Registered: Jan 2006
05-03-12 04:07 AM
Quote from oldtime:
well, you know more about it than I do, but why is it whenever anyone talks about the deficit, including Alan Simpson always says we won't get anywhere controlling it without reforming social security?
I never hear anybody say, "We have a lot of problems but at least the social security system is still sound and needs no attention."
I don't know about Simpson's knowledge of Social Security. Some congressmen and senators obviously have only cursory knowledge of how the system is designed to work. But Simpson may be talking about future obligations of the Treasury to the Trust. The Treasury will have to borrow the money it will owe to the Social Security Trust when the Trust begins to redeem its special Treasury bonds. The Treasury sold bonds to the Trust and spent the money raised elsewhere. Currently there is an approximate 3 trillion surplus in the Trust.
The retirement benefit Trust needs a two cent increase in contribution rate per dollar of earned income, as of 2010, to adjust for changing demographics and to keep the system sound for the foreseeable future. That's one cent per employee and one cent per employer. (It is a 16% increase in contribution rate relative to the current contribution which is 12.5 cents. The contribution rate was recently adjusted downward, supposedly temporarily, to put more money in workers pockets. )
But Congress has so far refused to act and the longer they delay this needed adjustment the greater the adjustment needed. Needless to say there are those who are philosophically opposed to the very idea of social security and they are one source of misinformation, but the real origin of much of the misinformation is Wall Street which has been trying to kill social security for years.