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Guest view: The truth about Social Security

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Social Security is one of the most successful government programs. Since its enactment, it has prevented millions of seniors and retirees from living in poverty. Prior to the inception of the program, the majority of retirees found themselves living in poverty, in many cases forced to live with their children.

Since being signed into law by President Franklin Roosevelt on Aug. 14, 1935, there has been continuous efforts by some to dismantle this effective social insurance program. The effort to eradicate Social Security has been raised to new levels during the past 10 years, beginning with the Bush administration’s efforts to privatize it, followed by the recent push to dismantle the program entirely.

Here are a few of the distortions being made by politicians and candidates for office and the reality about each:

  • Baby boomers are creating the present strain on the program. FALSE! The boomers were all born long before 1983 when the Greenspan Commission recommendations were adopted to address the population bubble. Adjustments were made to cover the boomer situation.
  • Government “raided” the Social Security fund. FALSE! Surplus funds are invested in Special Obligation U.S. Treasury Bonds. These bonds carry the same obligation to repay as the savings bonds we purchase for our children and grandchildren.
  • The system will not be able to make payments in 2037 (or some other year selected by the speaker). FALSE! Even if the trust fund were exhausted in 2037 as the actuaries report, the tax revenues estimated for that year will be able to pay 76 percent of the calculated benefit. Adjusted for inflation and wage gain, this will still be a higher benefit than is paid under the present formula.
  • The only answer is to raise the retirement age to 70. FALSE! A great majority of workers are in physically demanding jobs that cannot realistically be continued to age 70.
  • The Social Security Trust Fund does not exist. FALSE! At present, the Trust Fund has a value of $2.4 trillion. The Congressional Budget Office estimates the Fund will grow to $3.8 trillion by 2020. In 2009, Social Security paid out 94 percent of its tax revenues in benefits. The excess tax revenues and interest were credited to the trust fund.

The trust fund claim is the most common misrepresentation. In fact, the fund is a product of the original legislation by which the program was developed. In 1935, after the 1929 market crash, developers of the programs realized that investing any funds in the stock market was too great a gamble for this important retirement security program.

The legislation required any surplus funds to be invested in U.S. Treasuries, commonly called “bonds,” and created a formula for interest payments that would mirror other financial instruments issued by the federal government. In 2008, the fund earned interest on its Treasuries at a rate of 5.1 percent.

In closing, the Social Security program has not added 1 cent to the national debt. Those who attempt to connect Social Security to the debt are, in truth, attempting to default on the treasury bonds owed to the trust fund. In business, not meeting your loan obligations is considered unacceptable. Apparently, political candidates attempting to default on the government’s treasury obligations to the Social Security trust fund see it as “business as usual.”

Leon Burzynski is president of the Wisconsin Alliance for Retired Americans.

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