Thursday, March 10, 2016

What Is The 2.8 Trillion Dollar Surplus



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.

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