How broken
is Social Security? It has collected a total of $17 trillion in revenue, and in
exchange has created $25 trillion in unfunded liabilities. (That is the optimistic view of the SSA) For every $1 that the system has ever collected,
the system has created $1.50 of promises it can’t keep.
But
wait. Social Security has a $2.8 trillion surplus that can pay every benefit owed to every eligible American for the next 18 years.
How can both be true?
Let’s compare Social Security to the checking account that you have. The unfunded liability is like a check that
has been written on the checking account but hasn’t cleared at the bank. The
surplus is like the balance that you see at the ATM. In the analogy, Social Security is like you
having a $1,000 in the checking account on which you have written $10,000 in
checks.
In other words for every dollar of problem we have about a dime of solution. This will tell you how dysfunctional our
attention span is: we want to argue about the value of the dime. Half of the people say we have $1,000 in the
checking account. The other half says we
have nothing but worthless IOUs designed to funnel cash to the general fund. Instead of focusing on the $0.90 of problem,
we are bitching about what to call the dime of solution.
The problem isn’t the dime. It is
us.
