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Up next for rescue is retirees' trust fund

| Thursday, Oct. 15, 2009

The future comes quicker than we think. Didn't President Barack Obama argue a case for the Olympics in 2016• Well, 2016 is the day after tomorrow for Social Security.

Just seven years from now the United States will begin paying out more in monthly benefits than payroll taxes bring in.

That's four years faster than forecast just a year ago. Thank recession job losses for that. But it's no reason to panic.

Social Security's "trust fund," accumulated as a paper account in the U.S. Treasury for years, would be able to pay full benefits through 2037, says the MarketWatch reporting service.

And even after that, socialism's greatest success won't run out. Treasury could cover 75 percent of benefits on and on. Because workers still on the job would be paying in.

But we'll almost certainly never get into such a squeeze. Congress wouldn't dare allow it. The big question is what adjustments will be needed to set the huge system right. No doubt a mix of higher taxes and lower benefits. Or stretched out benefits. The threshold for full payoff is already in a long-term creep to age 67 from 65.

What seems clear is that workers in their mid-50s and down, will not get as sweet a deal as their elders. The system pays out far more than today's beneficiaries paid in while working. And their inputs never were invested in growing corporation but in government debt. That's why it's basically a Ponzi scheme. The early participants get paid off by a pass-through from the later.

The illusion of such a system (never mind that it will be patched up in time) is a clear signal to younger workers.

Put aside more for the future on your own!

And teach children to do the same!

Old age security will result from the same idea that built America in the first place: Personal thrift. Savings. Investment. Putting off consuming now to own assets that might grow in the future.

Former President George W. Bush clumsily tried to steer the country in that direction. He fought for "personal investment accounts" carved out of payroll taxes. But it scared heck out of the old voters' lobby and the labor unions. And then the market crash of 2008-09 knocked 50 percent out of stock averages and put the kibosh on Bush's idea for who knows how long, never mind the market's recent 30-odd percent climb back.

Whatever shape the coming rescue takes, sometime before 2016, you can bet it will be called "reform." It really ought to be renamed too, from Social Security to "supplementary security?" Because it never was meant to serve as a total retirement income. Unfortunately it gave millions of workers that illusion.

Let's play fairer next time. Have everyone realize, including our poorly schooled young, that people really must save for their own future. And a government check at age 70• Nice but not life or death.

Devising new investment products for workers, and new incentives to save, ought to be a great opportunity for the financial industry to win back some lost stature.

The U.S. economy, too, pumped by new investment, might again be the powerhouse that we should not be surrendering to socialism.

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