It’s Time to Privatize Social Security

Abstract

According curity system's board of trustees, social security will be insolvent by 2029, one year sooner than was stated in last year's report. This represents the eighth time in the past ten years that the insolvency date has been brought forward. But even this does not provide the full story of social security's looming crisis. The important date is 2012. Social security taxes currently bring in more revenue than the system pays out in benefits. The surplus theoretically accumulates in the Social Security Trust Fund. However, in 2012 the situation will reverse. Social security will begin paying out more in benefits than it collects in revenues. To continue meeting its obligations, it will have to begin drawing on the surplus in the Social Security Trust Fund. However, the trust fund is really little more than a polite fiction. For years the federal government has used the trust fund to disguise the actual size of the federal budget deficit, borrowing money from the trust fund to pay current operating expenses and replacing the money with government bonds essentially an IOU.