Our national pension program, “Social Security” is often disparagingly called “an entitlement” or “welfare” and not what it actually is. It is a funded pension program, albeit not as good as it could be. The great weakness of the Social Security program is that payroll taxes go into the general fund and the program gets back IOU’s in the form of Treasury securities. Treasuries pay interest and as everyone knows interest rates are currently miniscule.
Everyone should look at the Trustee reports (http://www.ssa.gov/oact/tr/) to see what a bad idea it is for the program to be managed by the government and accept Treasuries instead of investing payroll taxes in a managed fund in the market.
A good question to ask is where were the Democrat voices that ought to have been actively and loudly pointing out, as Senator Angus King has done, that Social Security (OASI) with the exception of the Disability Insurance (DI) part, is still liquid. The program has been paying beneficiaries from just earnings up until as recently as 2011. (Total expenditures in 2011 were $736 billion. Total income was $805 billion). While the Social Security program has not done well because of low interest rates paid by the government, the stock market has recovered from the 2008 recession nicely.
A few large corporations, in the past, provided pension plans that were funded both by the company and employees. Those plans were often invested in the market vs. those in which benefits were paid out of current corporate income. It has been estimated that the stock market, on average, traditionally has yielded around five percent, across the board for buy and hold, which seems passé these days with the power of “computer” trading. But good fund managers have produced more than five percent in certain large pension funds. What does that say about our government managed national pension program funded by interest payments?
By the way Senator King is up for election and needs funds to compete against fat cat funding for the two political parties. Let’s fund Angus to keep at least one senator in Congress that is not a paid lackey of big money.