Posted: Apr 28, 2005 By: Robert P. Hagemann

Subject: TRUTH IN TAXATION - Social Secirity

Comment: The Social Security System currently has a budget surplus, not a "trust fund."

It is misleading to imply to taxpayers that there is some sort of "trust fund," which they perceive as a repository of their FICA tax contributions which will be kept in an account drawing interest with the funds used for their retirement based upon actuarial tables.

No corporation could ever get by with this!

The unfunded pension liabilities of the Social Security program are massive, in the trillions I've heard, yet no one mentions the fact.

On the other hand, corporations with the old style defined benefit pensions are derided unmercifully by congressmen and the media for their unfunded pension liabilities, which pale into insignificance compared to the Social Security unfunded liability!

Face it, there is no "trust fund" that will fund each individual's defined retirement income benefit based upon actuarial tables.

There is something akin to a Ponzi scheme, where the contributions of the most recent investors are used to pay the original investors!

Maybe that is why the public has such a hard time understanding the "problem" facing the Social Security system, i.e., caused by calling the "budget surplus" a "trust fund."

Why not call a spade a spade?

Tell the taxpayers that the Social Security system currently has a "budgetary surplus," which is projected to disappear in a few years just like the tax surplus did, unless we do something now to lessen the impact. The longer we wait, the harder the problem will be to fix.