NOVEMBER 1, 2007
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Josh Marshall raises a great question today about Social Security, one I've wondered about myself for quite a while: If you believe the Social Security trust fund is one big myth, as most conservatives do, why on earth does it make sense to start "saving" Social Security today? After all, the Social Security program will be running surpluses for another decade or so. Those surpluses currently help fund the rest of the government, which, in return, sticks a lot of IOUs in the Social Security trust fund. The only thing "saving" Social Security today--that is, raising taxes or cutting benefits--would accomplish is to increase the size of the current Social Security surplus, and therefore the number of IOUs in the trust fund. But, of course, if you don't actually believe in the trust fund, it's not clear why you'd want to make it bigger. (Well, it is clear, as Josh points out: Because you want to raid it for tax cuts. It's just not clear why anyone should go along with you.)
--Noam Scheiber
5 comments
It makes sense if the "fix" is to raise the cap to make the payroll tax apply to the very people who have benefited from the tax cuts that the surplus has subsidized. That's what I call rough justice.
- seanwright
November 1, 2007 at 6:14pm
Birng back the lock box!!!
- virginiacentrist
November 1, 2007 at 7:38pm
How about instead of buying US bonds the government dedicates that surplus to buying State and Municipal bonds, thereby providing money to fix our goddamn roads and bridges and providing a steady income stream for the Federal Government in a generation.
I don't know, I must be so freaking stupid to think this because it will never happen.
- blackton
November 1, 2007 at 7:50pm
...." Marshall has made his decision; let him enforce it now if he can." Oops that was a different Marshall. How bout this, "I think I shall never see, a trust fund as lovely as a tree." Hey, a "trust fund" full of IOU's(which represent further future taxing) doesn't make sense either.
- lesserliz
November 2, 2007 at 8:19am
Despite scare-mongering on the right, there really IS no SS fund and any "surplus" the taxes produce have no direct effect on its solvency.People save for retirement; societies don't. If I'm not working I have nothing directly useful to exchange for food other than the memory that I once gave up some of my earnings to help a retired person. If 30% of the population isn't working, that means that 70% of the population is supporting 30% and the existence of a SS fund (or of bars of gold under the bed) doesn't change that. It can't.
We run a surplus so we can invest in the country so that when people retire the country will be wealthy enough to support them. If there's nothing in the coffers but the country is rich, it can afford high taxes to provide this type of transfer. On the other hand, if the country is poor even IF there are funds squirreled away, workers won't be able to afford to give up the fruits of their labor to pay for these retirees and you'll see sufficient inflation to make the retirees' unhappy. It don't matter...it's all book-keeping figuring out how to allocate fixed amounts of resources between workers and nonworkers.
To be sure, we've been eating our feed grain for quite a while and our society...having sold itself to the Chinese...is no longer rich enough and productive enough to support its retirees AND maintain appropriate standards of living for its workers. But that's not the inherent fault of the SS funds; the SS funds are merely one measure of the society's failure to become more productive.
This is Economics 101; an article making the identical point was actually published in TNR some years ago. The failure to make this clear in any of the public discourse in interesting.
- AlanK
November 2, 2007 at 9:53am