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390742 05: A protester demonstrates against a Bush administration plan to add private investment accounts to Social Security, June 18, 2001 in New York City moments after U.S. Treasury Secretary Paul O”Neill addressed a luncheon given by the Coalition for American Financial Security. (Photo by Spencer Platt\/Getty Images)<\/p>\n
Getty Images<\/p>\n
Social Security is not going bankrupt, and by extension benefits won\u2019t be cut. Not now, not in four years, not in forty.<\/p>\n
The irony in all of this is that existing and future retirees wouldn\u2019t much care even if benefits were reduced. More on this in a bit, and why it\u2019s better for U.S. taxpayers that benefits not be shrunk.<\/p>\n
For now, it\u2019s useful to address bankruptcy and benefit cut rumors. The frequently wise Washington Examiner columnist Tiana Lowe Doescher wrote there<\/a> recently that a failure to do anything about Social Security means bankruptcy in four years and 28% benefit cuts. The bad news is that Doescher\u2019s prediction won\u2019t age well, while the good news is that she\u2019s got lots of company when it comes to making a prediction that won\u2019t reveal itself.<\/p>\n The many predicting doom ignore that Social Security is all about general revenues, not what\u2019s in a \u201clockbox\u201d that has never existed as is. Better yet, the surest sign there\u2019s no risk of Social Security bankruptcy or looming benefit cuts is the lack of a \u201clockbox.\u201d Think about it.<\/p>\n In the past, monies paid into Social Security that did not fund benefits didn\u2019t go into a Social Security bank account, rather they went into general government revenues. Translated, any overages collected by Social Security were spent by Congress.<\/p>\n Of course, the fact that Congress has always spent what the Social Security Administration (SSA) didn\u2019t pay out means that if Social Security ever goes \u201cbankrupt,\u201d Congress will cover any benefits payments that the SSA lacks. In other words, and as stated up front, neither bankruptcy nor benefit cuts loom for Social Security or its recipients.<\/p>\n Which brings us to present and future retirees who will be Social Security recipients. It\u2019s long been said (correctly) by members of the right (including the recently deceased Cato Institute co-founder Ed Crane<\/a>) that Americans should be able to own the Social Security portion of their retirement with private accounts. This would be great.<\/p>\n Just the same, it really wouldn\u2019t matter. And it wouldn\u2019t because it\u2019s increasingly evident that enterprising Americans have worked around the ridiculously low Social Security payments that await.<\/p>\n