Incorrect promises about Social Security

The notion advanced by the AP that the Social Security system won't have trouble paying Social Security recipients because it has IOUs from the Federal Government for $2.5 trillion is not serious. This isn't really money that has been put aside. The recipients will depend on the system cutting other spending or raising taxes or running up even larger debt (at least in the short run). The quote by Auerbach at least cautions people that the unemployment rate is higher than the official numbers indicate.

The deficits - $10 billion in 2010 and $9 billion in 2011 - won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

Applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent. Social Security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn't expect the increase to be so large. . . . .

"A lot of people who in better times would have continued working are opting to retire," said Alan J. Auerbach, an economics and law professor at the University of California, Berkeley. "If they were younger, we would call them unemployed." . . . .