Social Security - Better to light a single candle than to curse the darkness

The Social Security trust fund is a fraud. Today’s SS surplus only helps government borrow stealthily and hide the true size of its spending. But it is not impossible for the Federal government to save for the future, as I believed. A couple of legislators proposed a plan that saves some of the surplus for the workers who earned it.

SS will run surpluses until 2017. As it is now the Federal Government replaces that surplus with an IOU in the SS fund. The IOU is an accounting trick. (It is like you putting an IOU to yourself in an old peanut butter jar every time you spend $10. All you get is a lot of paper that smells like peanut butter.) No money is saved. The government just promises to pay itself later by taxing future Americans at a higher rate.

A plan proposed by Sen. Jim DeMint and Rep. Jim McCrery would really save the Social Security surplus and use it to improve Americans' retirement security. This is how it works.

The plan uses the current surplus to fund retirement accounts for today's workers. The Social Security Administration estimates that by 2017, when the Social Security surplus ends, each worker would have $5,500. This is not a pile of money, but would you rather have $5,500 or nothing and the nest egg continues to grow. Imagine if you had invested $5,500 thirty years ago. It is a lot better than nothing.

The overall Social Security problem remains unsolved. Our demographic predicament remains unchanged and the system still is unable to pay full benefits by about 2045. But workers get more than before. Even if it doesn't actually force the government to cut spending, the plan saves some of the Social Security surplus and makes the borrowing more transparent.

So, while this plan is not sufficient, it is a step in the right direction. It is better to light a single candle than to curse the darkness.

All I know is what I read. Follow the link and you will have the same information.

Posted by Jack at July 1, 2005 11:31 PM