Your Opinion: Solutions to debt crisis
Thursday, July 21, 2011
Over the last several weeks the discussion has been about the raising of the debt ceiling.
Many people cannot see the connection between the debt limit and Social Security. They have the belief that when the government took the money from them out of their paychecks that this money was placed as cash in some hidden vault to be given out when they retire.
This is not the case. The money was taken in by the government and the government purchased treasury notes securing them away in a vault which is rumored to be in Pennsylvania. Treasury notes are moneys that the government borrows to pay for the programs that it cannot pay for with the revenues that it takes in.
Social Security was set up in the 1930s with the system of 65 people putting into the system and one taking out. This meant that there would be a surplus of money going into the system with a small payout at the end.
As time progressed life expectancy was extended for the people. This increase in the life expectancy of the people now puts us in a situation where we have two people putting into the system and one taking out.
That system works as long as we have full employment in the United States. With real unemployment hovering around 17 percent the system doesn’t take in enough money to support the system.
Social Security must cash in the treasury notes to make up the difference. That is the direct link between the debt ceiling and the Social Security checks. We have to be able to borrow more money to pay Social Security benefits because we spent the money that was set aside for Social Security on many good programs along with many pork programs by both political parties.
The problem also increased because President Obama and last year’s Democratic-controlled Congress in efforts to stimulate the economy cut the tax that was putting money into the Social Security system making the raising of the debt ceiling even more critical.
What are the solutions: An incremental increase in the retirement age as done in the 1890s when Tip O’Neal and President Reagan raised the full retirement age to 67 for the younger people; a reduction in taxes and regulation to help create full employment; spending only the amount of money that we take in guaranteed by a balance budget amendment.