An Interesting Look at Social Security

[Diane Amberg]

I thought some of you might find this enlightening.
" There is a source of additional stimulus that wouldn't cost the government or tax payers anything and would put money back into the productive economy, that  is the private sector.
Social Security is often referred to as a pay-as-you- go system, meaning the money paid in every year is paid out in benefits. But it is actually a pay -in- way- more- than- is -needed system, which receives every year more in contributions than it pays out in benefits, building up a so-called reserve. The excess, the result of a 1983 reform to generate a surplus, is "invested" in special non- tradable
Treasury securities and ultimately used to fund government spending.
In the latest annual Social Security report, for the year ended Dec. 31, receipts totaled 805.5 billion, including 674.5 billion in payroll taxes and 116 billion in interest in special non-tradable Treasury securities. At the same time, disbursements totaled 625.1 billion in monthly benefits and lump sum payments. As a result, the system generated 180 billion in excess assets that went into its reserve fund, raising the reserve total to 2.4 trillion.
That 180 billion should be returned to those Social Security participants and employers who paid it.  And in future years, the payroll tax should be cut so that receipts and disbursements are equal, and then adjusted annually to meet disbursements.  Employees and employers would get a tax cut from the current levels until rising disbursements  lifted the Social Security
contribution back to current levels."

from an article entitled Uneconomic Trust Fund.....Aug.24. Pensions  & Investments magazine

[Diane Amberg]

I'm going to add a bit more from the same article.
   "Social Security should be put on a non- reserve basis because the financing for the interest on the reserves, and the return on the principal, come from the same source, the Treasury, and the major source of funding for the Treasury is the income tax, which distorts economic activity far less than a payroll tax such as the social security tax.
Most of the 2.4 trillion reserve should be returned leaving only a cushion of, say, one to three years to provide for contingencies to finance Social Security payments. This could be done by providing a Social Security tax holiday until the reserve is exhausted. Imagine what a stimulus that would be. Building up the trust fund is a mistake. It takes away purchasing power of the contributions, diminishing economic activity and the gross domestic product, and enhances the spending power of Congress. Most employees do not realize their Social Security contributions are financing government spending; they believe they are "invested" in the trust fund. The reserve, further more, provides no real enhancement to secure the payments to secure the payment of Social Security benefits. What about the Social Security contributions Congress would no longer have to finance Government spending? well it is better public policy that Congress should have to go to the voters by proposing and justifying tax increases to meet its spending desires.
The public would be more fully informed of congressional funding and appropriations, enabling it to make to make better political and fiscal decisions.    Nancy K. Webman
   
Now that's what I call a plan! These are the kinds of people I like to read. They are not politicians.