Tuesday, March 30, 2010

NYTimes piece: more scare talk on social security?

Mary Williams Walsh had a piece in the Sunday New York Times, “Social Security to See Pay-Out Exceed Pay-In This Year”, with link here.

The article explains the accounting vernacular of “trust fund balance” as “all time total intake” minus “all time total outgo”. Once that’s zero, benefits would cease by law. That number right now is about $2.5 trillion and a lot of that was accumulated in the 80s after Reagan buttressed it with revenues and special taxes (and bringing in federal employees) when it was getting into trouble after the 70s Nixon-Ford-Carter stagflation.

There are three “treatments”: raise taxes, cut benefits, or print more money, Argentina style.

There are LTE’s on p A22 of the New York Times today March 30. Most readers point out that we could continue raising the wage base to raise revenue “painlessly” from more highly paid workers. Viewed as a tax, FICA is one of the most regressive that we have. But it can be viewed as forced savings for an annuity, too, which over time it has gradually become. That’s part of the argument for privatization.

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