YOUR OPINION: Critics distort Social Security
Sunday, December 19, 2010
Gossip and fear mongers rise again trying to scare you and the children concerning the solvency of Social Security. Why? Are they this misinformed or do they just hate our most popular government program?
They reference the Congressional Research Service as a source but distort the meaning of their studies. Instead these critics say that the Social Security Trust fund is an accounting gim- mick. Suppose we just say it is an accounting procedure. So what? Yes, money is not locked away in a vault.
SSA money that is not needed to pay this year’s retirement obligations is loaned to the government in the form of purchased US Securities. This procedure was established by Ronald Reagan through the 1983 Greenspan Commission and subsequent SSA Reform Act of 1983. Were Reagan and Greenspan crooks? Were we deceived?
Pull a dollar from your wallet or purse and look at it. It is backed by the same kind of accounting procedures that disturb these critics. I am sure they are dismayed that you cannot redeem its value in gold or silver. Darn. I guess we just have to rely on the power of our government to remain solvent.
We are told we cannot write ourselves an IOU and count it as an asset. Therefore, the federal government should not do this either because it is meaningless. Actually our government can do this and isn’t it better to borrow money from ourselves than from China? The government can also declare war and print money. You and I cannot do that either.
I do not go to bed worrying over U.S. solvency. We are a super power, right? Obviously our politicians do not really worry about this. They are about to enter into a political tax deal that makes a mockery of fiscal austerity. Forget out-of-control government spending. Apparently we can afford to pamper the rich with continued tax breaks that have so far done little or nothing to provide jobs.
Social Security is funded by a payroll tax. To prepare for the baby boomer retirement era, Reagan/Greenspan devised the Trust Fund to be in interest-bearing notes. When payroll taxes do not meet the yearly demands, government notes are redeemed. And yes, to pay back this loan, the government has to pay from general revenue. That’s how government treasuries work. It is a business deal not a fraud.