Social Security continued...

When we last talked I explained that the surplus is held in US Treasury Bonds the safest investment on the planet. It is an investment backed by nothing less than the constitution itself. The 14th amendmendment to the constitution Section 4 reads as follows.

The validity of the public debt of the United States, authorized by law,
including debts incurred for payment of pensions and bounties for services in
suppressing insurrection or rebellion, shall not be questioned
Lately however, people have been calling them "useless ious". This is not so. The United States has never defaulted on its debt. And these bonds carry the same weight as any other bonds the government issues.

People have been talking alot about the fiscal crisis that faces social security but it depends on a set of assumptions all worst case scenarios. One of which is that over the period we are talking about the economy will only grow at 1.8% per year about half what we have averaged the last 75 years. If that happens the stock market will surely tank.

Now lets talk about the dates... remember this is a worst case scenario if we make no change.

  • 2042/52 this is the year that the Trust fund runs out of money but Social Security will still be able to pay 80% of promised benifits
  • 2018 this is the year that Social Security will be taking in less than it pays out.

Next time more on the President's non-plan its origins and the morality or lack for such a system.

1 comment:

Anonymous said...

Good points. I don't see a problem. I see facts that tell us we should make preparations to bolster Social Security, not take a hatchet to it.

My mother has social security and private investments (with a very well respected fund manager).
On 911, she lost 1/3 of her privately held investments, and we have not recovered yet.

I would hate to see what would have happened if the social security were in private investments.

The administration takes advantage of the American public's ignorance on most issues. To make sure that folks don't know better, schools are underfunded, and the media is a conglomerate that allows no useful information.

- JM