There's a simple answer why the Trustees report says that the Disability Trust Fund will be exhausted in 2016 rather than 2017 as I have suggested. It assumes that the modest improvement in the operation of the Disability Trust Fund seen over the last two years will disappear and be replaced by a modestly increased decline. That may happen.
There is a significant difference between the Trustees report and what has been happening so far this year. The rate at which the Disability Trust Fund declined was down by 12% in the first six months of this year when compared to the first six months of last year but the Trustees report assumes that by the time the year is over that the Disability Trust Fund will have declined by the same amount as last year.
This year's Trustees report projects that the Disability Trust Fund will be only $3.6 billion short of making it into 2017. If the improvement in the Disability Trust Fund continues in the last half of this year at the same rate as in the first half, we'll have made up that ground by the end of this year.
The trust fund is merely an accounting mechanism.
ReplyDeleteThe excess real dollars were loaned out to pay for general expenses. The remaining fake dollars are collateralized with Treasuries and show up in the form of intragovernmental debt.
To redeem the Treasuries, borrowing must occur, increasing the deficit.
What reserve fund operates on borrowing versus liquidating?
Certainly an insurer's reserve fund operates on liquidating pre-funded investments, not borrowing new money.
Social Security must be privatized.
Don Levit
Hi Don, what exactly are "fake dollars"? If debt is fake, then what's there to be worried about ;)
ReplyDeletePrivatizing social security is an absolutely absurd idea. If you think it's expensive now, just wait until you see Wall Street squeezing it for a profit.
Steve Goss, Chief Actuary for SSA, will participate in an ask me anything (AMA) session on reddit on August 4th at 2:00 p.m. EST.
ReplyDelete