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The Bush commission's report said the key date was 2016. That is when payroll tax revenues flowing into Social Security from workers and employers will fall short of benefit payments for the first time. At that point, the system will begin relying in part on interest payments from its vast holdings of government bonds — the Social Security trust fund. But the bonds and the interest on them are nothing more than commitments by the government to help pay future benefits out of general tax revenues, meaning that Social Security will begin to impinge on the rest of the budget. Now if those "trust funds" were invested
in other than IOU's from the Government to the Government they could earn more
and be real. Individual accounts are much more complex - alternative
investments could include foreign bonds which would help the balance of payments
- Bank CD would add to domestic savings and lower interest rates , index funds
are not the only investment alternative.
http://www.wiredbrain.com/public-policy.htm
suggests a Federal Assets Management Agency - like other pension funds. If the
surplus now coming into the trust funds over the next 10 years were used to
create a real reserve fund - several trillion dollars would be in the fund. It
would remove the temptation to spend theses funds and have real earning
(compound interest) added to them.
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Panel Argues for Changing Social Security.url
