Your Opinion: Response on Social Security
Thursday, October 20, 2011
Mr. Smith, your article on Social Security is correct that we must trust the system if it is to work. But you do not understand the system, which was set up under President Roosevelt. The system paid people of a certain age a monetary benefit paid for by the people that were of working age. That benefit charged that people paid for the retirement of the older people and that when those working people retired the next generation of working people would pay for their retirement benefit. Any excess moneys were placed in a trust fund for the future needs of the system.
The problem with this system is about to occur as the baby boomers start taking out more money than is paid in. Social Security must go to the trust fund and get the money to pay the benefits. The excess money was used to purchase treasury notes. Treasury notes are the government borrowing money to run its operation. If the government must cash in treasury notes to pay for the Social Security where will it get the money to pay back the money that it borrowed from the trust fund. It either must increase taxes or have someone else loan money to the government to buy other treasury notes to replace the one that they have to cash in.
Your premise that Social Security is solvent until 2038 has two flaws in the logic. One is that we will not have a real unemployment rate of 17 percent for very long and two that other people around the world will continue to purchase our debt. President Obama and the Democratic Congress realized that if they did not get a debt extension that the system could fail. To get the debt ceiling increased the president threatened that Social Security checks might not go out. Either he was telling the truth about the real problem that Social Security has or he was telling a lie or at the very least using that statement for a political purpose.
Mr. Smith, in all cases the money that you placed in the was spent on people who retire before you and any of the money that was in excess was spent by the government on many projects some good, some pork.
You are dependent on the next working generation to pay for your Social Security benefit.