4 Translation from page.
Translate from page the passages expanding on the subject of the text.
Will social security absorb our national debt?
The 1940s ushered in an era in which federal budget surpluses have been tiny, rare, and cumulatively swamped by deficits that have driven a rising national debt. Explosive growth of government debt has been dwarfed by growth of private debt, with U.S. saving rates being relatively low.
In part, private saving rates were depressed by family formation among baby boomers, many of whom borrowed heavily to acquire the houses and other amenities that have become the norm for those who pursue the American dream. By the 1980s, private domestic saving fell, and the result was that U.S. federal deficits were covered by imports that allowed foreigners to invest heavily in the United States.
Many people are concerned that our deficits have effectively "sold our country to foreigners at cut-rate prices." Are there natural economic limits to the size of our national debt? Do any natural forces exist to offset our national momentum toward infinite debt? One force that soon may relieve swollen deficits and rising debt is projected growth of the Social Security Trust Fund.
The Social Security system ran large deficits from the 1970s into the early 1980s. Deficits accumulated during this era, when each retiree was supported by about four active workers, threaten to bankrupt the Social Security Trust Fund when post—World War II baby boomers finally begin retiring in 2010. Demographers predicted that by 2030, each retiree would be backed up by only about two active workers.
Social Security surpluses are legally required to be placed in "reserves" that are based on "investments" in long-term U.S. Treasury bonds. This seems, on the surface, to be both prudent policy and a good way to ensure a healthy market for government securities. The Social Security Trust Fund Reserve, based on expected cumulative surpluses, is anticipated to mount to roughly $12 trillion by 2030. A wave of baby boomer retirements should begin around 2008, however, and last until about 2030. Reserves will gradually be dissipated until, by 2050, they are completely exhausted.
The enormity of the financial flows into and out of the Social Security Trust Fund will require major macroeconomic adjustments based on careful planning. The $12 trillion in total reserves expected by 2030, for example, is about 10 times as large as the level of privately held federal debt in 1990.
The Social Security surpluses expected over the next 40 years are, in a sense, a nest egg that could, if invested properly, support our retirement system permanently. A major issue is how should these funds be invested? Even if our national debt were to double by 2000, it would only amount to $8 trillion, and total reserve funds are expected to mount to $12 trillion.
Some critics argue that the expected Social Security surpluses justify huge current expenditures to fix our roads, enrich our educational system, or cure poverty everywhere. Others want to defend Social Security from any spending binge. Still others assert that this public saving (Social Security) is just a shift away from what should be decisions by private individuals. FICA taxes should be slashed so that private individuals can choose their own retirement plans.
Baby boomers flooded our educational system in the 1950s and 1960s and invaded the labor market in the 1970s and 1980s. The depressed saving rate of the 1970s and 1980s reflected their attempts to borrow huge amounts so that they could buy their way into the good life. It is predictable that the aging and then retirement of this bubble of humanity will have profound social and economic consequences. 3017 digits