The problem here is that you’re lookng at Social Security as a personal investment instead of social INSURANCE. The whole point is to have a system everyone pays into, that in return guarantees everyone will get some minimal subsistence income, no matter how bad their investment choices were, no matter how badly the housing market tanks, etc. Its more about keeping widows off the street than giving the best possible personal returns. Sure one could say “man i wish i didn’t have to pay into that, i’m a great investor”, but don’t look at it in terms of YOU, look at it in terms of US. I know thats not what we’re trained to do, but there are real reasons why an incredibly rich society doesn’t want to let its elderly starve to death.

>If the SS money were invested elsewhere (private stocks & bonds, for instance) then the government would have to issue ordinary debt to replace the SS loans, and would certainly have to repay it.

Personally at this point, given the fact that almost nobody in the entire country understands the concept of social insurance I’d say why not just shut it down. I mean, mandated personal investment in stock and bond funds is really good for wall street firms who get guaranteed profits, but its a bad deal for the average joe, if we’re going to kill the idea of guaranteed income for the retired.
The government uses the actual cash surplus from the trust fund to fund things like taking over energy rich nations and building military equipment we’ll likely never use. I for one look forward to the budget cut proposals from social security critics that explain how the trust fund can be invested in the stock market. Otherwise then the government would just be borrowing money on the open market to invest in the market, probably not a good idea with historical valuation metrics as inflated as they are, and the dollar poised for a plunge.

I also look forward to a government-run investment fund that unscrupulous administrations can use to direct money into the stocks of favored corporations. This should be a good exercise in the “limited government” the republicans are always talking up.

>So I don’t think SS is automatically more Ponzi-like than any other form of debt financing.

agreed

>A major problem that I see with the program is that the “debt” is not legally guaranteed–courts have ruled that recipients have no enforceable right to get “their” SS benefits. What this does is to make all retirees, and prospective retirees, hostage to the political process.

Well, the bottom line is Bush tried privatization and he lost decisively. Despite almost blanket condemnation of Social Security by the media, Americans have figured out that keeping SS in its current form is probably in their own personal best interest. As a partisan democrat I really hope the Republicans continue to strongly push privatization.

So I don’t think SS is automatically more Ponzi-like than any other form of debt financing. A major problem that I see with the program is that the “debt” is not legally guaranteed–courts have ruled that recipients have no enforceable right to get “their” SS benefits. What this does is to make all retirees, and prospective retirees, hostage to the political process.

this “investment” is in US government bonds. nobody calls bonds fictional when they are held by individuals. so why are bonds fictional when they are held by american citizens collectively?

>There comes a time when, demographically, revenue into SS falls and payouts grow, creating a net flow from general revenue, paying back the securities that are the paper “surplus,” and requiring an increase in general taxes and/or increase in SS taxes and/or decrease in spending somewhere.

theres two issues. first, when does the trust fund start to get drawn on. thats the 2015 number we hear about. the second is when does the trust fund run out. thats the 2040 number we hear about. what we DON’T hear is that the most likely outcome (per the actuaries predictions which have proven to be accurate in the past) is that date might be 2060 – or never, if productivity growth is average instead of miserable, which is what the doomsday scenarios are based on.

>The surplus is entirely on paper. Eventually the cash must come from somewhere.

its incredibly dishonest to say US bonds are “on paper”. i mean hey – so is US currency right? the money in your pocket is “just paper” by your theory.

>Demographics don’t support that happening, sooner or later.

the demographic situation isn’t that bad. productivity growth helps. but theres at the worst case a need for a slight increase in taxes in the future. until people stop lying about social security, its just open class warfare to claim its in some sort of crisis.

whats interesting to me is that the anti-social security arguments are entire predictable and rote. it all seems to start in some DC think tanks, and nobody bothers to check the details on their lies and obfuscation on the topic.

The surplus is entirely on paper. Eventually the cash must come from somewhere. Demographics don’t support that happening, sooner or later.

note that a lot of anti-social security commentators like to talk about this mythical program called “social-security-and-medicare” which doesn’t exist since those two programs have different balance sheets.

but don’t take my word for it go look into the numbers, you’ll be surprised by what you find.

http://tinyurl.com/snr7b