Social Security Bookkeeping Doesn’t Add Up

Unfortunately, the Social Security Trust Fund that will supposedly keep the program solvent until 2032 is a bookkeeping fiction [“Public Pension System’s Future: Social Insecurity,” Dec. 6]. The government has loaned the money to itself, issuing special bonds as a reminder of the debt. It then counts the loan as income. This borrowing from itself is the only reason the government budget appears to be running a surplus.

If the excess Social Security revenue were not counted as income, the budget would still be running a deficit.

When the trust fund reaches its maximum in about 2010, Social Security income and expenditures will balance and there will no longer be excess Social Security revenue to support other government spending. Finally, when Social Security income is insufficient to cover expenditures, the trust fund will cash its bonds to make up for the shortfall.

And where does the government get the money to redeem those bonds? The only sources are from taxes or selling more bonds in the open market, increasing the national debt.

JACK A. CRAWFORD

Ridgecrest

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It seems to me that Social Security could be funded quite nicely if the cap on qualifying for payroll contributions were raised to $100,000 or so. This would something like quadruple the contributions. Bill Gates and Michael Eisner could still make theirs in the first hour of the work year.

Of course, this is about as likely to happen as serious campaign finance reform, and for much the same reasons.

Too bad.

KAREN GREENBAUM-MAYA

Claremont

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When the government is holding its own paper, that is not an asset.

Put it in personal terms. Suppose you earn $2,000 and put it in an envelope marked “Retirement Savings Trust Fund.” A few days later you decide that you want to take a vacation so you take the money from the envelope and spend it. But you put a piece of paper in the envelope that says, “I promise to pay back $2,000 plus interest out of salary that I earn in the future.” A few weeks later, with the money all spent, you apply for a mortgage loan, and list as an asset $2,000 in your “Retirement Savings Trust Fund”--the note that you wrote yourself.

There’s a name for what you just did: fraud!

TOM SHANLEY

Newbury Park

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Were the yearly FICA surplus ($80 billion) not spent out of the general fund, but invested at 5% or 6%, compound interest would produce approximately $3 trillion in 20 years . . . real dollars for a real trust fund.

With $80 billion per year at stake, government has zero motivation to change the present system.

ROLAND K. ECKER

La Canada Flintridge