Larry: you in bold, my orig. in italics, my response in plaintext

Yup, I think everyone is in agreement that the system will continue generating a surplus until sometime after 2040.

No, that's completely wrong. The latest estimates are that the surplus of SS taxes will end in 2018, just 13 years from now. Simply put, the SS taxes paid in will no longer be sufficient to meet the payments going out in 2018. After that point, the deficit will require additional revenues, either from the general revenue to repay those Treasury bonds (IOUs), higher SS taxes, and/or some reduction in benefits such as means testing. By sometime after 2040 (I think the latest number is 2046, but that's open to a wide range of variables about the economy), all of those IOUs will be exhausted.

Larry, It all depends on Sources, Assumptions and etc. The SS Trustees report (I believe thats the name of it) says 2042 where we meet the point where the 'purchased assets' (and yeah, we'll get to what that means) are exhaustred, and thats a perfectly valid source. However, please also note that by that very same source, the inflow will be adequate to pay for 70% of benefits.

Another source I have seen, places that date at 205n with over 70% of benefits paid after that mark. Another source I have seen says the real crises somes in 207n. Assume slight departures from assumptions, and things change completely.

The point is that the 204n 'bankrupt' date is not hard, and even after we reach the 'boogeyman' date, inflow can cover at minimum 70% of benefit.

Also, my sources differ on the 2018 'no more surplus' number, I have seen numbers as high as 2040. While I do not entirely discount the SS trustees reports numbers, I consider them the worst case. Over the last four years I have seen governmental offices produce extimates that are, if not broken, at least massively bent in the direction the president wants. I Don'ty have SST reports from before 2004, so I can't really be sure. But I take it with a grain of salt.

Not trying to be rude here, but yeah. I think we are on the same page WRT understanding how the system works.

Actually, while you may understand how the system works, your first reponse proved that your understanding of the problem was flawed.

You are welcome to your opinion. I am happy with my data, though open for more.

The various following phrases are more or less misleading WRT how the system works, and people who use them too much don't understand how the system works or are trying to scare everyone into a course of action they want:

"the government has spent all of your social security money"
"Lock box"
"Bankrupt"
"The system will be exhausted/Insolvent sometinme after 2040"


A. The surplus SS taxes have been spent, replaced with Treasury bonds (IOUs).
B. There is no lock box nor a trust fund, other than the collection of promises to repay those bonds.
C & D. Sometime after 2040 (depending on demographics and economic projections), those IOUs will be exhausted. At that point if nothing changes, the only money dedicated to paying SS benefits would be the SS taxes collected from people working at the time. That tax won't be nearly sufficient to pay the promised benefits to retirees.


A: That the 'Asset' that SS has ultimately purchased, after swapping, is Gov't IOUs- yes, I understand that. But one way or the other, the money has been put into the system and a promisary note has been 'purchased'.

B: Agreed, thats why I have always found the words misleading, and indicitive of someone trying to pull the wool over the taxpayers eyes.

C&D: 70%, by the most conservative estimate, of benefits will still be payable. Its a big number: 30% of SS benefits- but were are talking about chicken feed compared to our current combined debt/deficit.

I don't think that is strictly the case. the IOU's would still probably be less than the input to the system (IE, I don't think the person making a cool mil a year would get back an amount entirely porportional to what he put in). We'd have to get out the green-shaded hats and the calculators to really be sure. Regardless, the answer is to simply put a cap on total benefits that you can get in a tax year.

"Perhaps I wasn't clear with my previous statement. Under current law, any SS surplus has to be invested in the Treasury Bonds (IOUs). Simply increasing the SS taxes now will mean that the surplus will be larger, meaning the number of IOUs in the system will increase. That does little to change the long term problem."

Hummmm.... We are choaking the semantic chicken at this point. While all IOUs are payable, as a whole to all beneficiaries, higher paying folks will be putting more IOUs into the system, but I don't think its entirely the case that if you pay more you get more even under the current system. In some cases, if you live long enough, you can concievably get more from the system than you put in. In many cases, you get less.

"taxing people at a higher level would result in them being eligible for larger SS checks when they become eligible. It won't be a 1-1 relationship (not even close).
"

Which is the point I am making. You pay in X and get out Y, where Y<X. If a person P gets out less than he puts in, then there is more available to fund others in the system.

"When she worked for the city government, she did not pay SS. I know, it surprised me, too. I'm not saying that all government employees are exempt from the SS program (I paid SS when I was in the military), but I've learned that some are exempt. Some say the number of government workers who are exempt might be in the neighborhood of 3 million people. For example, teachers seem to be exempt in many states. A quick Google search found this statement from the Teacher's Retirement System of Georgia

"

Now, THATS something I didn't know.

"Bush's proposals don't do away with SS, they just give workers more options. Bush proposes that those who choose to participate (entirely optional) can direct up to 1/3rd of their SS taxes into private accounts with the remainder of the taxes going into the current system. "

And the devil is in the details.... I'm willimg to give it a chance, but this is a very danger-fraught path and It also does exactly nothing to fix whatever the problem is, however it is defined with SS.