If you’re willing to go that far why not take another step towards the abyss of the truely absurd. Stop collecting the tax entirely and just print crisp new bills and mail them to seniors via the postal service… problem solved!

…why does a loaf of bread cost $35?

…oh ya problem not solved.

The surplus wasn’t large until the Clinton years. Roughly a single decade of substantial surplus. The cash flow should roughly balance over the next decade, then steadily worsen as the boomers all retire.

q) What do you get when you do Keynesian stimulus via tax cuts?

a) California.

It has run a surplus for decades. Now that there may be a period of deficit a few years from now, all of a sudden it is “welfare?” I think the continuous GOP attempt to castrate Social Security will be a HUGE political miscalculation.

Most Americans have paltry retirement savings and much of the GOP base is located in non-unionized states and work for companies without pension funds. Once those people figure out that the GOP wants to take away their only major source of retirement funds after they have paid those taxes for decades, their base will erupt like Mount St. Helens.

If you consider the treasury bonds to be that — that the general fund was using social security funds, in the same way that the real estate developer two counties over is using the money I deposited in the bank — then I’m not sure what else you would do when social security stores up a surplus. You’ve mocked investment in the stock market; should they lend it to the government at 0 interest by storing federal reserve notes? Should they buy gold or real estate or rocking chairs and sit on that asset? There are only two ways of shifting purchasing power into the future: durable/capital assets, and lending to someone else. (Stock ownership is in some sense in between; you can characterize it either way.)

An actual breach in the account requires an apparently permanent change in the value of its claims and assets that is different from the net flow of funds due to its designated taxes, outflows, and investment gains or losses. I believe this is the first time that has happened, and, aside from some possibility that this transfer or a future transfer of this nature will be backed out, this is the only direction in which any transfer is ever going to be made. The children are right to laugh at you, Al Gore; the politics of Social Security simply won’t allow anything else.

The ratio between working-age adults and retirees is changing dramatically, however, so if we apportion the same percent of GDP to Social Security that we have in the past, it will mean reduced benefits for the retirees. You can try to vote in dramatically higher taxes, but that won’t work well on a variety of fronts.

That said, there will never again by a significant Social Security surplus. Using the general fund to replace Social Security taxes does establish a precedent confusing the two, however the likely implication is an ever-increasing contribution from the general fund to make up for that shortfall. Ultimately the whole concept of Social Security being a separate (and separately funded) system will be erased.

Moreover, the TRUE danger to Social Security comes from the unrestrained borrowing that we are seeing. If the Social Security Trust Fund is ever to be redeemed, the Treasury will need to borrow money to do so. By pushing the federal debt ever closer to the limits (which the market will eventually decide and enforce with the usual arbitrary ruthlessness of free markets), we make it less likely that the Trust Fund can ever be redeemed.