Q. Isn't the real problem with Social Security the fact that Congress (both parties) spent the money on "pork" for re-election? Could it be that the real purpose of Bush's privatization plan is to keep Congress's spendaholic hands off of it so something is actually there when we retire?

---H.D., Richardson, TX


A. Government spending is only part of the problem. Had government spending been controlled, the surplus cash collected for Social Security could have been used to pay down existing Treasury debt. That would make it easier to reissue the debt to the public when it came time to redeem the Treasury obligations in the Trust fund.

Total public debt in 1984, for instance, was just short of $1.7 trillion. With the current accounting value of Trust fund Treasury assets at about $1.6 trillion, this means our government could have paid off the entire public debt with the payroll tax surplus--- if our friends in Congress had different spending habits.

Even that much prudence, however, would not solve the problem.

The unfunded liabilities of Social Security, figured over the next 75 years, are $3.7 trillion. That's after taking into account the value of the Trust fund. If we had had a prudent government, under either party, we would have no publicly held debt, a trust fund of $1.6 trillion, and plenty of room to borrow both the $1.6 trillion and the $3.7 trillion from the investing public. The total, $5.3 trillion, would be far lower than the current $7.7 billion of total debt, $4.5 billion held by the public (which includes China and Japan) and $3.2 trillion of Intra-governmental debt held by government agencies and trust funds.


Q. I will be turning 62 next month. I am still working and plan to work for another five years or so. I have been reading your articles about cutting back on Social Security and do not have any 401k or other retirement income.

Would I be better off, or safer, to start my Social Security now while I would have about $1,300 a month in benefits or should I wait till I quit working? I can make $40,000 to $50,000 in sales and my wife is 30 years old and also working.

---G.S., by e-mail


A. There are three reasons you should delay taking Social Security benefits. The first reason is that between 62 and your full retirement age your benefits can be reduced or eliminated when your earned income exceeds certain amounts. Your income exceeds those amounts.

The second reason is that you, and most other Americans, are worrying about Social Security on the wrong time scale. The unfunded liabilities of Social Security will have a far greater impact on your 30-year-old wife than they will ever have on you. The real issue we face is how much of the unfunded liability problem can be, or will be, dumped on people as young as your wife.

One of the really curious things about the Social Security debate is that it is a sideshow. The real fiscal problem--- the elephant in the room that neither Republicans nor Democrats are willing to talk about--- is the unfunded liabilities of Medicare. They are about 6 times as large as the unfunded liabilities of Social Security.

The third reason is that you'll enjoy a major benefit increase if you delay your Social Security benefits until you reach full retirement age--- the monthly benefit is increasing at a rate of 8 percent. As a consequence, if your benefit would be $1,300 a month now, it will be $1,910 five years from now, plus any adjustment for inflation.

Your biggest task is figuring out how to reduce your loan and other obligations, whatever they are, so they can be handled when you are living on your benefits plus your wife's earnings.