We cover a number of Chuck Saletta's pieces on Social Security.  This piece is worth reading because it is well written and well thought.

"Over the last several years, the news about Social Security's long-term health has gotten progressively worse. With nearly every passing year, the Social Security Administration's annual Trustees' Report has pulled forward the date when the Social Security Trust Funds are expected to run out of cash."

The article spells out the problem and the consequences.  It tells you about the problem, and what is being done about the problems.

Last week, the authors of the Simpson-Bowles plan released an updated version of their plan.  The part pertaining to Social Security can be found in Appendix A on page 41.  The key phrase is : Unfortunately since the Fiscal Commission proposal was released, the 75 year shortfall actuarial shortfall has increased significantly" 

In football, we throw to where the receiver will be.  In DC, we throw to where the problem looks smallest and most remote.  This is why we measure Social Security by the 75 year solvency. 

The 75 year window is a bad measure of Social Security's security because it makes the problem appear smaller and far away.  How? The figure does not include the financing costs of the system.  It shows the payroll taxes we collect today as revenue, but does not include the cost of benefits associated with taking that revenue.  

Solving the problem for 2010 through 2085 is completely different from 2013 through 2088 because you are bring on the cost of future benefits. In five years, fixing Social Security will be defined by 2018 through 2093 and once again we will have a problem.  Soon enough we will be right back where we were in 2010. 

This is why Social Security has been 'solvent' three times in my life.

Social Security reform should be a very popular issue.  More than 80% of the voting public thinks that without reform the system is heading for crisis.  The problem is that the support for reform is highly fragmented across dozens of ideas and concepts.   

The driver of that fragmentation is simply myths about the system.  It is difficult to ignore the impact of myth on the Social Security debate, and the strength that myth holds on the voting public.  And it isn't just the numbers of people, but the dogmatic belief.  In one email, the myth holds that Social Security would be voluntary.  Taxes aren't voluntary in this world.

One can see not only the belief, but the intensity, in the comments sections of articles, and the ratings of comments.  When you look at the most popular comments, they are invariably grounded in myth.  In an article about Obama’s offer to include a change to CPI portion of the benefits formula, the most popular comment was : “why not come up with a plan to repay the money stolen from SS !”  It received 2,476 thumbs up versus 38 thumbs down.  Those numbers mean that there are 65 people who thought it was a good comment for every one that thought the comment was inaccurate or irrelevant.

Here are the facts.  The Social Security system has a 20.5 trillion dollar shortfall assuming that every penny in the Trust Fund is repaid with a generous assumed interest rate.   (Page 15 of the 2012 Trustee Report) There is no one seriously suggesting the money won’t be repaid.  There is no serious person who says that repaying the money will change the outcome of the system.  After every penny is repaid, the system will still have 20.5 trillion in unfunded obligations, and will still be unable to pay full benefits in 2033 - and that is in a good economy. 

Another comment garnering 50 to 1 support: “Leave Social Security alone, its not your money, its not the gov. money. It is our money, we have paid into it, its not the government checking account.”   The money that is held in the Trust Fund is reserved for future benefits, and it is outweighed by the promises of the system by 10 to 1. 

Any comment that blames LBJ, Reagan, Clinton, or Bush for stealing the money is guaranteed to get support of 40 to 80 to 1 depending upon who is blamed.  The fact is that 90% of all money ever collected by the system was distributed to beneficiaries.  Until Congress changed the system in 1983 to collect excess cash, the system was a paygo system that produced almost no money to ‘steal’.  The system did not reach the 100 billion mark until 1988, when Reagan left office.  No: Social Security did not pay for Vietnam, Starwars, unfunded wars, welfare, section-8 housing, or any of the other obligations of the general fund.

The problem is simple.  Politicians have always enjoyed promising more than they can deliver.  Social Security is no different.  Politicians have altered to the system to generate more promises than it collects in cash, a difference that grows every year and amounts to trillions of dollars.  That comment will get voted down 100 to 1.