Columnist Ann McFeatters writes, “Social Security is a separate revenue pot that has nothing to do with the national budget deficit.” Really?
Contributions are a wage tax that doesn’t apply to higher-income individuals. The revenue is invested in government bonds and loans, which spends it while also borrowing freely elsewhere during the period when the baby boom provided a large workforce from which to extract taxes.
Now baby boomers are retiring, the taxable workforce is shrinking, and retirement expenses exceed Social Security revenues and contribute to government debt (http://usdebtclock.org). Where will the government get the money to pay for the bonds and the expenses?
U.S. debt’s largest holders are the Federal Reserve via quantitative easing, the Social Security Trust, and China. The Federal Reserve’s printing limits are unlimited, other nations are currently willing to buy U.S. bonds, and the constrained interest rates minimize the expense of holding that debt while reducing the return on the money invested by the Trust and by anyone who saved.
