Sunday, October 30, 2011

Nice graphic showing the situation with Social Security...A concern for the young and old...

Go HERE for the source of this graphic in the Washington Post (Via: Jared Bernstein blog).

A concern should be the cross-over point between surplus and shortfall.  There are lots of divergent viewpoints as to whether this constitutes a crisis or not.

Revenues will still come into the fund from current workers payroll taxes (6.20% from workers and 6.20% from employers).  Until now that has been sufficient to pay current benefits.

However, as we pass into shortfall, workers will still pay into the fund from payroll taxes, BUT the Social Security Trust fund will have to redeem bonds (according to the graphic) to pay for the difference.  Where does the money come from to do that?

I am just trying to follow the money trail.  Is it from taxes? Borrowing ("private and/or public)?  Printing? A continued shell game with the Treasury?

A vigorous economic recovery, seemingly remote at this point, would lesson the problem in the short run as a surge in tax revenue from the payroll tax would continue to fund current and future obligations.  While that would be terrific, it would give politicians breathing room to postpone necessary reforms that must take place in order to make the program solvent for the next generation of recipients. 

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