"The federal Government actually owes money to Social Security".

Is the Federal Government a good borrower? Not really.

I know - the response is that the SS fund just invested its surplus....

But would you invest all of your money with one broke borrower, who has the power to manipulate the money supply, and alter the payback terms (by changing SS benefits)? After several decades of lending money to the general fund, the SS fund is linked to the fortunes of the general fund, for better or for worse.

The government is currently running a deficit....SS for the first time is running in the red (predictable because of baby boomers)...so the general fund has to 'repay' its loans to the SS fund, at an increasingly faster pace. And the deficit gets bigger. This is a mathematical reality.

So get ready for a wild ride. Politicians will put everything on the table.

During his presidential campaign, Al Gore talked about a SS 'lock box'. He was dismissed (and sometimes mocked) by politicians from both sides, and the media. Al was right, btw.

on the wealthiest and to close corporate tax loopholes and to go after wealthy tax-dodgers who hide their money in overseas accounts to avoid taxes. These solutions are the ONLY moral and equitable ones but they take POLITICAL SPINE that too many of our reps just don't have.

The gov't STOLE. OUR. MONEY. And now they want to get out of paying it back, instead cutting benefits of seniors - that they PAID FOR all their lives - rather than making the rich and corporations pay their fair share like they used to.

That's the fight. It IS class warfare.

And Al Gore was right - SS should be LOCKED so that the gov't cannot TOUCH that money - it should be left for the seniors who paid into it.

Its now in the red...borrowing from the SS trust fund is no longer a possibility, or anything that can be 'stopped' now. It already happened.

So how do you get that money back?

Raise taxes?

Ever hear of Hauser's law? I don't know what Hauser's political persuasion was, but its hard to argue with his observation - which is that no matter what the tax rate, or how it is structured, our revenue always stays about the same, as a percentage of GDP:

http://en.wikipedia.org/wiki/Hauser's_law

As the article describes, though, while the law is also true in Western Europe, it is true at a higher constant rate. This is because of VAT in Europe...or quite frankly, a non-progressive tax is their mechanism for getting higher receipts.

Raising income taxes is fine...but it should really only be viewed as a social policy. It won't particularly increase revenue to the treasury. Short of a VAT, rapid economic growth (and the accompanying growth in tax revenue) is the real mechanism to bring in more $$ to the treasury. Sadly, growth has not been strong for half a decade now.

So what to do. Raise the cap on SS income. Studies have predicted this would keep it solvent for many more years. But ALSO, when the raised cap causes a momentary surplus again, DO NOT LEND THAT MONEY TO THE FEDERAL GOVERNMENT....or it will with great certainty be squandered again.

Ok. Here is the history. Since the inception of SS in the 1930's the rules have ALWAYS been thus :

if SS has excess funds - a surplus - those funds are required by law to be invested in US treasury securities.

Thats how the program was designed by FDR.