The Boeing Company (BA), General Electric Company (GE), Ford Motor Company (F): Why the Social Security Trustees Report Is Meaningless

Worst of all, at the end of last year, the fiscal-cliff debate lingered until the end of December and beyond, leaving taxpayers completely unable to plan properly for their 2012 tax returns in light of the government’s failure to clarify the provisions of the alternative minimum tax. With AMT patches having been enacted every year, it was reasonable for taxpayers to assume new measures would be put in place, but Congress ended up providing AMT relief retroactively going back more than a year in its New Year’s compromise.

Letting automatic cuts happen
Until sequestration hit, though, the government usually managed to get things handled in the long run without major incident. But the government’s allowing automatic spending cuts to occur raises the possibility that political gridlock could indeed lead to retirees going over the Social Security cliff in 2033.

Moreover, when it comes to retirement issues, the government has given private employers huge latitude in maintaining pension-plan deficits. The Boeing Company (NYSE:BA), General Electric Company (NYSE:GE), and Ford Motor Company (NYSE:F) have had some of the worst pension shortfalls among U.S. companies, but the extent of the problem is as broad as it is deep, with a huge number of employers dealing with pension liability issues. Yet rules governing pension plans have allowed companies plenty of time to address any problems.

With that track record, lawmakers are likely to give themselves the same latitude in 2033 or whenever the Social Security cliff hits. All the government would have to do is to approve deficit spending to cover the benefits shortfall.

Don’t panic
As an intellectual exercise, the Social Security Trustees Report serves the valuable purpose of focusing public attention on the financial challenges that government programs face. But without realizing the reality of Social Security’s status as a third-rail political issue, you shouldn’t plan on its conclusions reflecting the reality of the situation when it finally comes decades down the road.

The article Why the Social Security Trustees Report Is Meaningless originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Ford and owns shares of Ford and General Electric.

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