Polls consistently show that America’s workers worry that Social Security will not be there for them when they retire.

Now that President Bush has decided to reform the system, liberal columnist and professional Bush hater Paul Krugman has an important message about the current Social Security system: Don’t worry. Be happy. Mr. Krugman will address the issue of why we shouldn’t worry about Social Security over the next few weeks, but meanwhile’

“The short version is that the bonds in the Social Security trust fund are obligations of the federal government’s general fund, the budget outside Social Security,” writes Krugman. “They have the same status as U.S. bonds owned by Japanese pension funds and the government of China. The general fund is legally obliged to pay the interest and principal on those bonds, and Social Security is legally obliged to pay full benefits as long as there is money in the trust fund.”

See, the fund is “legally obliged” to pay Social Security benefits. Got that?

For those who aren’t blinded by hatred of Bush and tax cuts, James K. Glassman has a more sober assessment of the Social Security situation:

“Security is an absurd anachronism — and most people under 50 know it and want something better. By its 70th anniversary, the system must get the restructuring it desperately needs.

“Begin with the obvious. Social Security is a Ponzi scheme headed for collapse. It is a pay-as-you-go program. Taxes from working Americans go directly into the pockets of retired Americans. (A tiny bit is left over for a so-called ’trust fund,’ which will soon be depleted.) Initial retirees scored big, as early winners who are bait for any Ponzi. The very first recipient, Ida May Fuller, paid in $44 and collected benefits of $20,934.

“Times were different. In the 1930s, there were 11 workers per retiree; today, the ratio is 3-1; in about 20 years, it will be an untenable 2-1.”

The AARP, the liberal lobby for older citizens, has caricatured Bush’s plan to allow workers to invest a portion of their payroll in the market instead of putting it in the Social Security Fund. “If we feel like gambling, we’ll play the slots,” intones an ARRP ad. Apparently, they have no compunction about forcing workers to put their money in the Social Security fund which generally shows a return of around 1.5 to 2 per cent over the worker’s lifetime.

Notes Glassman:

“Since 1926, the average annual return for a conservative portfolio split 50-50 between Treasury bonds and a stock-market index has been 8 percent; after inflation, 5 percent. A reasonable approach to restructuring Social Security would guarantee current benefits for retirees and let other Americans take half of what now goes to payroll taxes and put it into a 401(k)-style personal retirement account, retaining a thinner pay-as-you-go layer — which, as the program showed its success, would eventually be phased out.”

(Thanks to Real Clear Politics for twining these two pieces.)