Wednesday, December 29, 2004

Social Security

Why is it so difficult for people to understand why SS reform is so crucial? The taxes collected today pay for the benefits that retirees and other recipients receive today. The government is currently collecting more in taxes than it spends ON THE SYSTEM. It goes ahead and spends the money anyway on other things like bullets, armor for Humvees and environmental studies.
The spent excess is "redeemed" by giving a Treasury note (bond) to the SS system. This is the so-called "Trust Fund". When the tipping point is reached in 2018 or so, the liabilities of the sytem will outweigh the incoming receipts. So the "Tust Fund" bonds will have to be redeemed at that point--by OTHER Federal tax money. And people are crying about the deficits now!

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