I wrote an op-ed piece for the Sept. 16 edition of the Gazette on the problems inherent in our Social Security system, and the failure of our elected leaders, including Cong. Barney Frank, to acknowledge that a problem exists. This elicited a rebuttal from Prof. David Salkever, which was published in the Gazette on Oct. 7.

In hopes that a continued discussion of this subject might produce consensus that significant change is needed to reform Social Security, I wish to respond politely but emphatically to some of Mr. Salkever’s comments.

First, there was nothing partisan about the factual statements I made about Social Security’s insolvency or its poor return on the payroll contributions made by the average worker. Surely I am disappointed that respected politicians like Mr. Frank, whom the average American desperately wants to trust, continue to proclaim that there is nothing wrong with the system. A few irresponsible Republicans make the same claim.

Second, Mr. Salkever refutes my first claim that Social Security is insolvent, but it would appear that his definition of solvency (“the state of a company being able to service its debt and meet its other obligations”) proves my point precisely. He goes on to say that if the Chevrolet division of General Motors were insolvent, that would not make the parent company insolvent, and by analogy the same holds true for Social Security, since it is but one division of the federal government.

Let’s again look at the facts. Last year, in what the Social Security Trustees themselves have stated is the beginning of a likely irreversible, permanent trend (go to ssa.gov and search for 2011 Annual Report of Trustees), benefits paid to retirees and others exceeded payroll contributions by $49 billion — no small amount, and a figure which will only widen in future years as the baby boomers reach retirement. If this is not insolvency, what is? The fact that the government can allocate money (our tax dollars) from other sources (the Cadillac or Buick divisions of government, I suppose) does not change the fact that we have an insolvent program. If GM has a division that is losing money, do they ignore it because the other divisions are profitable? Do they subsidize it indefinitely with profits (tax dollars) from other sources? As a sidelight, it might be noted that some other divisions of the “company” (Medicare and Medicaid) are not far behind in the race to insolvency.

I also questioned what has happened to the $2.6 trillion surplus of contributions collected in excess of benefits paid (including earned interest), since the inception of Social Security, which the government has “borrowed” and replaced with U.S. Treasury or special issue bonds. Mr. Salkever says this investment has been very positive, given the 4.5 per cent annual return on U.S. bonds over the past 30 years. But the point is, the government isn’t making these interest payments, they are simply accumulating on paper in what amounts to additional debt which must also be repaid later. And in the final analysis, it is absolutely true that you and I, the American taxpayers, are the only source of revenue for the government to pay these obligations. So whether the government is paying itself 4.5 per cent or 10 per cent interest, or whether it is even paying interest at all, is immaterial because the money to pay for future benefits is going to come out of our pockets regardless.

Do Americans see the fundamental reality here? We have all paid for our future retirement benefits once. Our contributions, which we believed were safe and secure in a trust fund, have been taken and spent for other purposes by dishonest politicians who found a convenient way to finance $2.6 trillion more of government spending without having to account for it along the way, and without having to raise the money legitimately by raising our taxes in a transparent way so we at least knew what was happening. I should have been more clear on this point in my previous article. But now the rabbit is out of the hat, and starting last year $49 billion in annual benefits, which could and should have been paid for out of the trust fund if it really existed, had to be made up out of other tax revenues. Going forward, that will either continue, or benefits will have to be cut. If the trust fund really existed, and the government had really paid the interest over time, the $2.6 trillion in trust fund assets would have paid for the increasing shortfall in contributions for roughly the next 15 to 20 years. Instead, either our taxes are going up, our benefits are going down, or other government programs will be curtailed. Mr. Salkever’s academic arguments cannot refute this reality.

This is the real policy issue confronting Social Security. The “real” policy issues raised by Mr. Salkever (the level of benefits, the proper inflation index to adjust those benefits, and the earnings cap to which the payroll tax is applied) are issues only to those who wish to perpetuate the failed system we now have. I would assume that Mr. Salkever favors adjustments to all of his named issues, which I would be willing to bet includes lower benefits to at least the wealthier retirees (if not all), a reduction in the inflation index adjustment, and a higher or unlimited salary cap on which Social Security payroll taxes are assessed.. But a higher cap would simply result in a pure transfer payment from one wage earner to another — something prohibited by our constitution — because the payer would realize no additional retirement benefit whatsoever. And the currently used inflation adjustment index for benefits (Consumer Price Index-All Urban Workers) does not include food and energy prices— the two items most responsible for inflation. Again, this is your government diligently working to protect you, while looking for an even less favorable index to employ to limit future benefits.

In summary, the only salvation for Social Security is in partial or total privatization — the dreaded P word, where your contributions belong to you forever and are managed by you or an approved investment adviser, with restricted options on where those funds can be invested and, as with the current system, no provision whatsoever to allow you to withdraw those funds prior to retirement. That way private enterprise is paying the interest, not your tax dollars, and you have the likelihood, based on decades of past market performance, of seeing your contributions grow with time, giving you a significantly higher monthly retirement benefit. Hopefully a plan can be devised to phase in such a system in a way that protects the benefits promised to current and near-term retirees. And, as stated in my prior article, the billions of dollars of annual contributions redirected to the private sector would have an unimaginable positive effect on capital investment and jobs.

So, Americans, the ball is in your court. You can write to Mr. Frank, or your own congressional representative, and demand that Social Security be reformed, beginning with replenishing the trust fund immediately. Or you can continue to watch your retirement safety net wither away, and you and (primarily) your children will pay twice to keep it. Unfortunately, that reality began as of last year.

Robert. E. Landreth lives in Midland, Tex., and Vineyard Haven.