‘Accounting’ for Social Security’s shortfall

To the editor:It seems like almost every issue of NHBR contains an article about “Social Security.” The one by Mark Fernald in the Oct. 21-Nov. 3 issue (“A response to the Social Security ‘smear campaign'”) does a great job of outlining all the great benefits of the system. But it, like all of the others, dances dangerously close to revealing where the $49 billion shortfall comes from (A “mere” 3 percent of the federal deficit, as if to trivialize $49 billion). And that’s for one year.The purported $2.5 trillion held in the trust fund makes $49 billion seem like chicken feed, yet it must come from somewhere, as it was sent to beneficiaries who actually received the money.As some people know, the trust fund holds no actual money. Instead, it has paper credits issued by the Treasury. So the process the trust fund uses to get $49 billion is to redeem sufficient paper to the Treasury, which then comes up with the money.The trouble is, the Treasury is broke and has been for a long, long time. So where does it get the money? Why, it sells bills, notes and bonds to whoever wishes to buy them. Eventually these bills, notes and bonds will be redeemed by the buyers, and where will the money come from?Inasmuch as the government earns no actual money, its sole source of income is taxation of its citizens. Inasmuch as the trust fund money has already been long spent by the politicians, there is no choice but to tax the citizens again for the money. But, they will say, were we not taxed once for this money? The answer is a resounding “yes.” But this time there is a huge interest charge attached, as the Treasury pays the trust fund interest on the money it borrows.As if the above was not enough, the government, through its “special” accounting system, counts the nonexistent money in the trust fund as an asset, even though it has been spent and is further encumbered as a result of being owed to beneficiaries. No one in the private sector is allowed to count an asset more than once — except, perhaps, Enron. Especially one that does not exist.Donald BradleyPlainfield

Categories: Cook on Concord