Should we trust Social Security?
TEXT OF INTERVIEW
Steve Chiotakis: Sometime between now and April, we’re going to get the Social Security 2009 Annual Trustees’ report. And like everything else these days, it’s expected to be in the money hole. That’s got Fortune Magazine’s Allan Sloan talking about the health of Social Security. Good morning, Allan.
Allan Sloan: Good morning, Steve.
Chiotakis: So we’re getting this Social Security Trustees’ Report in a month or two, what are we expecting to see?
Sloan: Well we expect to see this report, which comes from the Secretary of Labor, the Secretary of the Treasury, and the head of Social Security. It’s the annual update, and what it’s going to tell you, if you look properly, that this year for the first time since 1983, Social Security is taking in less cash than it’s spending.
Chiotakis: And how will they characterize this? Will they sound the alarms and get everyone all worked up, or will they say, “OK, we’re OK right now?”
Sloan: They may not characterize it at all, because they typically talk about things like the trust fund, which we won’t go into, rather than what’s going on on a short-term basis in the system. So the words “cash flow” are not likely to come out of anyone’s lips — except possibly mine.
Chiotakis: Has this always been, Allan, a number-finnageling thing? It seems like we get the wise one to the office and Congress, political party no matter, they find a way to say Social Security is sound. I mean, is that really the case?
Sloan: That’s what they always say. It’s really not the case, because Social Security, if you really understand it, can really not in the end pay out much more than it takes in. And this trust fund that it has is of no economic value, but everybody focuses on the trust fund, and the year the trust fund will supposedly disappear. And I, being sort of tacky, talk about the difference between what’s going in and what’s going out — which is now negative for the first time in a long time.
Chiotakis: What does the government say to 20-somethings, or even older folks — you know, Baby Boomers or Generation X — what does the government say to those folks who have paid to Social Security and may not get anything out?
Sloan: To people over 55, they say everything is fine. To those of you whipper-snappers who are under 55, what they say is, “Trust us.”
Chiotakis: And should we?
Sloan: Unless they fix the system, no. But I do hope they fix it.
Chiotakis: Fortune Magazine’s Allan Sloan with us this morning. Allan, thanks.
Sloan: You’re welcome, Steve.
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