ARTICLES BY TOPIC ¦ SOCIAL SECURITY



Op-Ed ¦ March 18, 2004
The Shape of Social Security

Regarding Tim Penny's March 15 Opinion piece "Social Security needs long-term overhaul, not campaign slogans": Mr. Penny has been misinformed about some fundamentals. The baby-boom demographics have been factored into Social Security cost projections since the mid-1980s, so there is no impending financial crisis on that score.

As Penny notes, the Social Security trust fund is not a government asset; however, the US Treasury bonds it buys are an asset that the government will have to pay interest on and later repay the principal to the trust fund. Yes, in order to repay the loans, the government will have to raise taxes (if the current level is not sufficient), or cut programs, or borrow money; but this is normal for all Treasury borrowings from banks, investors, and foreign governments.

Using a reasonable calculation basis, Social Security's finances are in fine shape. The problem is that politicized trustees control the projection process and have preferred to distort it by using unjustifiably high economic assumptions about the future.

David Langer
New York


© 2001 DAVID LANGER COMPANY, INC.