I was shocked on Sept. 22 to see the headline in the Baltimore Sun commentary section, "Yes, Social Secretly is a Ponzi scheme."
Nothing could be further from the truth. Obviously, the author of the article is unfamiliar with how the Social Security program operates or he is joining some of the current protagonists trying to frighten the American people into believing that the insurance system is about to collapse. I would like to cite a few facts to demonstrate that Social Security continues to be the bedrock of economic security for the aged, the disabled and the survivors of wage earners in our society.
From its inception in 1935, Social Security has been an insurance program. The Old Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund from which benefits are paid are funded by payroll taxes and interest paid on investments in securities backed by the full faith and credit of the United States government. (Monies lost to the trust funds from the current payroll tax holiday have to be made up by payments from the general revenue of the United States government.)
Only benefits and administrative expenses can be paid out of the trust funds. Although the income and outgo from these funds are carried in the president's budget, none of the money can be used for other government programs.
From the beginning of the Social Security program, an individual worker or self-employed person has had an individual account on which his/her Social Security benefit amount is or will be calculated. This is the basic concept of the insurance principle on which the program was established
Every year the trustees of the Social Security trust funds are required to issue a report on the status of the funds and their projections for the future. The trustees are the secretaries of treasury, labor and health and human services, the commissioner of Social Security and two lay members. Future projections are developed by actuaries and economists.
I worked for the federal government for 37 years — almost 30 years in financial management in the Social Security Administration. Because of my long absence from government service and because of concerns that have arisen about the future solvency of the insurance program, I recently read the 2011 annual report issued in April 2011. Future projections contained in that report are that the Social Security funds will cover payment of full benefits up to 2036 and pay about three-fourths of benefit amounts through 2085. (With the continuing unemployment levels this year, the 2012 report will probably revise downward those projections.) The 2011 report strongly recommends that the earlier Congress enacts changes to the program that will improve the trust fund balances over the long run, the better.
I think the basic structure of Social Security as an insurance program remains strong. Public attention needs to be focused on making this program stronger and assuring future generations of beneficiaries that it will be there when they need it.