Social Security Trust Fund... (depression, 2015, retirees, sucking)

[Hamish Forbes]

Originally Posted by Themanwithnoname

Perhaps you need to read a basic investment dictionary!

Bonds are not money, bonds are an IOU!

NO WONDER you have made some of the statements you have. You are unaware of basic differences in economic terms.

Shhh! You're doing it again . . .

[Mircea]

Originally Posted by PhxBarb

I personally am not going to worry about this (or about any other money issue). The government has no clue what they are doing now, and I just cannot be concerned enough to help them figure it out. As long as I get my 3.6% increase, let them figure out where its coming from.

That is an incredibly bad attitude and the main reason why Social Security is in the mess it's in.

You had best figure it out, and soon, otherwise your COLA increase might be the last one you ever get, and then they reduce your benefits by 23%.

Originally Posted by NewToCA

I think the Payroll Tax cut is one of the most dangerous moves I've seen from the Federal Government.

Here is my prediction, a decade or so from now Obama will be viewed as initiating the end of Social Security as we know it.

It was a very bad move.

[quote=Ariadne22;22074879]I am completely opposed to a payroll tax cut. It will make no difference in the unemployment issue and only serves to weaken Social Security further - which has been running a surplus until lately.[/qutoe]

Social Security has not been running a surplus since 2009.

Even if the recession had not occurred, the surplus would have ended in 2012 exactly as I predicted, and at that point, you'd have to start drawing from the Trust Fund.

Originally Posted by Hamish Forbes

If the article is correct, the payroll tax cut won't affect the solvency of SS, because the revenue that would have been collected and put into the SS trust fund is being replaced (and put into the SS trust fund) by general tax revenue (which means, of course, it's borrowed, and charged to Uncle Sam's Mad-Max credit card). What it does is provide a boost to many people who make too little to pay any income taxes at all.

It doesn't even offset Cost Inflation.

You're not in a recession precisely because your government is deficit spending $1.5 TRILLION a year.

And now you're going to lose about 1.1 Million to 1.2 Million jobs over the next 6 months, because of the troops withdraws from Iraq and Afghanistan.

And if you're pulling money from the General Fund, that means you're raiding the budgets of other agencies, like the Department of Veteran's Affairs. All departments, offices and agencies have been on a budget freeze since July 1. Obviously Defense and few other are exempted, but what that means is that the VA has not been able to hire people, because of the budget freeze. It also means they've had to cut back on spending, which means they're ordering less office and medical supplies, and they are awarding fewer contracts to the private sector, and it all adds up to either jobs lost or jobs not added.

Originally Posted by Hamish Forbes

You may be right, but that was not my reading of the article, which claims that: "the money that would have gone to the trust fund would be made up from general revenues, with "no effect on individuals' current or future Social Security benefits."

That smells bad.

Your Social Security benefits are not based on the amount you pay into the fund. It's based on the amount you earn, specifically your monthly average indexed earnings, not your payments.

So why would would Goss [the actuarial head of SSA] make such a bone-headed and misleading statement? What is he trying to hide? Why is he trying to spin it?

Originally Posted by Prairieparson

Curmudgeon: I'm kinda surprised you believe in the myth of the "Social Security Trust Fund" There is not money in any trust fund from Social Security.

Technically no, there isn't.

Treasury special securities are an asset to the OASI and DI Trust Funds and a liability to the U.S. Treasury. Because the OASI and DI Trust Funds and the U.S. Treasury are both part of the Government, these assets and liabilities offset each other for consolidation purposes in the U.S. Government-wide financial statements.

In order for the government to convert the IOUs (the special treasury bonds) to cash to give to beneficiaries, it will have to sell it as public debt, raise taxes or cut spending, or a combination thereof.

Originally Posted by Hamish Forbes

This is completely wrong. Anyone curious (and open-minded) about the topic should read at least the Wiki article on how the SS trust works. Excess funds over the years have been invested in Treasury bonds which cannot go into default without the specific authorization of Congress. These bonds earn substantial interest, which, together with principal, will keep the SS system solvent for a long time to come. After that, a few minor changes in taxation and/or benefits can keep the system fully solvent over any reasonable planning window.

Pukipedia is the least reliable source of information, and the Puki is dead wrong here.

The June 2011 SSA report says that the combined OASI/OADI Trust Fund is solvent through 2036.

It will go bankrupt in 2028.

If you look on page 44 of the report at the Intermediate Cost Assumptions, you will see the following as revenues:

2011 482.7 (Billions)
2012 616.1 (Billions)

What is that? That is a 27.64% increase in revenues.

That is possible, if and only if, your unemployment rate is 5% and your labor participation rate is 66.4% by January 1, 2012.

That is impossible.

All of the revenue assumptions are grotesquely overly optimistic in the SSA report. Under the High Cost Assumptions, SSA has this fantasy that your GDP will average 6.4% growth per year, and under the Low Cost Assumptions, at the rate of 4.1% per year.

Both of those are impossible. In the last 50 years since 1961, your average GDP growth rate has been 2.89%, which is fair and what I would consider "normal" for a post-Industrialized country.

Because Social Security erred with its bogus assumptions for GDP growth, and because its revenue assumptions are based on the flawed GDP growth estimates, its revenue assumptions will not pan out either.

For the last nearly 3 years, SSA has already been pulling money from the Trust Fund. Under public law, when money is transferred from the General Fund to the Trust Fund, the Trust Fund is debited in that amount.

SSA anticipated an 11.14% decline in revenues from 2010. The revenues for 2010 were only $544.8 Billion (which was 4.49% less than 2009).

Even if the payroll tax cuts had not been ordered, SSA revenues would have declined in 2012, which means the Trust Fund is depleted that much further.

So what does that say? It's all lies.

Because of the payroll tax cut, money from the General Fund will not be going into the Trust Fund, rather it will be going directly to beneficiaries as payments.

My reading of the law is that the Trust Fund will not be debited in that instance, but in the end, separate and apart from the payroll tax cut, money is going to have to go from the General Fund to the Trust Fund, because SSA will again have a short-fall and have to pull funds from the Trust Fund.

This says it all:

The U.S. Treasury does not set aside financial assets to cover its liabilities associated with the OASI and DI Trust Funds.

This explains how the Trust Funds are converted to cash:

When the OASI and DI Trust Funds require redemption of these securities to make expenditures, the Government finances those expenditures out of accumulated cash balances, by raising taxes or other receipts, by borrowing from the public or repaying less debt, or by curtailing other expenditures.

What the government did in 2009, 2010 and thus far in 2011 is "curtail other expenditures" to make up for the loss of revenues. So money is pulled from the VA, HUD, Education, HHS and other agencies to give to SSA, and then the Trust Fund is debited.

2008 was the last year money actually went into the Trust Fund and that was a paltry amount. In fact, SSA revenues only increase by 2.44% from 2007.

[marc515]

I think the only way SS and Medicare can be saved is to phase out benefits over a certain income, and ensure "all" income is factored.

By phasing out benefits above a certain income, the benefits will be there for the folks that really need them.

If they don't make drastic changes soon, the poor will suffer in the future.

[Hamish Forbes]

(anon) -- Good suggestion. The "ignore poster" function works! Thanks . . .

[RiverBird]

Originally Posted by Hamish Forbes

Ani, I agree with you. In my opinion, "general revenue" is in very serious trouble, but the underlying problem with general revenue has nothing to do with Social Security. Rather, SS is a sound program that has been looted for so many other purposes (as an earlier poster pointed out), and will likely continue to be looted.

And that's the truth, amen.

[augiedogie]

NEw To Ca. The reason payroll taxes should not be consider an investment is because, there is actually no investment, and there is no promise that you will ever get your money out. IE. If you die at 60 without a spouse, your hiers get nothing. If you retire and live to a hundred, you will get paid out far more than you ever put in including inflation. The money paid in payroll tax actually goes goes to pay present beneficiaries. If the govt. colapses, you get nothing.

[NewToCA]

Originally Posted by Prairieparson

NEw To Ca. The reason payroll taxes should not be consider an investment is because, there is actually no investment, and there is no promise that you will ever get your money out. IE. If you die at 60 without a spouse, your hiers get nothing. If you retire and live to a hundred, you will get paid out far more than you ever put in including inflation. The money paid in payroll tax actually goes goes to pay present beneficiaries. If the govt. colapses, you get nothing.

Somewhat agreed, which is why I stated it is like putting money towards an insurance policy or annuity. Those would also have different outcomes depending upon lifespan.

Payroll tax is intended for a specific purpose though, while general income tax is for overall operations.

This is a significant difference to me.

[TuborgP]

Originally Posted by marc515

I think the only way SS and Medicare can be saved is to phase out benefits over a certain income, and ensure "all" income is factored.

By phasing out benefits above a certain income, the benefits will be there for the folks that really need them.

If they don't make drastic changes soon, the poor will suffer in the future.

And that will create even more voters opting for candidates willing to privatize the system so folks are putting THEIR money to work for them and not someone else which some might say is just another wealth transfer antic.

[TuborgP]

Originally Posted by Hamish Forbes

You may be right, but that was not my reading of the article, which claims that: "the money that would have gone to the trust fund would be made up from general revenues, with "no effect on individuals' current or future Social Security benefits." I could be wrong, but I read this to mean that the trust fund will supposedly be maintained at the same level it would have had in the absence of the payroll tax cut.

That would at best be general revenues down the road and who will fulfill that promise years later and with what money and at what trade off costs and what level of deficit?

[TuborgP]

Remember folks if SS is privatized that money you contribute goes in your personal account and when invested in equities will not be available for government to spend resulting in heck of a budget cut or deficit increase. However many will have their future in their own hands. So I guess we all need to look at our hands and have a serious discussion with them so we know how much to trust them.