|Posted on February 6, 2015 at 12:20 AM|
Social Security Is Not Broke – But It Is Not In a Lock Box Either
Social Security is NOT THE PROBLEM - the problem is with the government’s total
“unified budget.” Social Security is running a surplus and this surplus is used to understate
the national debt. If you are interested we would be happy to provide the actual numbers and
all projection assumptions used by the Board of Trustees.
Social Security is not welfare it is an entitlement like your life insurance. Let us get some
terminology straight. The Old –Age, Survivors, and Disability Trust fund consists of two
separate parts that pay benefits to “Workers” and their families; (Old-Age and Survivors
Insurance (OASI) and Disability Insurance (DI)). OASI pays monthly benefits to retired
Workers and their families and to survivors of deceased Workers. The DI part pays
Monthly benefits to disabled Workers and their families.
The Board of Trustees was established under the Social Security Act to oversee the
financial operations of the OASI and DI Trust Funds. The OASI Trust fund is not the problem
but rather the DI Trust fund is. The DI fund will steadily decline because its costs will exceed
income beginning in 2013. If the decline is not fixed this fund will be exhausted by 2018.
However if you combine the OASI and DI funds they are in good shape. Some
recommendations to maintain the solvency of the programs over the next 75 years include
raising the payroll tax rate, and/or re-allocating the payroll tax rate between the two funds as
Clinton proposed and Congresspassed in 1994. (See the 2011 Annual Report of the Board of
Trustees of the Federal Old-Age Survivors Insurance and Federal Disability Insurance Trust
If you want to be more radical merely end all payments upon the death of the
principal worker. No more survivors benefits and/or tighten the definition of a “disability”
which has already begun. This is of course the “let’s privatize the funds approach”.
So let us be clear “Privatization” means the transfer of $2.7 Trillion” today or $3.6 Trillion in
2020 into the hands of those who brought us the financial collapse of 2009. So let us also be
clear, although Social Security is referred to as an “Entitlement” which has the connotation of
“Welfare-something that is handed to you” – Social Security is an EARNED BENEFIT.