New Math

The Christain Science Monitor consults Rosy Scenario and decides that Social Security isn’t in need of any overhaul:

But some economists see any needed adjustments as modest, and perhaps not even needed at present. Here are their arguments.

The trustees of the Social Security administration project say that the payroll tax will provide enough revenue to cover all benefits through 2018. Then the system can draw on both payroll taxes and the Treasury bonds in its trust fund to pay all benefits through 2042.

That’s a long time – long enough to weather most of the baby-boomer bulge.

Read that middle graf again, and see if you can tell me what’s wrong with it.

If you’ve given up, I’ll tell you: the “trust fund” is financial fiction. It’s trickery. It doesn’t exist. Treasury bonds are money the government loans to itself. Imagine if you went and spent your own $500-a-month household budget surplus to make a backyard habitat for snail darters. You promised yourself you’d pay back the money, by writing yourself an IOU for the $500 each month, and depositing them in your piggy bank.

The snail darters sure are happy, but what happens when you retire, and that $500 monthly surplus becomes a $100 deficit? Can you pay the mortgage with your collection of “I OWE ME $500” slips of paper?

Congress — and the Christian Science Monitor — thinks you can.