Re: Refresher Course on Social Security

JB wrote:
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I am new here and usually just sit back and read what is
said, but I do have to ask, why in all the talk, there is
no mention of the numerous times that the Government has
tapped into the SS funds for other things.

Also when does the Government plan to return that money?
I know the answer to that, but if they would leave their
hands off the funds that are for SS, would be have a
problem?

John

Eventually, yes. There are two important dates: 2018 when the withdrawals exceed revenues and the funds from the trust fund have to be tapped, and 2042 when the trust fund is exhausted and withdrawals will have to be reduced to match revenues if nothing else is done.

Most of the debate has to do with whether or not the government can be trusted to pay the portion of the national debt represented by the trust fund (about $2T or roughly twice the cost of the Iraq war). If you fear that the federal government will default on US Bonds, then you might take this part of the debate seriously.

The problem can easily be fixed if the cap on contributions were to be eliminated. It is presently set at $95K income at which point taxes to support SS are eliminated. No one pays SS taxes on income above this level. This makes it one of the most regressive of taxes. If this cap were to be eliminated, the first date would be extended to 2024 and the second date would be extended to 2079.

If the elimination of the cap were coupled with a gradually increasing retirement age (one month per year), the solvency would be extended indefinitely.

In fairness, there are also those who argue convincingly that the program should invest in the market in the same or a similar manner as some state retirement programs. In any case, the program can be made solvent without draconian measures.

.

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