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View Diary: Social Security Chief Actuary: Super Congress cuts would hurt current beneficiaries (44 comments)

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  •  I've read the comments (0+ / 0-)

    and I've read your Social Security series, and so far I believe that what I've written is closer to the situation than what you believe. As for the cap, I didn't comment.  

    •  Better with numbers (0+ / 0-)

      Lots of people believe lots of things. Like Flying Spaghetti Monsters.

      Let me leave you with a tidbit.

      Per Stephen Goss, the Head Actuary of Social Security, a perfectly balanced Social Security Trust Fund under a Pay-Go system would be perpetually cash flow negative as a PORTION of Trust Fund Interest was paid out in cash to meet the roughly 1.6% gap between tax income and costs while the rest would need to be retained along with ALL the Trust Fund principal to maintain the 100% of next year cost that defines 'solvency'.

      That is once Socia Security hits a steady state of having one year of projected cost in reserve each year it needs to KEEP not just 100% of its principal but to AUGMENT it with enough of its accrued interest to keep pace with an ever increasing beneficiariary population coupled with a benefit formula that goes up with Real Wage. Meaning that in a healthy economy we would never need to redeem the Trust Fund and due to the requirement to retain some of its interest earnings to maintain a Trust Fund Ratio of 100 (one year of projected cost) would actually be paying a discounted rate on the face interest when measured in terms of assets extracted from the real economy.

      Yes it is odd that if we fix Social Security we never have to pay back ANY of it's current assets. But I have run these numbers by the biggest names in the biz and nobody disputes them.

      A fixed Social Security system, something that can be done by minor changes on the revenue front, transforms the Trust Fund into a discounted interest only loan. And so not really much of a debt at all. If you look at the numbers. Which I have done. You?

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