Social Security- Security or Insecurity? by David Morgan

The following article is a rewrite of an editorial in The Morgan Report earlier this year.

In May 2005, President Bush traveled to the Bureau of Public Debt at Parkersburg, West Virginia, to prove that the idea of a Social Security trust fund is a myth. The “holdings” of Social Security stand at $1.7 trillion in treasury securities, which have been borrowed to cover the general budget shortfall of the U.S. This is the simple truthful explanation of the budget “surplus” during much of the Clinton years. The money borrowed from the Social Security system was applied to the general budget deficit, and therefore the general budget showed a “surplus.”

This is an area dear to your editor because as I was working toward my masters in Economics/Finance in the ’80s, my main professor asked me to apply for the White House fellowship program. Without going into any detail, I did apply and part of the application process was to write a policy change paper. The policy change paper written by me was how to “fix” the Social Security system. This was done over twenty years ago, when the possibility of finding a solution was much more viable than today. My application was rejected and I never made it to the first round of interviews. I had touched one of the political sacred cows and no one was going to reach out and touch me.

One of several proposals now being offered is to fund Social Security with U.S. bonds. This is something that your editor has discussed with Jim Puplava of financialsense.com

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ALSO: Important article by Jim Cramer about Social Security and 401Ks