Do you think the social security problem is real or overblown? WHY?

Answer 1

It's real...but not as direly apocalyptically awful as the politicians want us to think.

If you think about it, who pays into Social Security - working people, right? Who gets paid out of it - retirees, mostly. So you pay in during your working years to have benefits after you retire.

Our unemployment rate is something close to 5%...very low by world and historical standards. That means that lots of folks are paying into the system right now. When we Baby Boomers begin to retire, we will start to withdraw benefits. We are the largest age cohort and our benefits will cost the system a good deal, BUT, we contributed more than anyone else has, too.

It will take a some adjusting to make sure no one goes hungry or medication-less or roofless, but the good news is that Social Security isn't going to disappear...we are. We will eventually die off and no longer be a drain on the benefits system.

Answer 2

Overblown - but the rest of the government is in big trouble, because it has been borrowing money from the social security trust fund, every penny of which came from FICA taxes on the wages and self employment earnings of working people, and the government has no plan in place to pay it back, when it is needed to pay benefits. Last year the government borrowed over 168 billion dollars from the Social Security trust fund, an all time record. Trillions more in borrowing from the trust fund is planned in the next few years

This has put President Bush in a very awkward position. He needs an excuse to avoid paying back the money that he has been borrowing from the Social Security trust fund ,so that he can preserve his tax cuts for the rich. But legally the bonds held by the Social Security trust fund have the same legal status as other government bonds - they represent a debt of the U.S. government. The law prohibits the Social Security trust fund from being used for anything other than paying benefits. - And there is no way the government can default on the bonds, without causing a financial crisis. - So what President Bush has been trying to do is to convince the public that the system is going to go bust in 2042, so he can have an excuse to cut benefits and build up a larger trust fund that the government and borrow and not pay back.

In a Ponzi scheme, money from new investors is used to pay high percentage returns to old investors which encourages more people to invest. Eventually, the person operating the Ponzi scheme runs off with (steals) the money and the investors are left with nothing. Prior to 1983, Social Security had little resemblance to a Ponzi scheme because nobody had an opportunity to steal from the system. (All money coming in from taxpayers, was paid out in benefits) - but as a result of the reforms in 1983, social security taxes were raised to build up a surplus in order to help pay for the retirement of the baby boom generation and suddenly there was money available to be looted.

For a really good explanation of the problem, see
Social Security in Language at:

http://www.youtube.com/watch?v=Tts2uTWt6e8

Answer 3

Doctor is absolutely correct. If a corporation pulled this nonsense, the people that love SS the most would want the CEO burned at the stake.
And I love typing this:
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In 1936, the federal government published an informational pamphlet on Social Security. It stated:

"…and finally, beginning in 1949, 12 years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay."

http://www.ssa.gov/history/ssn/ssb36.html
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I would say a multi-trillion dollar lie is a real problem.
.

Answer 4

Susan is about right. There truly is a massive problem with Social Security, but at the same time it's nonsensical to talk of bankruptcy or assume it'll "disappear". We should be so lucky.

Social security will always be adequately funded through the levers of more borrowing, higher taxes, reduced benefits, and/or lower cost of living adjustments. That's a tautology.

So the problems revolve around how inefficient and unproductive it is, and how the potential large amounts of taxation or borrowing in the future will impede economic growth and productivity in the future. Once can assume there'll be nasty political fights as it becomes really expensive in coming decades, yet politically powerful retired baby boomers refuse any reforms.

Answer 5

Social Security is a Ponzi Scheme (a Pyramid Scheme). Therefore, it cannot succeed "by definition". It MUST eventually fail (or be marginalized to a level of uselessness - it is approaching that now).

Answer 6

overblown plenty of cash in the reserve

Answer 7

The only thing keeping it afloat is government issued bonds.. if people ever just collectively decide to not buy anymore.. goodbye US government..

Answer 8

real. call the irs... they have a recording saying when benifits end. seriously no joke!