Max's explication of the social security scheme

Michael Pollak mpollak at
Fri Feb 26 20:39:38 PST 1999

>>If I've got this right, then all talk about
>>saving social security has always been a scam,
>>starting at least in my brief lifetime with
>>Moynihan's plan in the 80's. He made a big fuss
>>that Reagan used the money from increased social
>>security taxes to pay general revenues, as if that
>>was a scandal. But if I'm understanding you
>>correctly, what Moynihan was piously holding
>>out for was a Clinton style debt pay-down. Was
>>that what he meant by inceasing the Social
>>Security Fund? And it was just as intrisically
>>false a notion as Clinton's?>
> At the time I do not believe it was envisioned
> that a payroll tax surplus would be used to
> finance general expenditure.

You lost me here. (Although I can't thank you enough for explaining all that went before). Moynihan passed a raise in the payroll tax in order to produce a surplus. What else could that surplus possibly have be used for besides paying down the debt or financing general expenditure?

> Also the 1980's
> group followed the dictum of securing the
> Trust Fund's 75-year actuarial solvency.

If Social Security has no real assets at the moment -- if it is simply an entitlement program financed out of current revenues -- than what exactly does acturial solvency mean? That over a 75 year period the same amount of money will be given to the government in the guise of SS taxes as will be drawn out -- even though, when more comes in than is needed, it is spent elsewhere, and when less comes in that is needed, the expenditures come from elsewhere?

If the Social Security Fund was incapable of amassing any assets that were built up and then drawn down, I can't see why this wasn't always a pure fiction.

Thanks again for all your help, Max. (I've tailored my lines this time to fit your procrustian mail program :o)


__________________________________________________________________________ Michael Pollak................New York City..............mpollak at

More information about the lbo-talk mailing list