Social Security and Manufactured Outrage
We're all entitled to our opinions about things, but as I've said here before, you're not entitled to your own facts.
Social Security is not broke, and with minor adjustments it will be viable for my lifetime, and for generations to come. Payroll contributions continue to cover distributions. American workers provide continuous contributions. This is not a static fund. Raise the maximum annual payroll contribution figure slightly (for high wage earners) and the fund is covered for the foreseeable future.
The outrage we hear from the right is all a bit silly. The so-called "trust fund" aspect of SS monies may be debatable, but the fact is that Treasury securities held by the SSA are backed by the full faith and credit of the US government. I suppose if you have little faith in the government you might not find this worth much. Treasury securities are purchased with the revenue monies that exceed expenditures. For example in 2007 that figure was $2.2 trillion.
There are no interest payments, only interest received on the Treasury securities. By law, the assets of the Social Security program must be invested in interest-bearing government securities or in securities guaranteed by the government as to both principal and interest. The Trust Funds hold a mix of short-term and long-term government securities. The Trust Funds can hold both regular Treasury securities and "special obligation" securities issued only to federal trust funds. All the securities in the Social Security Trust Funds are special obligations. These are NOT IOU's they are interest earning securities. Big difference. In fact it's the polar opposite of an IOU.
The outrage we hear from the right is all a bit silly. The so-called "trust fund" aspect of SS monies may be debatable, but the fact is that Treasury securities held by the SSA are backed by the full faith and credit of the US government. I suppose if you have little faith in the government you might not find this worth much. Treasury securities are purchased with the revenue monies that exceed expenditures. For example in 2007 that figure was $2.2 trillion.
There are no interest payments, only interest received on the Treasury securities. By law, the assets of the Social Security program must be invested in interest-bearing government securities or in securities guaranteed by the government as to both principal and interest. The Trust Funds hold a mix of short-term and long-term government securities. The Trust Funds can hold both regular Treasury securities and "special obligation" securities issued only to federal trust funds. All the securities in the Social Security Trust Funds are special obligations. These are NOT IOU's they are interest earning securities. Big difference. In fact it's the polar opposite of an IOU.
The rate of interest on special issues is determined by a formula enacted in 1960. The rate is determined at the end of each month and applies to new investments in the following month. The numeric average of the 12 monthly interest rates for 2007 was 4.656 percent. The effective interest rate (the average rate of return on all investments) for the OASI and DI Trust Funds, combined, was 5.3 percent in 2007. This higher effective rate resulted because the funds hold special-issue bonds acquired in past years when interest rates were higher.
The laws in this case are the facts. Don't believe it? Research it yourself. I did. If contrary data of greater merit can be presented I might be swayed. Until then the "outrage" amounts to little more than bloviation.
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