Do you guys think Social Security will ever be reformed? During the election Bush proposed to fix Social Security through private accounts but given the stock market's last couple of years I don't think private accounts are going to be the solution to it all. This is not a post written with the intent of bashing a single person, because frankly I think there's enough blame to go around. I think social security is a great idea but because our government keeps on borrowing from it they really benefit from social security being in place for the time being without the immediate prospect of people given the option of taking their percentage that gets taken out from their account (here in Arizona its 6.2%) and having it put into a private account. In other words, there will be a lot of talk around this but...it will never materialize. It will just run out and then the government will have to take a hard look at how to exploit its citizens financially in different ways.
I researched the issue and I think as much as we've isolated ourselves in different ways in the world, the world is still a business and foreign investors play the biggest part in keeping our system in place.
I read in Wall street journal that Foreign investors and Social Security tax receipts have helped pay for the majority of it. The main reason why this is important is because not all of our national debt is something we owe ourselves. Treasury statistics show that since Bush took office, foreigners have put up more than 90 percent of the cash it's taken to keep our government's checks from bouncing. From January 2001 through this past August, the amount of "privately held" Treasury securities (as opposed to those held by federal trust funds) rose by $910 billion. During this period, foreigners' privately held Treasury securities rose by $830 billion?91 percent of the increase. Foreigners now own 43 percent of our privately held national debt, up from 30 percent in 2001. If foreign central banks that are major purchasers of Treasury debt cut way back or stop entirely to protect their own currencies, for instance, or diversify into euros we'll be vulnerable, extremely vulnerable.
Unless you expect the rest of the world to lend us cheap money forever, which I don't, then the main issue is clamping down on how much we're borrowing from it.