Things To Act
Wednesday, January 26, 2005
 
Social Security Reform
The President's longstanding desire to meaningfully reform the Social Security system is one of the biggest topics on the political agenda right now. I hope to write more about it later, for now I present the following links:

Club for Growth has launched a new blog about SS reform. An ungrammatical motto, but interesting stuff, including links to two Social Security calculators which allow you to compare private account options to the current system, making certain assumptions of course.

Comments:
As I understand the economics, the social security receipts of the Federal government exceed social security expenditures. The excess funds are used to purchase Tbonds, which are held for the benefit of the "Trust fund," until such time as expenditures exceed income. At that point they will begin to be redeemed.

Meanwhile, on the other side of the "curtain", Federal income tax revenues are less than federal expenditures. The shortfall (ie, the deficit) is overcome through borrowings, a portion of which come from the SS surplus.

The trust fund is in some ways a misnomer, as there are no assets held in trust, other than the promise that future tax revenues will be used to redeem the TBonds held by the trust fund.

The social security trust fund surplus is expected to turn to a deficit in about 14 years, if I remember correctly. At that point, the trust fund will have to begin redeeming its TBonds to meet its obligations.

The thought occurs to me: If there is currently a social security surplus, why don't we cut the social security tax rate? This will place accountability for the deficit back on the other side of the "curtain", where it belongs. (Perhaps this could also be coupled with the individual accounts option that is receiving so much press.) Why do we continue to take the SS surplus and use it to fund the deficit?
 
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