US/Social Security/myths

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About

The Social Security system is often attacked by supporters of "free-market solutions" using various spurious claims that it is in financial trouble, presumably with the intention of rebuilding it as a private profit center for themselves (e.g. by converting the trust fund to a set of private accounts) or eliminating it altogether in order to increase worker dependency.

The arguments used tend to play heavily on the minor financial complexity involved in the fact that the system's funds are held as treasury bonds, a form of debt security backed by the US government, rather than cash.

Example

During the debt ceiling crisis of 2011, President Barack Obama said "I cannot guarantee that those checks [he included veterans and the disabled, in addition to Social Security] go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it." This was widely interpreted to mean that the Social Security trust fund was empty -- when in fact Obama was referring to the funds used to redeem the maturing treasury bonds which, in turn, provide the backing for "those checks".

Notes

This text was posted on Facebook; the original source and/or backing sources for the claims needs to be tracked down:

There is no Social Security crisis. And the extent of the federal budget crisis as a whole is being wildly overblown to scare us toward drastic measures rather than rational solutions.

The common source for everyone writing and talking about Social Security is the annual Social Security Trustees Report. This shows that the program can pay all promised benefits for the next 27 years, without any changes at all. If nothing is done over the next 27 years, only about 75 percent of scheduled benefits would be payable in 2037; but that would still be more than what retirees receive today, after adjusting for inflation.

THE LIE: Social Security is a Ponzi scheme, is "going broke," people live longer, fewer workers per retiree, I'll never get mine, etc.

REALITY: Social Security has run a surplus since it began, has a trust fund in the trillions, is completely sound for at least 27 more years without any changes at all and cannot legally borrow so cannot contribute to the deficit (compare that to the military budget!) Life expectancy is only longer because fewer babies die; people who reach 65 live about the same number of years as they used to.

THE OTHER LIE: The trust fund is a fraud.

REALITY:the Treasury obligations held by the Trust Fund are as real as the U.S. government bonds held by any private mutual or pension fund, or the ten-dollar bill in your wallet. The part of the constitution that requires Social Security to be paid back is in article six ,and the fourteenth amendment -the government is to be good for its debts-. Of course if you are going to take something away from people, the first step is to convince them that it wasn't really there in the first place. (you didn't really think the republicans wanting to get rid of the fourteenth amendment had anything to do with "anchor babies", did you ?)

Links

Reference

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Related

  • 2011-07-13 [L..T] What Happened to the $2.6 Trillion Social Security Trust Fund? "I cannot guarantee that those checks [he included veterans and the disabled, in addition to Social Security] go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it." "...either Obama and Geithner are lying to us now, or they and all defenders of the Social Security status quo have been lying to us for decades. It must be one or the other."