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S4 in the Washington Post
January 25th 02:57:24 PM
Check out S4 setting the record straight...
The Jan. 19 editorial "Fake Retirement Security" urged Congress to take steps to shore up private pension programs without noting that the nation's pension program, Social Security, faces the same problems. Private companies are realizing that defined-benefit plans are not sustainable in the same way that Social Security as it is constituted is not sustainable.
The Post urged Congress to require companies that operate traditional defined-benefit programs to put aside enough money to fund their promises, but the editorial did not note that Congress is spending young Americans' Social Security taxes on pork-barrel projects across the country. Congress should take a lesson from corporate America and enact a retirement program that funds itself while ending its raid on the Social Security "trust fund."
Posted by Jeremy Tunnell
Comments
There actually is not very much "trust fund" money for Congress to "raid." The purported SS surplus in FY 2005 was about $173 billion. Of this amount, only about $54 billion came from FICA taxes during the year. Congress returned about $35 billion of this to low-wage earners via the "Earned Income Tax Credit" program. There was thus only about a $19 billion cash surplus, instead of the highly trumpted $173 billion amount. The remaining $119 billion of the purported $173 billion surplus was nothing but bogus accounting entries.
It was even worse in FY 2004. In that year, the actual cash surplus from FICA taxes was about $39 billion. Congress returned $33 billion of this amount to low-wage earners, via the aforementioned "Earned Income Tax Credit" program, resulting in a net cash SS surplus of about $6 billion.
These are the real numbers, which I got from Treasury reports for these two fiscal years. We really do need to make changes in the SS program, but not because Congress is "stealing" the money from the mythical "trust fund." We simply cannot afford the grandiose promises Congressmen/women have made to future retirees.
We are going to have to increase taxes, reduce benefits, or both. The sooner we make the chice of how to go, the sooner today's workers (future retirees) will understand the need to take their own initiatives to fund their retirements, instead of expecting the government to do it. However, we are never going to get that accomplished if we do not first recognize that there are no giant FICA related SS surpluses. Congress cannot invest what it does not possess. It is all an illusional tapestry, woven from the "yarn" of fiction.
Posted by Roy V. Dent on January 27th 04:34:07 PM
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