Bernie Sanders Has An Amazingly Simple Idea To Fix Social Security For The Next 75 Years

[jeff47]

24. *facepalm*

After WWII, a large number of people were born. They were dubbed the "baby boom".

These "baby boomers" had much fewer children. Both subsequent generations are smaller than the baby boom generation. The baby boomers are also, shockingly enough, older than their children so they will retire before their children.

How, exactly, do you expect to pay Social Security to these baby boomers? You're either slashing benefits to baby boomers, or taxes have to go through the roof as each "Generation X" and "Generation Y" taxpayer has to support multiple "baby boomers". Or you build up a surplus before they retire and use that money to pay for it. Since "Generation X" and "Generation Y" and "Millennials" do not form an upside-down pyramid in terms of size, they will not suffer the same problem.

You can either collect a larger surplus that sits in a vault, or you can invest a smaller surplus in something that pays interest. However, such investment must be utterly rock-solid or you risk being unable to fund retirees. So they bought US bonds. The only way those would not be repaid is if the US government was going out of business, which means Social Security is moot.

What happens now that they have to "cash out"? Not much. The Social Security administration accepted slightly below-market interest rates, so we'll pay a touch more on our debt as bonds are sold to "real" investors instead of the Social Security administration. It does not require a "double taxation". Nor is the surplus "gone".