May 16, 2009

The 81% Tax Increase

Bruce Bartlett of Forbes magazine explains that a lock box, piggy bank, or any other reserve of money simply doesn't exist to pay for Social Security and Medicare programs.
Most Americans believe that the Social Security trust fund contains a pot of money that is sitting somewhere earning interest to pay their benefits when they retire. On paper this is true; somewhere in a Treasury Department ledger there are $2.4 trillion worth of assets labeled "Social Security trust fund."

The problem is that by law 100% of these "assets" are invested in Treasury securities. Therefore, the trust fund does not have any actual resources with which to pay Social Security benefits. It's as if you wrote an IOU to yourself; no matter how large the IOU is it doesn't increase your net worth.
He doesn't even get into how TARP or other bailout debt will be paid back. But the amount of burden we've placed on our kids becomes a little clearer.

It's a whole lot more than chump change, you can believe in.

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