Pass the Kool-Aid; We're Talking Social Security

Most people understand there's no Social Security lockbox where your FICA payroll deductions go till you retire. The system works on PAYGO in which payments from current workers are paid out to current retirees like me. Thank you very much. The payments I made in the ancient past went to people who are now most likely dead.

Receipts in excess of payments are put in the Social Security Trust Fund that scaremongers want you to believe Congress has raided and is why it's running out of money. Some cite this as the reason there've been no cost-of-living adjustments (COLAS) the past two years. They're all wrong.

The Treasury Department, not Congress, is the one doing the raiding -- actually borrowing money at 4.9 percent instead of borrowing from the private bond market. The IOUs are guaranteed Treasury Notes, just like the ones we owe China, that must be paid back.

As far as COLAS go, they're based on the rate of annual inflation as determined by the Bureau of Labor Statistics. Regardless what some of my fellow codgers think, the lack of adjustments has nothing to do with Obamacare, too many abortions or the place of the president's birth. No inflation. No raise.

This is key. Social Security was never meant to be a pension plan. It's a social insurance program that covers retirees, widows, widowers, orphans and the disabled. It's not accurate to compare it with investments that you can pass on to your heirs. Apples and oranges. The payroll deductions were "insurance payments." You don't get you're fire insurance premiums back if your house doesn't burn down, do you?

Republicans are clamoring to make contributions voluntary through privatization. But where will the PAYGO funds come from to pay current recipients if current workers could opt out of FICA?

That doesn't mean Social Security doesn't require some serious attention -- and now!

The Trust Fund is paying out more than it takes in sooner than expected due to the slack economy. But that would have occurred in 2016 anyway because of increasing numbers of retirees, who also are living longer, relative to contributing workers.

Once it hits zero around 2036, without adjustments in eligibility, payroll deductions or retirement age, payouts will total about 78 percent of obligations; a calamity since roughly 40 percent of older Americans already would be living in poverty without Social Security.

The more immediate problem is the $2.5 trillion the Treasury borrowed needs to be paid back starting now to offset the drop in FICA receipts, adding to an already dire deficit.

Democrats who deny Social Security is in jeopardy are drinking the Kool-Aid. And Republicans, who would wipeout social insurance for the 40 to 60 percent who will never make enough money to set-up voluntary retirement accounts, are pouring it.