Social Security IOUs

Right-wingers describe Social Security as an "entitlement," meaning its beneficiaries receive public funds transferred from others. It's actually a pension plan, and the federal government is the trustee.
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Right-wingers describe Social Security as an "entitlement," meaning its beneficiaries receive public funds transferred from others. It's actually a pension plan, and the federal government is the trustee.

The Old-Age and Survivors Insurance Trust Fund uses the Social Security taxes you and I pay to purchase "special issue" securities of the United States Treasury, guaranteed by the Federal government. Uncle Sam pockets the cash and hands us an IOU, giving us a variable rate of return (will we get a COLA, for example?)

So if there's a shortfall, it's because the IOUs were overvalued. In other words, we paid too much for what we got. In other words, the trustee hasn't been very trustworthy. Money that should have been invested soundly was spent on unnecessary wars, for example, or to give fat cats tax breaks or corporate subsidies

The social security glitch related to the boomer retirement period was supposedly fixed in 1983, raising the retirement age, among other things. That enabled the government to take in a lot more money than it paid; that surplus was supposed to be saved for the shortfall we are now facing. But guess what? The government spent that money.

Today, the trust fund is poised to pay out more than it takes in. The only way the government can make good on its promises is to raise the retirement age, reduce benefits, raise the maximum income level at which social security tax is collected, or borrow the money. In other words, it looks to the taxpayer, to other lenders, or to retirees to make up for its waste of the money it collected from us.

The other problem is that that the money the government wasted was collected only against incomes of $110,100 or less. That sounds like a tax on the middle and working-class. Perhaps to make up for tax cuts for the rich?

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