"Commentary"-Saving Social Security
Friday, February 29, 2008SUSIE GHARIB: Tonight's commentator has some ideas to sustain Social Security. He's Allan Sloan, senior editor at large for "Fortune."
ALLAN SLOAN, SR. EDITOR AT LARGE, FORTUNE: I've got a magical solution to the Social Security problem, or at least part of it. Let's set up a sovereign wealth fund to invest Social Security's cash surpluses. That way, when Social Security takes in less cash than it spends about 10 years from now, we'll have a way to cover the shortfall. Sovereign wealth funds, which are owned by countries, are a very big deal these days as I'm sure you know. They've put about $50 billion into big Wall Street firms that needed capital. They own maybe $3 trillion worth of various stuff but our country doesn't have one.
So Social Security's cash surplus -- about $90 billion this year -- goes into Treasury securities. Its trust fund owns more than $2 trillion of them, but they're not wealth. Because when Social Security takes in less cash that it spends, the funds wont' make it any easier for the government to cover the checks than if there were no fund. A Social Security wealth fund could buy high-rated corporate bonds, home mortgages of credit-worthy borrowers or anything solid. Then, when Social Security needs cash, the fund would have real wealth. Now, I don't think for a minute that anyone in Washington has the nerve to do this, because it would involve admitting the trust fund is useless. So, we'll keep doing what were doing. Instead of building a Social Security sovereign wealth fund, we're running an impoverishment fund and our children and grandchildren will get to pay for it. I'm Allan Sloan.
