You've inserted something I never said (pay out the surpluses as they are collected) and then called it "ridiculous." If we were truly "paying as we go," there would never have been any excess SS taxes. Instead, we would have paid the obligations (e.g. benefits due each month to beneficiaries) with current taxes from those paying in. There would have been no excesses nor deficits. THAT is "paying as you go." Now, I'm not saying that is the best way to have organized Social Security cash flows, I'm just saying that truth-in-labeling would require that only this method could truly be called "pay-as-you-go.
Is this really that hard?
Wow, with so much difference of opinion/misunderstanding of what "paying as you go" means, I'm not surprised that our national savings rate is in the toilet.
I should not have used the word "ridiculous". Here is the def from wikip:
"Social Insurance
In social insurance,
PAYGO refers to an unfunded system in which current contributors to the system pay the expenses for the current recipients. In a pure PAYGO system, no reserves are accumulated and all contributions are paid out in the same period. The opposite of a PAYGO system is a funded system, in which contributions are accumulated and paid out later (together with the interest on it) when eligibility requirements are met.
[edit] U.S. Social Security
An important example of such a PAYGO system in this second sense is
Social Security in the U.S. In that system, contributions are paid by the currently employed population in the form of a payroll tax, also called the
FICA tax, which stands for the "
Federal Insurance Contributions Act", while recipients are mostly individuals of at least 62 years of age. Social Security is not a pure PAYGO system, because it accumulates excess revenue in so-called Trust Funds, officially known as the Old-Age, Survivors, and Disability Insurance Trust Funds (
OASDI).
[edit] Explanation
These kind of PAYGO systems can be implemented quickly, because no reserves are necessary to finance the expenses of the first generation of recipients. However, these windfall gains of the first generation have to be financed by following generations. By paying the expenses of generation t, the following generation t+1 relies on future contributions of generation t+2 to cover its expenses. In this fashion, the windfall gains of the first generations are passed along over generations and, hypothetically, the last generation would have to finance its own expenses and that of the preceding generation."
PAYGO - Wikipedia, the free encyclopedia
If that is what you said then you were correct.