Your Opinion: Discussion continues on Social Security
Wednesday, November 16, 2011
Don Fleener and I do agree that Social Security is important. The really good news is that none of the issues he raises are significant.
First off the American bond market couldn’t be more secure. The last two years our financial press has been predicting runaway inflation. That was based on concerns about the massive amounts of money the Fed injected into the financial system. Despite this U.S. Treasuries have remained the safe-haven investment for the world.
U.S. bond rates are at almost historic lows. Fear of failure makes Greek bond rates over 25 percent compared to our 2 percent. This means SSA is holding very secure financial instruments. The world sees us as a safe haven.
The rating agencies are just flat-out disgraceful. They did not perform competently in the tech bubble or housing bubble. Instead, they have clearly been part of the problem. Receiving revenues from sources they are supposed to be rating is a major conflict of interest. Furthermore, Standard and Poor’s (Moodys maintained a triple A rating on the U.S., but says they are watching the budget super-committee closely) did not recently downgrade the US because of poor performing bonds. They clearly stated that they were concerned about American politicians who threatened to force America into default with tactics over a bogus debt ceiling issue. This was a dumb and meaningless call. The markets discounted it and never even blinked at the rating.
Threatening to force America’s finances into a state of limbo, Republicans have decided to play a constant game of chicken instead of acting responsibly and help govern. The charade continues with unwillingness to help on any jobs bill as it could help Obama politically. Forget millions of Americans out of work. Was Obama bluffing about SSA checks? If so, he does a poor imitation of Republican tactics.
Social Security is not presently an intergenerational transfer of young to old. We all paid in substantial amounts of our payroll taxes matched by our employers. That money is in the SSA Trust fund. When that is gone, only current funds will pay for everyone. Fewer workers with ever increasing productivity have added to the system which is completely solvent until 2038. Starting to modestly increase SSA taxing for incomes above $106,800 would make the program solvent indefinitely.
America does not have a debt problem! A deregulated financial industry crashed the economy. We have an income problem.