Friday, September 11, 2009

A Look At Social Security

by Daniel Aaronson and Lee Markowitz (article link)

[…] all of the surplus money collected since Social Security's inception, which should have been saved for future payments, instead has been lent to the Government in exchange for privately issued Government debt. In fact, the US Treasury does not hold assets against the privately issued Government debt, making social security taxes no different from other federal taxes in that the Treasury uses the money for "general Government purposes".

The Government ran out of money long ago. As a result of its insolvency, the Government is tapping any source of cash it can access, such as Social Security's surplus funds. This is not a healthy or sustainable situation. People recognize that Government spending has the US on a crash course, but markets still behave as though the day of reckoning lies so far ahead that there is no need to address it now. However, the Government's attempt at solving the current financial crisis through the assumption of trillions of dollars in additional debt has only moved the day of reckoning closer.

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