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  • From: "clanSkeen" <sgian AT planetc.com>
  • To: <homestead AT lists.ibiblio.org>
  • Subject: Re: [Homestead] Social Security 2005
  • Date: Sat, 11 Dec 2004 16:09:44 -0500


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What is bringing down the system are politicians that keep raiding the
system and not putting the money back or what would have been earned by the
money!

Lynda, I'm sure I must be talking at cross purposes here. I'm sure you know how the SS system works. There is no "back" to put the money into. By law, and this has always been the case, the government can't hold onto money or put it into private instruments, from one year to the next. If the IRS collects any money, any at all, withholding and FICA, the US government MUST spend it all during that fiscal year.

When the IRS collects more SS money than is disbursed as SS benefits (which is currently the case) it MUST by law spend the surplus on other programs. There's no legal place to put it. Basically the government is telling you "Thanks for the extra money, in return we promise to exact even more from future earners to give you something for having given us the money now."

The treasury "owes" to the SS all the money it spends that is collected in surplus of SS expenditures. And it owes it with interest. But the treasury doesn't own a dime. It only owns the power to tax in the future.

But you are right (yet again) that the mechanism of taxation and disbursement is of little importance. It ignores the weightier problem. There is only a certain, and small I'm thinking, percent of the people who can be collecting benefits (using goods and services) ... a small percent of those contributing (providing goods and services) for the system to work. Doesn't matter how much money is put away in how many instruments of saving or taxation, when you have 77 million people in line to join the ranks of the non-producing consumers, goods and services don't magically appear for them to consume.

James





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