plan. Thus Social Security is NOT a Federal Program, but a State program administrated by the Federal Government as an Agent of each state. Please note, while each state had (and continue to have) the option of dropping out of Social Security, the duty to pay the tax remains. Thus a state may opt out of Social Security but if a State does opt out, its Residents still pay the Social Security Tax (Thus all states passed laws authorizing the Federal Government to run the Social Security System in their state).

FDR knew what he was fighting, the same radical GOP we face today. The above is the main reason the GOP hated FDR. FDR knew how their operated and planned accordingly. Social Security has worked for FDR knew it would only work if the vast majority of Americans received some benefit from it. The GOP hates SS for the Vast majority of American get a benefit of it. The GOP tried to use its policy of divide and Rule when attacking SS under FDR but FDR made sure support for FDR was overwhelming.

Today the GOP is again trying to use Divide and Rule, this time by telling people you be better off investing your SS money yourself than leaving the US Government invest the money. This is a lie, for every financial person out there will tell you to diversify your holdings and to invest what you need to live on in the safest investment you can (US Treasury Bonds). Social Security invests in US Treasury bonds, thus Social Security is already part of your "fall back" money. Could you do better than T-bonds, yes, but at greater risk. When you retire what you get from Social Security should be your "fall back" money. If you would take your money of of Social Security and invest it, you should treat it again as "fall back money" and invest it in the safest investment possible, T-Bonds. Given that SS is already in T-Bonds why change SS?