Quote:
Originally Posted by tickyul
Sorry, there is NO SS trust fund, well ok.....maybe a fake one to comfort the average Amerit**d.
The Congressional Research Service (CRS) of the Library of Congress issues factual public reports on the social security situation. The CRS says bluntly: There is no social security trust fund with real money or assets in it. Most people, and most of the media, don t realize that social security taxes taken from people s paychecks are not paid into a social security bank account. They are paid directly into the federal government s general account. The politicians in Washington have stolen and spent over a trillion dollars of excess social security taxes that were not paid out in benefits to retirees.
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That is disingenuous.
If you're going to attempt to explain things to people, then you should at least have the courtesy to tell them the truth instead of ranting.
The Social Security Trust Funds exist as two separate Trust Funds, one for OASI and one for OADI. They are often combined into the OASDI Trust Fund for reporting purposes.
As of December 2010, there was some $2.58 TRILLION in the combined OASDI Trust Fund and it is projected to default in 2036.
The OADI Trust Fund has $186 Billion and is slated to default in 2018.
The OASI Trust Fund has $2.39 TRILLION and is slated to default in 2037.
One thing of note here and that is if Social Security is wrong, and the OADI Trust Fund defaults in 2017, rather than 2018, then that forces the OASI Trust Fund to default in 2036 instead of 2037.
That also makes the combined OASDI Trust Fund default in 2035 and not in 2036.
If (as I and many others calculate) the OADI Trust Fund defaults in 2015, then that forces the OASI Trust fund to default even earlier in 2033.
Now, how does this play out?
The Trust Funds consist of special security bonds that bear interest. The interest rates vary from a fraction of 1% to slightly more than 5% depending on when they were "purchased" by the government.
The issue is
"How do we convert the special security bonds to cash in order to pay Social Security beneficiaries?"
Here are the ways (I'll try to explain on another level):
1] Congress sets the annual budget at $3.1 TRILLION and collects $3.6 TRILLION in revenues. The government has a $500 Billion Budget Surplus. The surplus is then used to convert $500 Billion worth of special security bonds into cash to pay beneficiaries.
Unfortunately, this option is not available, because no American will see a budget surplus before the year 2040.
However, note that you are being double taxed, because you already paid the FICA tax, and now your tax dollars are being used to convert the bonds into cash.
2] Congress sets the annual budget at $4.1 TRILLION and collects $2.6 TRILLION in revenues. The government has a $1.5 TRILLION Budget Deficit. How does the government convert the Trust Fund bonds? The government must add to the Budget Deficit. If the government must convert $500 Billion to make payments to beneficiaries, then the total Budget Deficit becomes $2 TRILLION.
This option is available for a limited time, only to the extent that foreign investors can or are willing to buy US treasury notes. This option because less likely over time, as the National Debt increases far above the GDP and even more so as the public portion of the National Debt starts to equal the GDP.
3] Congress can default. Congress can simply refuse to pay Social Security beneficiaries or cut benefits.
4] Congress can enact Budget Cuts. Congress sets the Budget at $4 TRILLION and of that $4 TRILLION, Congress promises to give the Department of Education $300 Billion, HUD $500 Billion, H&HS $400 Billion and Defense $700 Billion. Congress then freezes the budgets and instead of giving Education $300 Billion, only gives them $200 Billion, and does the same for each of the other offices and agencies.
Note that you are still being double-taxed, as you already paid FICA once and now you must pay taxes to convert the Trust Fund bonds to cash.
You need to understand that, because many on this forum are under the misguided impression that the US government can just continue to borrow money in perpetuity.....it cannot.
There are consequences for financial and economic stupidity, among them, Real Inflation. Listen to me now and hear me next Thursday, in about 12 years you will have Real Inflation like none of you have ever seen. Some of you might say, "
I remember Real Inflation from the early 1970s." Sorry baby, it will be much worse than that. It will even be worse than post-WW I Real Inflation, but not as bad as post-1st Great Depression [of the 19th Century]/Civil War Real Inflation (and I am talking about Real Inflation as distinct from the Cost Inflation that you are all experiencing now...if you don't like Cost Inflation then stop consuming...it's real simple).
Good luck with that.
Special security bonding....
Mircea
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