There is a lot of misinformation about Social Security out there. I know this is true because at least half of what I read is inconsistent with the other half of what’s out there.
Here is a paragraph from Kim/Riverdaughter/Goldberry’s latest:
We know that Social Security does not add to the deficit. In fact, we have a trust fund worth almost $3 trillion dollars. Sure, that trust fund has taken a hit in the past four years because so many people are out of work and can’t pay their taxes but once people are working again, the kitty will start to grow again. And if all that is needed is a couple of tweaks to solve the minor shortfall, it’s really not as damaging to the economy or rich people’s ability to spend ungodly amounts of money on themselves as they pretend.
I don’t mean to pick on my former blog overlord, but that’s not true. There is no vault in the basement of the Social Security Administration offices with $3 trillion sitting in it. There might be a vault somewhere, but the only thing in it is a government I.O.U.
In the United States, the Social Security Trust Fund is a fund operated by the Social Security Administration into which are paid payroll tax contributions from workers and employers under the Social Security system and out of which benefit payments are made to retirees, survivors, and the disabled, and for general administrative expenses. The fund also earns interest. There technically are two component funds, the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds, referred to collectively as the OASDI funds.
When program revenues exceed payments (i.e., the program is in surplus) the extra funds are borrowed and used by the government for other purposes, but a legal obligation to program recipients is created to the extent this occurs. These surpluses add to the Trust Fund. At the end of 2011, the Trust Fund contained (or alternatively, was owed) $2.7 trillion, up $69 billion from 2010. The fund is required by law to be invested in non-marketable securities issued and guaranteed by the “full faith and credit” of the federal government.
The trust fund represents a legal obligation to Social Security program recipients and is considered “intra-governmental” debt, a component of the “public” or “national” debt. As of April 2012, the intragovernmental debt was $4.8 trillion of the $15.7 trillion national debt.
It’s just like your local bank. They may say they have a $100 million in assets but they probably only have $20-30 thousand in cash on hand. The rest of it is invested or loaned out.
What the government did is loan itself our retirement savings. (Not all of it – some of it goes to pay current retirees.) Then they spent it. It’s kinda like a guy who stole and spent all his grandmother’s money and now he’s waiting for her to die so he can inherit it. But the bookkeeping is way more complicated – I suspect they intentionally make it hard to figure out so they can hide how much they are stealing.
My grandpa said that the best way to lie is to tell the truth, but not all of it. There is a lot of that going on these days. That’s why you can read one article saying that Social Security is broke, and another saying everything is hunky-dory. They are both telling you some of the truth, but not all of it. So who do you trust?
In a perfect world there would be some independent, non-partisan authority out there that would sort through all the bullshit and provide us with neutral, objective facts. Unfortunately we have the mainstream media and the blogosphere. Most of them don’t know what they are talking about and the rest can’t be trusted to tell the truth.
We just came out of a two-year long election campaign where control of the country was up for grabs. During that time do you recall EVER seeing a detailed discussion (backed up by hard, verifiable data) by any of the major players as to what is wrong (if anything) with Social Security and what needs to be done to fix it? There was something called “Simpson-Bowles” (aka “The Catfood Commission”) but there wasn’t any consensus on their findings and recommendations.
It’s not just Social Security. The first half of Obama’s first term was taken up by health care reform but I don’t recall any hearings discussing the problems. That’s like a doctor prescribing treatment without first doing any diagnosis.
I really don’t want to eat cat food when I get old. If there is something wrong with Social Security we need to fix it. I mean really fix it, not just slap a band-aid on it and kick the can down the road a few years. But before we start fixing anything we need to reach some kind of consensus as to what the problem is.
That’s really hard to do when you can’t trust anybody. I’m no bean counter so I can’t do my own research. What we need is somebody (or several somebodies) to put together a “Social Security Reform For Dummies”. Then maybe we can get everybody on the same page.