Tucker Explains It All For You
Everyone's favorite bow-tie-wearing frat boy is at it again. This time, when former Clinton national economic adviser Gene Sperling appeared on Crossfire, he made the statement that "Social Security does not become insolvent until 2042." Tuckie, who evidently counts economics expertise amongst his many talents, "corrected" him: "In 2018, just to correct you ... that's, again, only 14 years. Benefits will overtake revenues." Whence the confusion? I thought an excellent post from Sue on the MediaMatters website answered the question quite succinctly:Just as having an account at a bank does not mean that the bank has to have your pile of money sitting in the bank vault just waiting for you to withdraw it, the Social Security Trust Fund does not have to have the funds in a LOCK BOX to have an obligation to fund monthly stipends to retirees. Currently, and for the next few years, more money is coming into the system from payroll taxes than is going out in benefits. This makes them have a surplus. Banks have surpluses, and have millions of dollars in deposits sometimes, but they do not have those millions in the vault. They lend that money out in dribs and drabs and huge chunks, and then borrowers pay it back with interest included. It is this constant flow of money out and money plus interest back in that allows banks to pay interest on savings accounts. If a bank were only a repository for the money, it would NOT gain any value over time. It only gathers value because it is used....
Tucker Carlson tried to make the argument that solvent and running a surplus are equivalent. They are not. His guest said "Social Security does not become insolvent until 2042." Carlson responded: "In 2018, just to correct you ... that's, again, only 14 years. Benefits will overtake revenues."
....Carlson was saying that he was correcting his guest from saying that something would happen in 2042 when it will actually happen in 2018. BUT, these are two different things. Social Security is bringing in more money now than it is putting out. And from 2018 until 2042, it will have enough money to pay all beneficiaries without doing a thing with a combination of stored asset s(once again, NOT stored in a bank vault, but owed and due upon demand. And, the US Government is not going to default on this obligation as some banks did in the Depression) and incoming payroll taxes.
So basically...as was pointed out by Molly Ivins in an earlier post this week, the government has been borrowing from Social Security to fund just about everything, and if it repays this money, there is no problem. Of course if the Chimp stays on his current drunken spending spree, the question of where that repayment money will come from naturally arises. But that is not a problem in the Social Security system...it's a problem with 59,000,000 people who voted for that dangerous fool.
It's all just a synchronous excuse to loot large amounts of money from one of the only healthy financial federal programs in existence. I agree with the prescient observations of another MM poster: "Privatization or Pirate-zation of Social Security will be attended by (1) periodic (5 to 10 years) embezzlement raids by Wall Street Firms (2) bailouts by the government."
posted by Jane Hamsher @ 12/18/2004 08:36:00 AM
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