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Social Security Letter Is Fear Mongering At Its Finest

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The Tampa Tribune

Published: August 7, 2008

Jim Gries's letter about Social Security is unnecessary fear mongering. Social Security is simply an income transfer program. Workers today pay a tax to support retirees and disabled people. In exchange, workers get the promise that when they retire, a new generation of workers will support them. As Gries notes, the program has a substantial surplus. By law, that surplus is invested in bonds issued by the U.S. government.

The idea is that these bonds will be used to help pay for the baby boom retirement without raising payroll taxes.

The government does, in fact, spend the money. But the government has an obligation to repay the Social Security system just as it repays its other debt.

The right wing Trustees of the Social Security Trust Fund - which is the government entity that owns the bonds - claim that the Trust Fund will be exhausted 30 years or so in the future. But that is based on a scenario that can best be described as a multi-decade recession. Even then, the current payroll tax could cover 78 percent of benefits. But, given even weak economic growth, the Social Security system will be solvent indefinitely.

Of course, there is the concern that the U.S. government itself will become insolvent and not be able to repay its debts. In that case, payroll taxes would have to be raised or benefits reduced.

There really isn't anything we can do now to deal with this hypothetical threat to Social Security. It's popular for "deficit hawk" politicians to claim that we need to "cut entitlements," meaning Social Security.

The implication is that working Americans are greedy parasites for wanting to live in the developed world. But cuts to Social Security, meaning later retirement or smaller benefits, do nothing but create a larger Social Security surplus for the politicians to squander. The other right wing dream, privatization, doesn't make the system any more solvent. It just routes the stream of payroll tax income to Wall Street, meaning that the government will have to find another revenue source, i.e. higher taxes or borrowing from someplace else.

Social Security is not a problem now. It's very likely that it won't be a problem in the future. If there is a problem in the future, we can't do anything about it right now. But I have faith that Americans in the future will be smart enough to deal with whatever comes up.

Dallas Dunlap

Brooksville

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