Reply #3: In the 1980's there was a summit in Washington

[Yupster]

which came up with a deal to "save" social security from the coming retirements of the baby boomers who would put a great strain on the system.

It was decided that social security taxes would be raised to their current levels (You put in 6.4 % and so does your employer). This would mean that social security would take in far more money than was needed to pay out to then retirees. That would start to build a huge surplus of money that could be saved up for when the baby boomers started to retire.

Good plan. Even Mr No Taxes himself Ronald Reagan signed it and "Social Security Was Saved."

The problem was what to do with the surplus which would quickly grow to a huge amount of money.

That's where the mistake was made. It was decided that the money should be lent right back to the US government in the form of Treasury notes and bonds. Then once it was lent back to the government, it was spent just like any other money in the budget.

So, now that the money will be needed soon, it's not there. It's been spent, looted, pillaged, whatever you want to call it. It was used to buy missiles, pay government employees, pay hospitals for medicaid patients, and whatever else the government does with its money.

You'll hear politicians say we need to pay back the surplus which is fine except the government just doesn't happen to have a couple of trillion dollars and isn't likely to find it. It's gone. Pfft. It's a dead parrot.

So what was the mistake the government made in the 80's?

They should have taken the surplus away from the government and put it in corporate bonds, insurance fixed accounts, even cd's. Then the money would still be there so we could draw on it when we start to need it in 8-10 years.

Anyway, that's where things stand.