[Speed Gibson,
Sunday May 22, 2005 at 11:04pm]
Social Security: The Trust Fund Debate
On May 15, Minneapolis Star Tribune featured a couple of articles on the Social Security trust fund. "Social Security: Looking for the trust in trust fund" by Staff Writer Eric Black was a rather droll recitation of the two major points of view on whether it represents a real asset or not. But only one point of view - that it is not an asset - has any basis in fact. To keep this phony debate going serves only those who refuse to act.
A reader's letter printed today offered a succint rebuttal with a new perspective:
There's some serious co-mingling going on here. Some of your FICA taxes are paying for general expenitures, and some of your income taxes will soon be paying for Social Security benefits. This is already happening for Medicare.
Social Security used to have a modicum of fairness about it. You paid your FICA taxes and you received a benefit in proportion to the amount you paid. Since the employer half was shielded from the Income Tax, it was certainly fair that 50% of benefits should be counted toward your taxable income.
But now, benefits are 85% taxable. The "full benefits" retirement age is being raised. And the ratio of taxes to benefits is significant off, which is why we're having to discuss this.
Let's face it: Social Security is welfare. So is Medicare. As such, maybe it's time to stop playing phony trust fund games and adopt a means-tested benefits approach.
Eric Black wrote a companion piece, "Decoding all the banter" that asks and answers the many questions about the trust fund. IMO, his answers are exactly right. Note this one:
Eric Black's many articles on Social Security have been, as a whole, excellent, even better than some "right-wing" media. Do his editors know he's actually printing the truth?
A reader's letter printed today offered a succint rebuttal with a new perspective:
"The bonds in [the trust fund] were bought with taxes on everyone's payroll income. The money has been spent by Congress in almost every session. To redeem those bonds (sounds so simple) the money has to be collected a second time by taxes - the second time mostly by income taxes."
There's some serious co-mingling going on here. Some of your FICA taxes are paying for general expenitures, and some of your income taxes will soon be paying for Social Security benefits. This is already happening for Medicare.
Social Security used to have a modicum of fairness about it. You paid your FICA taxes and you received a benefit in proportion to the amount you paid. Since the employer half was shielded from the Income Tax, it was certainly fair that 50% of benefits should be counted toward your taxable income.
But now, benefits are 85% taxable. The "full benefits" retirement age is being raised. And the ratio of taxes to benefits is significant off, which is why we're having to discuss this.
Let's face it: Social Security is welfare. So is Medicare. As such, maybe it's time to stop playing phony trust fund games and adopt a means-tested benefits approach.
Eric Black wrote a companion piece, "Decoding all the banter" that asks and answers the many questions about the trust fund. IMO, his answers are exactly right. Note this one:
[True or false:] The government's options would be no different if the trust fund didn't exist.
True. The options are: raise taxes, cut Social Security benefits, cut other government spending to produce a surplus in the non-Social Security accounts, borrow the money by selling more bonds to the public, or some combination of these. If there had been no Social Security surplus, no trust fund and Social Security's expenses began exceeding payroll tax collections, the government would have the same set of options.
Eric Black's many articles on Social Security have been, as a whole, excellent, even better than some "right-wing" media. Do his editors know he's actually printing the truth?