Tuesday, June 07, 2011

Pay no attention to that man behind the Social Security curtain . . .

The current AARP Bulletin published an opinion piece by James Roosevelt, Jr.,  the grandson of President Franklin D. Roosevelt.  Mr. Roosevelt is currently president of Tufts Associated Health Plans, Inc.

Mr. Roosevelt is of the opinion that worries that Social Security will run out of money are "utter distortions," the same sort of vicious foolishness that his grandfather had to endure when president.  He says that Social Security pays back 99 cents for every dollar collected.  He argues that Social Security is solvent because there is a positive balance of 2.6 trillion at the end of 2010, and a projected positive balance of 3.67 trillion at the end of 2022.  Why?  Because of interest to be earned.

Interest earned?  That's because money in the social security balance sheet isn't money.  It is debt, money that has been loaned to the federal government which is supposed to repay the money with interest. 

And how is the federal government doing?  It is currently spending $3.00 for every $2.00 it collects.  The other $1.00 it borrows.  The current federal debt, including money owed to Social Security, is 14 trillion and growing. 

So where is the cash that Social Security is going to pay out in the future going to come from?  It's going to come from future tax revenue.  In other words, we all have been paying money into Social Security once.  The government borrowed and spent it.  We'll pay again at tax time so the federal government can repay Social Security so that Social Security can return our 99 cents on the dollar.

Why it almost sounds as if there's some spinning of the facts, particularly in light of the unmentioned fact that Tufts Associated Health Plans, Mr. Roosevelt's employer, sells Medicare Advantage plans.

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