Does Social Security Really Add to the U.S. Budget Deficit? Here’s How it Works
- Posted on August 13, 2012 at 6:52am by
Billy Hallowell
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The following is a “fact-check” piece from The Associated Press. It was not conducted by The Blaze. Weigh in with your thoughts in the comments section, below.
WASHINGTON (AP) — Now that Social Security is paying more in benefits than it collects in taxes, there is a fierce debate among politicians, academics and advocates about whether those shortfalls are adding to the federal budget deficit.
The issue is important because the federal government’s annual deficit already exceeds $1 trillion, making any more borrowing tough to swallow. If Social Security is adding to the government’s financial problems, it becomes even more urgent to fix it.
FILE
“Over 77 years and now through 13 recessions, Social Security has not added one penny to our deficit or our debt,” Rep. Xavier Becerra, D-Calif., said at a recent hearing by the House Ways and Means Social Security subcommittee. Becerra is the top Democrat on the panel.
“I believe that Social Security has not contributed one nickel to the deficit because it is funded by the payroll tax,” Sen. Bernie Sanders, a Vermont independent who heads the Senate Social Security caucus, said in an interview.
Former Sen. Judd Gregg, R-N.H., disagreed.
“We all know that it’s on a cash-flow basis,” Gregg said in an interview. “The cash comes in, the cash goes out, and right now we’re running a negative cash flow.”
The Facts: Social Security’s shortfalls are adding to the federal budget deficit, in a roundabout way. One big reason: The rest of the government has been running such huge deficits over the years that it has spent all of the surpluses accumulated by Social Security.
Here’s how it works: For nearly three decades Social Security produced big surpluses, collecting more in taxes than it paid in benefits. The government, however, spent that money on other programs, reducing the amount it had to borrow from the public, including foreign investors. That’s why some advocates complain that Congress has “raided” Social Security.
In return, the Treasury Department issued special bonds to Social Security. The bonds are now valued at $2.7 trillion. They are accounted for in two Social Security trust funds, one for the retirement program and one for the disability program.
The bonds pay interest like other Treasury notes and are backed by the full faith and credit of the U.S. government.
Photo Credit: SSA
Social Security is now spending a portion of the interest because it needs cash to cover monthly benefit payments. This year Social Security is projected to pay $789 billion in benefits and administrative costs and collect $623 billion in payroll taxes and taxes on benefits, a shortfall of $166 billion.
About $112 billion of the shortfall is from a temporary reduction in the payroll tax that is scheduled to expire in January. There is no question that money adds to the budget deficit because Congress financed the tax cut through borrowing.
The rest of this year’s shortfall, about $54 billion, will be financed by the interest payments. Social Security’s trust funds are projected to earn about $110 billion in interest this year.
Until recently, the interest payments were an accounting device, with one part of the government crediting an account held by another part of the government. As interest accumulated, Social Security’s trust funds grew on paper but no money changed hands because the program had plenty of cash from payroll taxes to pay benefits.
Now that Social Security needs money from the interest payments to cover monthly benefits, the cash has to come from somewhere.
“If you don’t have the cash to pay for it, then you have to borrow that money from China or you have to raise taxes,” Gregg said. “Those are the only two options.”
Becerra, however, said it is wrong to blame Social Security for adding to the budget deficit when it is simply spending money generated by its investments. That’s like blaming bondholders for expecting to be repaid, he said.
“If we don’t owe Social Security – Americans who paid into it – then we don’t owe the foreigners either,” Becerra said.
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Comments (96)
eric6161
Posted on August 13, 2012 at 11:25amIn my ’60s high school economics class my teacher was telling us how wonderful FDR was and how he saved our nations elderly with great programs such as Social Security. I raised my hand and told her that she was so totally wrong and that it was only a ponzi scheme that would fail before I retired. She asked me to give my sources and I replied that I would write an essay to contradict what she had just said and give it in 2 weeks. For the next two weeks I spent most of my time at the library and when it was time to give it she wouldn’t let me.
Report Post »Of course I was prepared and when I called her a communist she grabbed me and took me into the hall while a friend of mine got up and gave my paper for me.
I don’t remember my whole paper anymore but I did talk about “population control” and how we wouldt have few people taking care of the many. It was also racist as the average black man lived to their late ‘50s and women to mid ’60s while the whites lived into their ’70s. Of course the Republican kids in my class were outraged while the democrats thought it was great…and Texas was predominately democratic in the ’60s and even supported the racist LBJ.
eric6161
Posted on August 13, 2012 at 11:38amIf I, as a high school student, knew this was going to happen… the democratic government knew it too… and for 70 years they’ve known it. Pat Robertson, when running for president, said it was going to happen and we needed to change the way things were going. Galveston knew it would happen and they opted out and now their retirees make 3 times more each month than those on SS retirement.
Report Post »We’ve known it would happen but we changed the Constitution so that the lazy and well connected could vote themselves the money of the workers.
randi3927
Posted on August 13, 2012 at 5:26pmWell said Brother! Though I would check your facts on Galveston. I lived there. CATO says it was Galveston County Government employees that opted out along with: “San Diego… , and state plans in Louisiana, Ohio, and Massachusetts”. The citizens got squat. Note also that the trust funds are based on two categories: retirement and disability. If I live the average age I will get $0.42 for every dollar I put in. (unless I work to 70 then I get $0.46/dollar invested) SS pays for all the widows, orphans, and disabled from our SS funds. Who doesn’t pay that? government employees, and railroad employees, who also opted out. So with 34% plus workers on the government payroll, we private workers pay the whole load. They support unions, who buy politicians who make sure they don’t pay, and that we can’t invest our retirement in the market. My ex is a teacher. They get $5 for every dollar they pay in. Why, they invest it all in the “risky” private markets, just like the politicians retirement plan. I’d love a little of that risk! Instead my retirement money bought turtle tunnels instead of American jobs. Turtles don’t pay interest.
Report Post »SgtB
Posted on August 13, 2012 at 5:38pmWhile I haven’t been around as long to be as wise as you, I too have discovered early on that social security is a Ponzi scheme and a farce on the American public. Up until this last year social security taxes were taken in and the amount over what they spent was turned around and spent in the form of federal bonds. If people can’t figure out that a bond is a tool used to finance debt, then they are beyond help and rehabilitation. This includes my postal service retiree/ postal service union rep. retiree/ democrat henchman of a grandfather who is so self righteous that he cannot admit that his generation and he himself have set up a house of cement cards for his children and grandchildren to live under.
Report Post »babylonvi
Posted on August 13, 2012 at 9:03pmRandi. you need to check your facts. Federal workers have paid SS and Medicare since 1984. Many other governmental employees do as well outside the Northeast, North Central and Western socialist enclaves. Over generalizing makes this problem seem insurmountable, but it;s not. If some governmental entities and states can do it, others can too if the politicians would only do their job. It was Democrat congress members who pushed for these inequities and they should be denounced for it. They are also the ones who permitted underfunding of private pension plans like the auto industry, which also led to their downfall and the theft of millions in investor funds. It didn’t have to turn out like this, but if your aim is to destroy the country, this is how to do it.
Report Post »randi3927
Posted on August 14, 2012 at 7:52amI need to add a correction. Since 1984 Federal employees have had to pay into Social Security. The exception being our fine elected officials. It’s called FERS. Above SS contributions they take at least 1% of your pay match it and add it to your Thrift Savings Plan. If you stay with them to retirement you get the Basic Benefit Plan as well. Many if not most other government workers don’t pay into social security.
Report Post »RSHLUVER
Posted on August 16, 2012 at 1:03amObamacare just warmup act for what’s next White House strategy to take government control to next level revealed
Report Post »http://www.wnd.com/2012/08/obamacare-just-warmup-act-for-whats-next/
RodT82721
Posted on August 13, 2012 at 10:47amThere really are very few actual entitlements. Both SS and Medicare were supposed to be paid by the payroll tax, but Barry and the Dems decided to use to buy some votes in 2012. That of course puts the actual burden on those workers not lucky enough receive some sort of waiver from the Feds, just under 50% pay nothing into the income tax system. Barry calls these tax payers the evil rich.
Congress through appointed bureaucrats controls who gets the SS / Medicare payments, and how much. Congress sets the payroll tax. The revenues to pay for the benefits. So who’s to blame, when after over taxing the system for decades and stealing the money to buy votes, then adding millions to the system that have no legitimate reason to be there, other then the benevolence of Congress members (or buying votes) with tax payers money, all of a sudden SS & Medicare are a drain on the budget (that has not been passed for over 1200 days).
So what’s the plan from our elected wizards? Tax the evil rich more!
Report Post »Someone has to pay for all this largess.
While not a secret, most have no idea that our progressive Obamacare strips $700 Billion from the FICA fund to pay for their moocher and illegals free health insurance.
While they slam Paul Ryan for attempting to do something about their mess. He’s a right wing nut?
What about all the left wing loons stealing the country blind? (They are called unions and their bought politicians.)
MM59
Posted on August 13, 2012 at 12:54pmWhat about Bush adding Medicare Part D (prescription drug) to the benefits being handed out and NO corresponding payroll tax increase to fund it? How did Paul Ryan vote on that new program? Yup, he voted for it. He did not make a passionate floor speech stating how we couldn’t afford it, did he? (provide the link)
Both parties bought votes with this program, for decades. Vote them ALL out.
Report Post »tombogan03884
Posted on August 13, 2012 at 2:52pmDon’t forget that when LBJ and his Dems first raided the SS Trust fund to pay for his welfare boondoggle the Republicans predicted exactly this result.
Report Post »SS has not gone into a “trust fund” since LBJ’s theft, the money has been going into the general fund to pay for things like Planned Parenthood’s black genocide, and other racist programs aimed at keeping blacks dependent on the founders of the KKK.
progressiveslayer
Posted on August 13, 2012 at 10:45amHow about the radical idea of making your own investments for retirement rather than the government.
Report Post »Government screws up everything so SS shouldn’t be mandatory.
JoeTheEconomist
Posted on August 13, 2012 at 12:23pmWhat do you do for the people who are retired and those to paid into the system.
Report Post »Rothbardian_in_the_Cleve
Posted on August 13, 2012 at 1:15pm@Joe,
Dude, someone isn’t getting paid. It’s a ponzi scheme. Mathematically, they all blow up. You pick who doesn’t get paid….it doesn’t matter. My preference is that we do an orderly exit with cents on the dollar so that at least everyone gets something back.
Report Post »Dot
Posted on August 13, 2012 at 2:12pmExactly! That is in Paul Ryan’s plan, to give those under 55 the option to invest themselves.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 2:56pm@Dot, Paul Ryan’s plan lets you use your payroll taxes to fund a small PSA and then takes substantially more of your income taxes to pay for the debt created by the unfunded Social Security. His plan guaranteed people 55 and older full benefits. Today people as old as 63 expect to feel the impact of the exhaustion of the trust fund. This is a left pocket/right pocket of the same jeans type of plan. They just take the support for the system out of different pocket. Does that make you feel good?
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 3:05pm@RothBard,
“My preference is that we do an orderly exit with cents on the dollar so that at least everyone gets something back.”
Everyone will something back – their parents as tennants. The nine most frightening words in the English langage are : “I’m your mother-in-law, I need a place to live.”
Seriously, the question is how you unwind a system as large as Social Security in an orderly fashion. The thing is a complete sinkhole of dependence. The Trust Fund alone will last about 3 three years. Focusing the entire implosion on a single demographic is not what I would call orderly.
Given your views, you might take a look at AEI’s article on buy-outs. The bigger problem for you is that the system is getting bigger. You view is losing. So you should get more active on the issue.
Report Post »beekeeper
Posted on August 13, 2012 at 10:33amSocial Security has collected about $2.7 Trillion dollars in “surplus” funds (money in excess of what it needs to meet annual obligations). It has loaned that money to the Gov’t, and it is included in the near $16 Trillion in total debt the US Govt holds.
Since 2010 the payments to beneficiaries has exceeded monies coming in, so SS is starting to collect payments from the US Gov’t for a tiny portion of the outstanding amount – $54 Billion – to cover it’s obligations.
The “payroll tax savings” cost another $112 Billion, and that is coming from tax increases, closed loopholes, etc.
The collection of the needed $54 Billion does not add to the total debt held by the government, it is simply shifted from the SS “trust fund” to an outside lender, for example China. Out total debt has not increased, just the mix of private and public debt is shifted slightly.
Social Security is, in fact, simply acting as a lender to our credit-happy government, and that they collect interest reflects the reality that the money is borrowed, not “gone.”
Unless and until SS exhausts it’s entire “trust fund”it will not be adding a thin dime to the national debt, and the interest paid to SS for the money the Gov’t borrowed would simply be paid to a private bank if they they held the debt – that doesn’t increase the debt either.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 12:34pmFirst this isn’t factually accurate. The government provides billions in subsidies to which Social Security which create dollar for dollar debt. The EITC was created to offset the high cost of payroll taxes. So the GT paid billions of dollars to get people to pay the excess payroll taxes.
Second, the high cost of payroll taxes makes it impossible to raise income taxes. The best example of this is the people who want to incerase the cap. We could raise the same amount monsy as an income tax to control the debt.
Report Post »testandverify
Posted on August 13, 2012 at 12:55pmYour statement: “The collection of the needed $54 Billion does not add to the total debt held by the government, it is simply shifted from the SS “trust fund” to an outside lender, for example China. Out total debt has not increased, just the mix of private and public debt is shifted slightly.”
“just the mix of private and public debt is shifted slightly.” Debt is debt and since the SS fund is wholly own/controlled structure of the Fed gov. Since the governement has no money of its own, and has overspent any tax revenue they got for the year 2012 they have to borrow for any expenditures like covering SS needs. Borrowing more for a need is increased debt!
Are you saying that China now owns SS debt? Or are you saying that the Feds sold more bonds (Debt) to china to cover what they owed to SS? Either way the Feds did have to sell more bonds to cover the payment into the SS since they had no money to pay into the SS, that sure sound like increased debt to me. More bonds issued more Fed debt. Sounds like it would be like you taking a 2nd mortgage on your house and saying its not debt, wonder how your bank looks at that!
Report Post »beekeeper
Posted on August 13, 2012 at 9:16pm@TESTANDVERIFY – SS is a lender to the US Gov’t, just as China is.
If SS needs money to suplement current receipts, it will “cash-in” some notes that the Gov’t is obliged to redeem. If the Gov‘t doesn’t have the money when demanded, it will go out and borrow the same amount from another lender (say China) and pay off the request by SS with the proceeds from the new debt.
Report Post »azcowboy1
Posted on August 13, 2012 at 10:31amI wonder if ya get an enema before the grinder. I sure hope so (lol)..
Report Post »azcowboy1
Posted on August 13, 2012 at 10:24amI’m 58. The best solution for me is to walk into the grinder so‘s ya’ll will have sump’in ta eat.
Report Post »Rothbardian_in_the_Cleve
Posted on August 13, 2012 at 1:16pmSoylent green is people!!!!!!!
Report Post »brovet
Posted on August 13, 2012 at 10:19amThe DC rats raid the fund and now don’t want to pay it back. Further, we are paying out more than we are taking in and what do the Dems do? Why suspend 1/3 of the money paid into SS by wage earners. That is certainly a bright, leftist idea.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 10:28amYour statement is riddled with fact problems :
1) The Trust Fund will be repaid – and you still have a problem According to the Trustees page 15 of the 2012 report the shortfall after the Trust Fund is repaid is 20.5 trillion. Basically we ‘pay’ . We just didn‘t ’pay’ the full cost.
2) The payroll tax-cut is backfilled by the general taxpayer. The payroll tax-cut is a net benefit to the Social Security system. So this is a ‘tax-cut’ if you are a wage-earner who doesn’t pay income taxes.
Fix Social Security Now (FixSSNow (dot) Org)
Report Post »Rothbardian_in_the_Cleve
Posted on August 13, 2012 at 1:17pm@Joe,
Don’t fix it…end it. In what other world would it be acceptable to force people to make bad investments at the barrel of a gun?
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 3:11pm@RothBard,
I think you ought to look at the trend in Social Security reform. Today the trend is to make the system bigger with a wider revenue reach. So if you don’t want it fixed, keep in mind that it can get worse.
Report Post »Rational Man
Posted on August 13, 2012 at 10:07amSS has been misused for a long time. In it’s original format, it is not a bad program. Because of politicians abusing the program and stealing from it and straying from it’s original intent, it is just one huge mess that they may not be able to fix.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 10:19amIn the beginning it was free money. How on earth can you say that is a good system. The average retiree couple in 1960 took $7 dollars in benefits for every $1 in contribution on REAL terms. Congress of the past parked the difference on you, and this generation. It isn’t bad until you have to pay for it.
Report Post »auhunter
Posted on August 14, 2012 at 4:38pmDitto on many other government programs. If your program starts to fail, borrow from China and subsidize it, much like Green Energy (Solyndra) and others. It’s way past time to cut federal spending and balance the budget (nearly four years now NO proposed federal budget). A dollar in a dollar out, NO more. Obama has been spending on a ration of about 1/10 or more and with the new IRS rules, illegal as they are, we are going to be paying more and getting less for our money, like many of his other programs. 84 more days until Obama gets the change he has been advocating for so long.
Report Post »overthecliff
Posted on August 13, 2012 at 9:19amThe politicians will print money to pay the bills. We will then have the inevitable inflation and eventual Argentinian collapse. Long livePeron, uh I mean Obama.
Report Post »Robin1965
Posted on August 13, 2012 at 9:09amthere would be no problem had the gov. not stolen all the funds from SS. SS was a trust fund much like a 401k, but gov. decided to use it as their piggy bank with worthless IOU”s. Now the time has come to pay up and gov. can’t. SS is not a budget item therefor it does not add to the deficit, in that gov. is one that robbed SS and can’t pay it back.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 9:49amWhat is your source for that statement?
The Trustees have said that after all of the money lent to the government in SOBs is repaid, the system will have a 20.5 trillion dollar shortfall. The system basically prints more promises than we ‘pay’ for.
Report Post »kaydeebeau
Posted on August 13, 2012 at 10:07am@ Joe it is like borrowing money from yourself and paying interest to yourself on the loan you made to yourself – it is bogus enron accounting
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 10:24am@KeeDebBeau,
The flaw in your logic is that the money isn’t lent to ourselves. Not all Americans have equal interest in Social Security. Millions of Americans can‘t collect because they didn’t participate. The general fund has no obligation for Social Security benefits beyond paying back the money that it has borrowed. While that may prove difficult, it is difficult because SS lent money to a poorly run business not because SS lent money to itself.
If you want an example of lending to yourself, you would look at the payroll tax holiday. SS received $103 billion in 2011 subsidizes to backfill the revenue lost to the payroll tax-cut. Where did the money come from ? The Social Security Trust Fund. It is as those the Trust Fund printed $103 billion.
There is a huge difference between this funding and payroll taxes. Payroll taxes can draw on capped-wages. GF debt can draw resources on all forms of income, including the income of people who do not participate.
“Fix Social Security Now” on FB
Report Post »MEnders
Posted on August 13, 2012 at 1:16pm@JoeTheEconomist The Social Security Administration is part of the government. When I worked for the Social Security Administration, my paychecks came from the U.S. Treasury. Social Security checks also come from the U.S. Treasury. So, of course the Social Security system “loaning” money to the general fund is very much like an entity borrowing from itself. Or rather like a wholly owned subsidiary of a corporation using its profits to buy bonds of the mother corporation and redeeming the bonds in the years it has losses. The main difference is that if a corporation did its accounting in the same way the Social Security accounting is done, its officers and directors would be in prison. The “trust fund” is an accounting fiction.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 2:44pm@Menders, When I worked for a software firm, I received a check from Wells Fargo, which served as the agent of the company to pay me.
Social Security may be part of the government, but the government has no liability for the obligations of Social Security. I don’t think lending the money to the government is wise, but it isn’t the same as lending to yourself. If the government had the same obligations, I would agree with but it doesn’t. You could basically say the same thing for any citizen that buys Treasuries.
The fraud has nothing to do with how the money is lent. It is in the promises issued by the system and the lack of reserves. That would get you jail time as a CEO of a private company.
Report Post »fbanta
Posted on August 13, 2012 at 8:59amIt would be nice if Social Security was funded by either taxes or borrowings. Unfortunately as the dollar has become a questionable investment with ever-decreasing support from investors, the FED is printing greenbacks as fast as the presses can go. In 2011, 61% of the US debt was “purchased” by banks as 30 year notes, using money borrowed from the FED at near zero percent interest. The value of the dollar has been reduced by 50% since Jan 2009 because of the FEDs wanton printing of worthless scrip. This is a 50% tax on every dollar in circulation.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 9:04amKeep in mind that the more taxes we dedicate to Social Security, the less taxbase we have to control the deficit. That is what leads the Fed to print money.
Report Post »Individualism
Posted on August 13, 2012 at 8:38amgenerational theft is what it is and its needs to be shutdown.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 8:54amThe harder question is how. There are millions of people who have been left savingsless by this system. You can’t just shut it down.
If you are interested in reform visit our site FixSSNow (dot) Org
Report Post »seljo1701a
Posted on August 13, 2012 at 10:14amJoe,
Where was this reasoning when Madoff was arrested?
It’s the same pyramid scheme, just different perpetrators. I’ve known this since I was 16 and got my first job and middle school history class. When my “history” book showed and *actual* pyramid diagram showing the #ppl putting in 1940 v. 1990… even my youthful mind was able to grasp what S.S. was.
Pyramid schemes always collapse, and it’s never pretty. It’s simple math. Eventually, you run out of new marks to sucker in. S.S. has only lasted this long because it has forced ppl to become suckers under penalty of law.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 10:34amCall me when all Congressmen since 1937 are in jail or have been removed from Arlington Cemetary.
The government created this problem. It is the job of the government to fix it. It is our job as voters unfortunately to tell them that it is their job. What have you been doing about it since you were 16?
There is a 20.5 trillion dollar shortfall. What you should consider is that this program has become a sinkhole of dependence where the system creates the need for the system. It serves an audience that does not adapt well. We need to allocate the loss in such a way that we do not have millions of dead people in the street.
My guess is that you have done nothing, figuring that it will collapse after you are gone. I think you are wrong. I think it collapses much sooner than DC expects. The 20.5 trillion shortfall will be resolved the only question is whether it will be planned or unplanned.
Now you get to tell me about how you have prepared for your retirement and won’t be affected by the collapse…
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 8:29amThe only important question is whether you think the future promises are actual obligations or not. The government doesn’t treat it as an obligation so this example shows you what this article debates
It is like when a college student gets a check from mom/dad for tuition – he is very rich. The Democrats are saying that the college student is rich until the check to the college clears. The Republicans are saying that the college student is rich until he writes the check to the college. I will tell you that the college student was never rich. Which do you believe?
Report Post »sbenard
Posted on August 13, 2012 at 8:22amThere’s one more piece to this puzzle that is not mentioned in this article. The Fed has artificially be suppressing interest rates for more than 4 years now. Interest that would have accrued on those US treasury bills and Social Security.
Report Post »But it’s a double edged sword, because the higher the interest rates, the bigger piece of the budget pie that interest would take. In other words, they would have had to borrow even MORE, just to pay all that interest!
The bottom line: We’re spending far more than were taking in via taxes. Our deficit is 40% of the budget. We’re going to hit a debt brick wall almost certainly within the next 2-4 years. When that happens, ALL entitlements will come to a swift, painful end. Our culture of kicking the can will hit a sudden, hard dose of reality, and those who aren’t self-reliant will be up a creek without a paddle. We’ll see Depression-like food lines and Americans literally starving in the street. Calamity is certainty. Plan and prepare accordingly!
JoeTheEconomist
Posted on August 13, 2012 at 8:35amIf you read blogs, Bruce Krastings writes about this lot. Oddly enough I have seen every President since LBJ accused of stealing the money. Very few mention what Ben Bernanke is doing. Here is the consequence, in 2011 the Social Security system lost more than a trillion dollars in projected interest income.
Mind you the Trustees haven’t updated their longterm real interest rate assumptions since 2007.
Report Post »Catfish
Posted on August 13, 2012 at 8:12amIt is not hard for them to fix Social Security all they have to do is pay the money back that they borrowed out of it.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 8:22amAccording to the Trustees of the system that after borrowed money is repaid, there is a 20.5 trillion dollar shortfall. (page 15)
Report Post »sbenard
Posted on August 13, 2012 at 8:27amPay back? From what source? The money is GONE! It’s Spent! It was spent on turtle tunnels, bridges to nowhere, airports in tiny towns to serve Congressmen, and $100 hammers! It’s SPENT! It’s GONE! How do you propose to “pay it back”? Crushing new taxes that will send us into a Depression?
Report Post »The only way to “pay it back” is to borrow it, and that will drive us off a debt cliff! We’re already at more than 100% debt-to-GDP. We’re already at the point that history indicates causes economic collapses throughout history! We have created a debt black hole that is going to swallow us whole — SOON!
Your simple solution is a fantasy of fancy — NOT a solution!
JoeTheEconomist
Posted on August 13, 2012 at 8:57am@SBernard, Actuallly the money was spent on your parents. That is where the problem is, they didn’t pay the full cost and voted for people willing to park the difference on you.
Report Post »nobull14
Posted on August 13, 2012 at 8:09amWhen SS go’s belly up and it will? There is going to be a lot of Baby Boomers that did not prepare in a world of trouble ?
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 8:23amThis is an unfair statement. The problem is that Social Security taxes prevent people from preparing. The idea that Social Security alleviates poverty in the elderly is misguided. It is what causes it.
Report Post »SamIamTwo
Posted on August 13, 2012 at 8:08amSS has been robbed 4 times to balance previous budgets..and under the LAW they are required to pay it back with interest. Yes they never were able to accomplish it…
And who robbed it 4 times, DEMS and REPS…missus of federal trust funds is against the law…they abused the system more than once by thinking they could continue to tax and get caught up…
You have to chop off FEDERAL CONTRACTS! In part, contracting out is what got us here…and that was part of the scheme for taxing those who worked under those contracts…you take from here, spend it there and it returns back to the feds…so they thought…yeah, employment goes down…people buy stuff but they are totally reliant on the federal contracts…a form of welfare. imho
No one till around 1997 asked, Hey did we meet that 50% contracting out objective set by President Regan…What?…not only did we meet it, we exceeded it greatly sir. No one spoke of it since that data call.
And in doing so the average pay of a federal employee appears to be high…why? They contracted out the lower skill sets and those that were left are those who work in the contracting skill set…doing everything with no one.
Now that was DoD…it is seriously messed up when you take a person making 40K and then contract out that person to say Boeing, Lockheed, TRW, GD etc and the average wrap rate for that skill becomes 70K…you have to add in overhead, g&a, profit etc when you contract out a low paying skill set…idiots.
Report Post »critterbait
Posted on August 13, 2012 at 7:58amIt’s like every other system that the gov is in control of ,full of corruption,so why would you expect this to be any diffrent ???
Report Post »bitemebiden
Posted on August 13, 2012 at 7:45amOr stop sending billions of dollars to foreign countries that we have to borrow from China, thus pinning Americans with the debt through tax.
“If you don’t have the cash to pay for it, then you have to borrow that money from China or you have to raise taxes,” Gregg said. “Those are the only two options.”
Report Post »Americanius
Posted on August 13, 2012 at 1:36pmAgree. Why not cut out the middle men and send those countries directly to China for loans and the U.S. can stop being Fannie Mae and Freddie Mac for the rest of the world. It’s insane for the U.S. to borrow money to lend or give to other countries and we are on the hook for the principle plus interest because the plutocrats in DC always end up forgiving the foreign debt.
Report Post »historyguy48
Posted on August 13, 2012 at 7:42amNo, the problem is basic math. We paid in throughout our working life and they stole the money. See, it is as simple as that! Now, when it’s time to pay, they don’t have the money because our dear representatives, short sighted fools that they are, have stolen the money, thrown it away, and will now bankrupt our government, screwing every American, regardless of their age.
Report Post »There’s an old saying “A fool and his money are soon parted” well guess what, it’s true!
Last night I heard some commie lib (I mean democrat) talking on the radio about how we must raise taxes so we can pay our debt because we certainly can’t cut any government programs. With superior thinking like this I have absolutely no doubt why we are about to fall off the cliff, especially when these are the geniuses trying to push us off the cliff before the coming election.
http://www.washingtontimes.com/news/2012/aug/7/the-civil-war-of-2016/ this is an interesting paper written for our military about citizens trying to take back their country.
loriann12
Posted on August 13, 2012 at 8:04amIt’s sort of like if I had a budget on paper, and I had a line item for “savings.” I put the money into my account, and I can say I’m saving as much as I want to. then I pretend it makes money through interest. As long as my spending doesn’t go over what I bring in, that line looks like it’s getting bigger, due to it “collecting” interest. But as soon as I run over what I’m bringing in, and try to spend that “interest” I learn that it was all a paper shuffle and the money will need to come from somewhere. I guess in our situation, it comes from Oblama’s butt.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 8:25amIf you are a history guy, you would know that Social Security is mostly a pay-as-you-go system. The money that you contributed went to your parents. If you didn’t like the deal you should have called for reform when you had a chance – every day of your life.
Report Post »Penn
Posted on August 13, 2012 at 7:39amHere’s the real truth on Social Security. A man who contributed the maximum amount into SS every year from 1935 to 1985 would have put in $37,822.05. If that money had been invested at 5% the total available in 1985 would have been $62,441.26. If that person were still alive today, do you know the total amount of social security payments he would have received? $487,020 through June 2012. These are actual numbers of a real person.
Report Post »Add Medicare on top of that. How insane do you have to be to ignore the simple math?
As a father and grandfather (still not on Social Security), I know that any payments I might receive won’t be coming from Washington DC, they‘ll be coming out of my children’s and grandchildren’s pockets. Stop the Insanity!
Selfreliance
Posted on August 13, 2012 at 9:24amYour “simple truth” is riddled with problems.
First off, your claimed contribution level averages $63 per month… with a rough average over the period of 4% of pay from each employer and employee that’s 8% of a whopping $787. An average annual salary of under $10K is not a representative person. Perhaps more schooling…
Second, an investment of $63 monthly for 50 years at a 5% annual rate of return is $169K… not $62K. You are not even close to the actual amount of the investment you describe. Further, the market average over that 50 year period is much closer to 11%, which yields 1985 value (had it been invested in say a DJIA index fund) of more like $1.65 million.
Third, to get to the amount of benefits you’re claiming, you’ve got this person retiring at 67 and collecting benefits for 27 years until today. At 94 years of age, they are certainly the exception. A man born in 1918 has a life expectancy of about 50 years, so living until age 94 is really remarkable. The AVERAGE person starting work in 1935 pays in considerably more to the SS system than your example and collects NOTHING because they die at 50. Had they invested privately, their retirement account would have been MUCH larger, and it would have been inherited by their heirs instead of reabsorbed by the government.
Sure, there are a scant few that do better than their contribution. The vast majority do not, period.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 9:59amThe figures are a little worse because you aren’t factoring in survivor benefits. If you are interested in Reform, FixSSNow (dot) Org.
More than 80% of the country thinks that Social Security is heading for crisis. The problem is that support is highly fragmented. We want to concentrate that energy – “Fix Social Security Now” on FB.
Report Post »MM59
Posted on August 13, 2012 at 1:11pm@Joe
Report Post »Yes, when the 50 year with 6 kids a wife died, his benefits did not die with him.
Look at your annual SS statement. This is not just an old age retirement fund. It was greatly expanded over the years. Also review the credits you need to get into the system.
You forgot to mention the disability part. Now the long-term unemployed are being ushered into disability programs.
Mojoron
Posted on August 13, 2012 at 1:34pmYou all are partially right. No matter what amount of money has been taken out with SS, if you apply an average of 5% per year increase, you actually need to compound the interest, not just take 5% of the total sum. That would give you much more than what you indicate. Unfortunately, SS does not add interest to its calculations. Responsible people who know that they cannot live on SS alone set aside their own retirement needs. Unfortunately, FDR soon saw that many people COULD NOT save for their old age and that philosophy has carried over the last 80 years and has been adapted to the current societies. It is still unfortunate that many citizens cannot or will not provide for themselves when they retire and are totally dependent on SS and Medicare. There isn’t much you can do to those people short of saying “tough **** dude.”
Report Post »suze649
Posted on August 14, 2012 at 9:23pmMy SS deduction about a year before I retired was over $100.00 a month.
Report Post »Melika
Posted on August 13, 2012 at 7:35amSo what you are saying is, if the people (government) hadn’t stolen this money from the SS fund to pay for welfare and other unnecessary things, there would be 2.7 trillion in the fund right now and it could easily ride out this shift from the Baby Boomers to later generations.
Report Post »So the goal right now of the conservatives is to beat up old people and the disabled so that there is plenty of money for drug addicts, drunks, lazy welfare whores popping out babies by the half dozen from just as many babies’ daddies, and college “students” who can barely pass an exam. That’s a great policy – keep punishing the achievers, especially when they are down and out or old and grey.
lefty5005
Posted on August 13, 2012 at 7:50amAll those welfare recipients vote Democrat if they can and most are probably felons. Most of those old people are conservative and it is Obamacare that is taking 700 billion from Medicare and will not provide life saving medical care to the elderly. “No cancer treatment after 75 years of age.” SS has been payed into by most who receive it. It is the Democrats who started all these programs to give to people who never paid a day into it or very little if any. After reading it again I think you were being sarcastic. Good day,.
Report Post »sbenard
Posted on August 13, 2012 at 8:33amSomeone, quick! Feel Melika’s forehead!
Report Post »Your reasoning is so erroneous and twisted that its not even worth responding to!
sbenard
Posted on August 13, 2012 at 8:35amNow I understand how Hitler got elected by the German people, unleashing the worst tyranny of the past century. Just wait for the dictatorship of a lame duck Obama, elected in ignorant glee by the likes of Melika!
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 9:02amThat isn’t what they are saying. The Trustees have said that the system has a 20.5 trillion dollar shortfall – after all of the money is repaid.
If you fall off of a 20 story building… The democrats are telling you that you don’t have a problem for 19 floors. The republicans are telling you that you aren’t in trouble for the first 4 or 5.
Repaying the Trust Fund only makes the problem smaller – a very little bit smaller.
Fix Social Security Now
Report Post »FixSSNow (dot) org
MM59
Posted on August 13, 2012 at 1:48pmNobody stole any money. The lawmakers we elected used it for other programs. If you look at the Statement of Social Insurance page 46 here http://www.fms.treas.gov/fr/11frusg/11frusg.pdf
Report Post »you will find that we need about $8.1 trillion to pay out the promised SS benefits to those who have attained 62 years and higher. The balance in the Trust Fund is $2.7 Trillion. So if we ended the program today, there is only enough money to pay $2.7 Trillion of the $8.1 Trillion promised.
If you look at the entire pool – those in the system under 62, we are short $14 Trillion. We need those new babies to make everything work. No more birth control or abortions – go forth and multiply so we can get our benefits! Or except the fact you were lied to. Accept the fact that a Harvard degree does not make you a good leader or manager of funds and programs. Or accept a MUCH higher payroll tax rate. Or accept lower benefits. The truth will set us free.
NOTAMUSHROOM
Posted on August 13, 2012 at 7:33amWow. Democrats really can’t do math! They prefer to shuffle imaginary money instead. And the term “full faith and credit” should send everyone into fits of hysterical laughter.
Report Post »The Jewish Avenger
Posted on August 13, 2012 at 7:28amSo, let me get this straight:
The ONLY reason why SS is NOW a problem is that people started taking money from it, filled the vault with IOU’s, THIS is what started the “SS needs to be removed/revamped?” Sounds more like someone needs to cover their IOU’s.
Report Post »USPATRIOT101
Posted on August 13, 2012 at 8:00amThis was first sold as a voluntary program. Hitler would tatoo the number on peoples arms and we carry ours on a card in our wallets.
Report Post »USPATRIOT101
Posted on August 13, 2012 at 7:27amThere is a practice going on now where immigrants work to get elderly family members in the country, gain citizenship and then immediately go on Social Security. How many people are collecting that have never contributed a dime? There’s your problem.
Report Post »JoeTheEconomist
Posted on August 13, 2012 at 9:06amThe problem is that it is Urban Myth. To collect social secuity you have to have worked 40 quarters, or be a survivor of someone who has.
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