TribLIVE

| Opinion/The Review

 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Follow the Social Security money


Email Newsletters

Click here to sign up for one of our email newsletters.

Letters home ...

Traveling abroad for personal, educational or professional reasons?

Why not share your impressions — and those of residents of foreign countries about the United States — with Trib readers in 150 words?

The world's a big place. Bring it home with Letters Home.

Contact Colin McNickle (412-320-7836 or cmcnickle@tribweb.com).

Daily Photo Galleries

'American Coyotes' Series

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

By Antony Davies & James R. Harrigan
Saturday, Nov. 30, 2013, 9:00 p.m.
 

For the past month, the amount the federal government has borrowed from the Social Security trust fund has hovered just below the $5 trillion mark — a historic record it soon will break. Something else will be broken along the way: the promise of Social Security itself. The Social Security Board of Trustees estimates that the program has just 20 years left before it begins defaulting on promised benefits.

Many politicians don't regard the money Washington has borrowed from the Social Security fund as debt. They say things like, it is “the government borrowing from itself.” Since they don't consider the “borrowed” money to be debt, they claim that the government's debt, at around 77 percent of gross domestic product, is quite manageable. But include what the government has taken from Social Security and its debt is 110 percent of GDP.

If the money in the Social Security trust fund belongs to retirees, and the government is merely holding it in trust, then every dollar the government borrows from Social Security is a dollar borrowed from retirees. That's debt, pure and simple. But if the money in the trust fund belongs to the government, then borrowing from Social Security isn't debt at all — it really is the government borrowing from itself.

Every politician who claims that money borrowed from Social Security isn't really debt necessarily believes that Social Security money doesn't belong to the people who put it there; it belongs to Uncle Sam. That is as morally alarming as it is financially frightening.

According to the Social Security Board of Trustees, the disability insurance portion of Social Security will exhaust its funding in 2016, Medicare will follow in 2024, then the retirement portion of Social Security in 2033. People need to be able to fend for themselves when government safety nets cease functioning. A good first step is to privatize Social Security.

Privatization opponents have long contended that Social Security is better than private retirement accounts because it is safe. But the only thing safe about Social Security is that the trust fund invests the money in Treasurys. The government has no legal obligation to give retirees their money back, and someday soon it won't.

If safety were really the goal, every American could simply open a private retirement account and buy U.S. Treasurys directly. People would have the safety of government bonds but also the legal guarantee of repayment. And people who did this would get a slightly higher rate of return.

Why doesn't the government want its citizens to get a better return with more safety? If people invested privately, the government could not spend their money indiscriminately.

If you want to understand what the government is really up to, follow the money.

Antony Davies is associate professor of economics at Duquesne University. James R. Harrigan is a fellow of the Institute of Political Economy at Utah State University.

Subscribe today! Click here for our subscription offers.

 

 


Show commenting policy

Most-Read Stories

  1. Pirates acquire pitcher Blanton from Royals for cash
  2. Starkey: Garoppolo baffles Steelers
  3. Peduto blasts Wolf’s plan to borrow $3B to shore up pensions
  4. Tight ends’ role in Steelers passing game continues to lessen but players remain selfless
  5. McCutchen, Pirates cruise to interleague victory over Twins
  6. Steelers notebook: LB Dupree sits out backs-on–backers drill
  7. Derry boy recovering at home after high-profile intestinal transplant
  8. Steelers’ Bell unsure why NFL reduced his suspension
  9. Inside the Steelers: Williams’ quickness out of backfield evident in drills
  10. Hempfield man serving life without parole for killing wife tells judge he’ll pay restitution when he’s released
  11. Extremes in weather hurt crops in Westmoreland