Social Security: Doomsday Comes a Year Earlier
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The Social Security Trustees have issued their 2005 Annual Report, in which they accelerate by one year both the "surpluses become deficits" date (from 2018 to 2017) and the "unable to pay promised benefits" date (from 2042 to 2041).
This is a good occasion to emphasize that the 2017 date is the far more important date, because that is when the “Trust Fund” will irrefutably be exposed as the fraud it is and the fiscal pain of that fraud will be felt throughout the economy.
To review, the "Trust Fund" is nothing more than an accounting entry on the federal government’s books (in a file cabinet in Virginia). It consists of economically meaningless IOUs from the federal government to itself. Just as an IOU from yourself to yourself is worthless economically, so too are the IOUs in the “Trust Fund” worthless economically.
These IOUs are not politically meaningless, however. The monies pledged by those “securities” will certainly have to be found by the Treasury to pay to Social Security; as the opponents of reform like to chant incessantly, the U.S. Government indeed does not default on its debts.
But what exactly does this mean? It means that the Treasury will have to start raising extra money, apparently now beginning in 2017, to pay back its debt to Social Security.
And how does the Treasury raise money? There are only two ways: higher taxes or higher debt.
So beginning in 2017, give or take a year or two, either income taxes or budget deficits (or both) will start to increase, and will continue to increase year after year, even more than they already would have without the Social Security crisis (and remember, we appear to now be in the era of the tax-and-spend Republicans, who can’t even cut entitlements by less than one percent or cut Amtrak, the stupidest of federal boondoggles).
Therefore, sometime around 2017, we will see the crippling effects of either higher taxes or chronically higher interest rates. And that’s just to keep Social Security afloat for an extra 25 years, not to fix it.
The 2041 estimate, while real, is still therefore something of a straw man -- 2017 is the true doomsday date.
And in case your calculator is broken, that’s only 12 years away. I'll be 50. How old will you be?
Related Posts:
More Social Security "Good News / Bad News"
More Americans Cheating Social Security (By Not Dying)
Who Faces the "Risk" of Social Security Reform?
Has Social Security Been a "Success"?
What is the Purpose of Social Security?
This is a good occasion to emphasize that the 2017 date is the far more important date, because that is when the “Trust Fund” will irrefutably be exposed as the fraud it is and the fiscal pain of that fraud will be felt throughout the economy.
To review, the "Trust Fund" is nothing more than an accounting entry on the federal government’s books (in a file cabinet in Virginia). It consists of economically meaningless IOUs from the federal government to itself. Just as an IOU from yourself to yourself is worthless economically, so too are the IOUs in the “Trust Fund” worthless economically.
These IOUs are not politically meaningless, however. The monies pledged by those “securities” will certainly have to be found by the Treasury to pay to Social Security; as the opponents of reform like to chant incessantly, the U.S. Government indeed does not default on its debts.
But what exactly does this mean? It means that the Treasury will have to start raising extra money, apparently now beginning in 2017, to pay back its debt to Social Security.
And how does the Treasury raise money? There are only two ways: higher taxes or higher debt.
So beginning in 2017, give or take a year or two, either income taxes or budget deficits (or both) will start to increase, and will continue to increase year after year, even more than they already would have without the Social Security crisis (and remember, we appear to now be in the era of the tax-and-spend Republicans, who can’t even cut entitlements by less than one percent or cut Amtrak, the stupidest of federal boondoggles).
Therefore, sometime around 2017, we will see the crippling effects of either higher taxes or chronically higher interest rates. And that’s just to keep Social Security afloat for an extra 25 years, not to fix it.
The 2041 estimate, while real, is still therefore something of a straw man -- 2017 is the true doomsday date.
And in case your calculator is broken, that’s only 12 years away. I'll be 50. How old will you be?
Related Posts:
More Social Security "Good News / Bad News"
More Americans Cheating Social Security (By Not Dying)
Who Faces the "Risk" of Social Security Reform?
Has Social Security Been a "Success"?
What is the Purpose of Social Security?
Posted by KipEsquire on
23 March 2005
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