Social Security invests in the American people - letter by Alan McCormick

This is the latest in a long string of missives from various people, which began with an editorial written by Joe Balyeat, a local CPA. In it he rightly described Social Security as an unfunded liability, which precipitated a hysterical howl of indignation.

Julie Quenemoen was one such person, She wrote a response to Mr. Balyeat, which can be found at the same link along with my commentary. I distilled that commentary into a letter to the editor, found below. A response was printed in today's Chronicle, and also reproduced below. My comments in bold.

You may need to go back to the original link and read it first in order to understand the exchange.

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My letter to the editor:

One might hope that Julie Quenemoen would think twice before debating economics with a CPA. It wouldn't be so bad if she entered the fray with something more than talking points, but no such luck.

She asserts that Social Security is funded. Sorry, it isn’t. It appears that she really believes that these budgetary and financing tricks are legitimate.

Permit me to explain. The Social Security Trust Fund is the receptacle for SS revenues. The government makes payment for all benefits, and the balance represents the surplus.

That surplus is then used to purchase special Treasury Bonds that only the Treasury can redeem, and only the Trust Fund can purchase. Bonds are debt instruments, IOUs. They must be paid back, plus interest.

Therefore, there is no money in the Trust Fund.

Once the bonds are issued, the money is added to the General Fund and spent. Yes, SS is not part of the budget, but the obligation to pay back the bonds is, sourced from the General Fund.

Further, she has no right to "her" funds. In Fleming v. Nestor (1960), the Supreme Court held that that there is no right to benefits because Congress has the power to decrease, discontinue, or increase benefits at will.

SS is nothing more than a tax with a promised future benefit. Her money is gone; it paid for someone else’s retirement.

If only Republicans wanted to use SS to reduce the national debt. If only. The debt is higher because of what Congress is doing and has been doing for decades. All that money is long gone, but the bonds are still there, and our grandchildren will pay for them.

So, Ms. Quenemoen, SS has indeed added many dimes to the debt. As far as “hands off our Social Security,” well, that train has left the station.

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Alan McCormick's response:

Social Security is a trust we have with our government, one of many such trusts. It’s hard to understand why insurance agent Rich negates the importance  and viability of insurance. (I made no comment about the importance and viability of insurance.) 

It’s built on contract and trust, just like our Social Security system. (No, the SS system, as I described, is built on accounting tricks. There is no contract for SS, which was the point of me citing Flemming Vs. Nestor. All Mr. McCormick offers is a summary contradiction with no facts, data, or logic.) 

We don’t abandon our car insurance if we don’t have an accident. We don’t claim our homeowner’s insurance is broken and needs to be dismantled when we don’t cash in on damage. (This particular argument mystifies me. Usually when people offer a metaphor, it illustrates some aspect of the debate by offering an enlightening comparison. However, I claimed that my "homeowner's insurance is broken" because there is no real money in reserves to pay claims, not that I haven't had a claim.) 

Why do we pick away at Social Security and claim it won’t be there for our kids and grandkids when they will need it, too? (Why would we pick away at a system that has no money in it and is functionally bankrupt? That is the question that puzzles Mr. McCormick? This is the point, sir. The system is broken, and it won't be there for our kids and grandkids!) 

A whole generation is graduating into jobs with lower wages in a difficult labor market. We should be making Social Security better, and we can do this. (If only Congress was interested in making it better, but no such luck.) 

America is a can do nation! We should allow survivor benefits for students through college. (Oh, that'll help improve it. He wants people to be able to suck even more benefits out of it!) 

Currently, they end at age 18.

I get the sense that some would like to grab our $2.7 trillion trust fund to write down debt, but that wouldn’t help everyday people, nor the economy. (Mr. McCormick glosses right over my direct statement: "If only Republicans wanted to use SS to reduce the national debt." Did he not read this? Or does he intend to persist in his template without regard to what someone already pointed out?) 

Let’s use our money wisely and invest it in people. That’s what Social Security does. (*Sigh* My letter pointed out that there is no money in the Trust Fund. It's becoming clear to me that either Mr. McCormick did not read the letter, or he is intentionally ignoring what I wrote. I know I've pointed this out before, but this is the way the Left thinks. Today is a new day. Nothing has happened before. Every crisis is new, so we must do something. Every refutation offered to them never happened. Every failure is because we didn't do anything before. Arrrgh!)

It pays out small amounts of money to beneficiaries each month, like microfinancing for retirees, disabled people and survivors. The average payment to Montanans in 2012 was $1,088/mo. And what do you think these people do? One-third of seniors rely solely on Social Security to pay for housing, heat and food. Another third of seniors count on SS for half or more of their income; they can occasionally buy a gift for the grandkids, or go visit them. Only that last one-third of seniors is not deeply dependent on this monthly check. (Hmm. 1/3 of current recipients do not need it? Didn't he just say our kids and grandkids will need if? So, do people need it or not? What exactly is Mr. McCormick trying to say?)

Let’s help our Social Security system last another 78 years. Let’s make it stronger! (Exactly the point of my letter. The SS system is a shell game, a ponzi scheme which will come crashing down. Since I did not advocate ending SS in my letter, it should be clear to Mr. McCormick that I was simply pointing out a weakness that must be addressed. 

Once again we find to our dismay a Leftist who is unable to comprehend an argument and offer an on-topic, cogent, substantial rebuttal. Do you see anything in Mr. McCormick's letter that even addresses what I wrote? Me neither.)

Alan McCormick

Manhattan