Saturday, December 21, 2013
The "blind process" of building and depleting the Social Security Trust Fund
First impressions count: I always assumed there was some rhyme or reason to the “Trust Fund” — Al Gore promising to put Social Security “in a lock box”, etc.
But as the TF and I both “matured” it began to strike me odd that the TF should be built up for 30+ years and then drawn down for 20+ years. Would sound reasonable for a person’s life — but whole populations go on forever — what’s the diff between the before and the after? Why “save” for the future now and “deplete” for the present later — what’s so unimportant about the future of the future that _it_ doesn’t have to be saved for?
Especially when the TF bonds would have to be cashed by income tax instead of FICA, that’s all — especially within especially when the regressive tax will come early when per capita income will presumably (barring a comet strike) be lower and progressive tax will kick in when (barring a limited nuclear exchange) per capita income will be higher.
It is not like Congress specified some exact level for the TF to reach (for safety). The 1983 Congress just seems to have set in motion a blind process. Unless Congress was intelligent enough — I doubt it — to realize that the practical result of it all would be to relieve Congress of raising the FICA rate for maybe 60 years.
In any case, if anyone worries about the TF running out tell them: we can just print some more TF bonds and then go on printing the money to cash the TF bonds (they don’t imagine Congress will raise income tax if it wont raise FICA). If we are going to print the money we may as well print the bonds. :-)