$22 trillion Social Security surplus revealed on C-SPAN

Try to be a bit respectful. The sons and daughters and some of these same "dam (sic) lazy and gullible" Americans are on foreign shores putting their lives in danger to protect your

All the more reason not to throw our country in the toilet over right wing lies. Oh wait, that's how they ended up overseas in the first place.

All your post does is support American Latina's point.

Oh go stick a sock in it TheDissentingVoice.

The American people are not dumb and lazy. The wealthy in this country spend vast amounts of money to lie twist and distort the truth.

Most Americans are so busy treading water that they don't have time to research for and find the truth.

The rich are not dumb and lazy either. They are so consumed with gluttony that they are missing the point that by continuing to destroy the middle class they are killing the goose that lays the golden eggs.

To bad the Social Security Trustees of the trust funding disagree.

Also.. under the Cut, Cap, Balance Act Social Security was SPECIFICALLY exempted from a cap and a cut.

The American people are not dumb and lazy.

Thank you Pat. I don't agree with the rest of your post but thanks for that rational comment..

I'm still trying to figure out how the military and their family's got involved in the topic of social security and the fact that many american's are gullible and lazy. Many american's are lazy and gullible! (not all, but some.) How can that be argued? But the military was not even part of the conversation until that poster mentioned it.

Americans are on foreign shores putting their lives in danger to protect your ..... well you know what.

No they are not. They are overseas nation building so American defense companies can turn large profits.

The American people are not dumb and lazy.

OK, what do you call it when half don't vote, and then half of those that do vote, vote against their own interests?

What do you call it when people vote in representatives who promise to support the rich, give rights to corporations, and take away support from the middle class, and then complain when those reps do exactly what they promised? What do you call it when nearly a fifth think the President was born in another country, and has failed to produce a birth certificate? What do you call it when a significant number call the President anti-American because of his Christian pastor, and then at the same time accuse him of being Muslim?

I don't call them smart and enthusiastic learners!

...passing a bill requiring us to buy a product, that Reid and Pelosi done up,and if we did'nt they would fine us...and surely is he was white and talked about blacks the way he did whites, he would have never been even considered for any office...first time in her life, once her husband was put into power...his parents filled out school regisration and check that he was a citizen of Indonesia...I wiil give Obama the benefit of the doubt, and say he was born in Hawaii. Which makes his parents LIARS. The apple falls not far from the tree.

And there you go. Much easier to be stupid than to think about what is going on.

Is the health care law constitutional?

The full story behind Rev. Jeremiah Wright's 9/11 sermon

Michelle Obama: Proud of her country

Indonesian school explains Obama’s registration

Americans dumb and lazy ?

well , I don't know about lazy .... but

Ignorant America: Just How Stupid Are We?

Millions of Americans are embarrassingly ill-informed and they do not care that they are.

http://www.alternet.org/news/90161/?page=1

LCS

you've proven US ignorance.

Ignorant America: Just How Stupid Are We?

Great read.

Ripley and Andre

America is ignorant? that does'nt sound patriotic to me. hmmm

So Andre I'm stupid? that was a hurtful thing to say, does that mean we are no longer friends?

I'll try to be civil, I know the truth is scary, don't be frightened.

I know what will help I have deprogrmmed many Obamabots. OK you two grab your ears and pull real hard, think like the little train I think I can, I think I can keep pulling until you hear a pop, I know its warm and there, but keep pulling, once you hear the pop, you will be able to see the light.

Now doggonit dont make fun of the new deprogramed Obamabots, because their ears look funny, these little feller have been through alot.

Back to my Tall Iced Tea and Stogey

TDV another account created in June 2011.

Troll or rereg?

Troll is such a nice word. Let's call them what they are;paid cyber "BROWN SHIRTS'! Yes, these people are paid to muddle the water and deflect from seeing what's really going on. Turn the fog lights on people. Stop responding and trying to debate these paid secret agents. American Crossroads might be the source of the money, but the so-called TROLLS are the recipients. And we see them daily here on the Vine!

If you are not a billonaire or millionaire, this bud is not for you. The Republicans are full of $*it- PERIOD! Cut cut cut everything, but don't dare touch their BELOVED top 2% moneyed people; Using their words,'THE CREATORS'. And as the 'good book' says, the love of money is the root of ALL evil...Alas, the Republicans are evil.

There is no surplus in the terms that people think of surpluses.

The vast majority of SS is in "special interest bonds" ----- basically Treasuries.

And there's certainly not 22 trillion.

http://www.socialsecurity.gov/OACT/STATS/table4a1.html

The column to the very right represents the total amount "net" contributed to the fund since its inception.

The issue comes about because the "fund" largely "gives" money to the government and in exchange the government issues special interest bonds. This is *EXACTLY* the same as the process of funding annual deficits.

The Federal Reserve gives the US gov credit, the US gov in exchange gives them Treasuries.

Now....Treasuries are all well and good. Considered to be the safest liquid investment on the planet. Because the US has never defaulted on payments or debts, ever. Which is why this debate is very important.

The reason Treasuries maintain value is based on *TRUST* that the US gov will repay them. Threatening the AAA credit rating is a prime way to exacerbate the debt problems.

1) It becomes harder to issue Treasuries because people Trust the US less to pay off their debts.

2) The interest rate goes up to secure peoples money in exchange for more risk (i.e. a lower credit rating) - *Just to give an idea, if interest on Treasuries goes up even 1-2%, it will cost an additional 2-3 trillion dollars over 10 years in interest.*

That is why doing this whole debate to simply save 2-6 trillion dollars over 10 years by threatening to default is *STUPID* - No one will save any money if the AAA credit rating is downgraded.

Even if you cut spending, servicing the existing debt effectively cancels that when it becomes more expensive.

______________

SS is threatened because 40 years from now, there will be less workers and more elderly. Making for extreme pressure on the fund. If benefits aren't cut now, the problem will continue to grow in size.

It's basically demographics. The world is aging (the average age is getting older all over the globe), boosting demand for all form of healthcare services. Which of course, raises the prices. In addition, you have the evolution of healthcare insurance, which is actually making things even more expensive.

The point, in case you missed it, was that we are on the tails of social security reform on the false premise that it is going bankrupt. If some Americans would do their research and turn off fox news they would realize that they are being falsely led to believe that the system they have paid into their lives is going to collapse, when in fact, it is on track to surplus.

I'm sorry American Latina, you are simply wrong.

Research....Let's try the CBO (who is the non-partisan go to for economics) or the ssa.gov site (who constantly pimps SS as being completely fine, which is really an arrogant view)

http://www.socialsecurity.gov/OACT/STATS/table4a1.html

It's very easy to see that total payments and total receipts are becoming equal.

http://www.ssa.gov/OACT/STATS/table4a3.html

The combined fund highlights that even more. Updated thru 2010, it only runs a "surplus" of 68 billion a year.

Also, if you look at all interest generated by the entire funds history, you get no more than 100-200 billion dollars. That is because the interest is only 1-3% on T-Bills.

22 trillion? The fund has never taken in that much money even over 70 years. Interest is re-deposited against more "IOUs" annually and put back into the "Fund", the amount you see on the SSA.gov site is the correct accounting number of the value of the trust.

The end.

The reason it's a problem even though the fund takes more money in than it pays out is because the money *has* to be invested in order to generate retirement funds for the people paying in now. Once you break even, there's no interest generated by a surplus.

Look at what happened to GM. Pensions (and being more expensive on the labor side, though that was minor compared to pensions). GM did not invest surpluses to the pension funds over time to account for having to pay all the retired people.

That's the exact same thing. By 2050, there will be 2 working Americans to every 1 SS recipient. Right now, there's 4 to 1. If there's not enough current funds, they have to draw down against the Treasuries, which is really an accounting trick.

Any shortfall, will produce new debt. Because the fund itself *IS DEBT* - Intragovernmental holdings.

http://en.wikipedia.org/wiki/Intragovernmental_holdings

All SS is held in intragovernmental debt which is part of the 14 trillion dollar figure people reference.

______________

CBOs projection.

http://www.cbo.gov/ftpdocs/108xx/doc10851/01-27-Ryan-Roadmap-Letter.pdf

Page 8 of 50.

It's pretty easy, they show what could be done to get it in order, or what happens if everything stays as is.

By contrast, under the alternative fiscal scenario with benefits as scheduled, Social
Security outlays would be close to 6 percent of GDP in the years beyond 2033. The
trust fund ratio under that scenario would be just over 1 in 2036, and the trust funds
would be exhausted in 2042.

If it's not fixed now (or soon), the problem will build out and be extremely difficult to deal with later down the line.

1) People are living longer and working longer, SS benefit age needs to be pushed up, people are drawing out more than they paid in.

2) The system is drawn in many instances, from funds never paid in. (i.e. spousal benefits, etc). Money that was never put in, is allowed to be drawn.

3) The benefits have to be trimmed down. It's simple math. Given the rate of aging in the US, boomers starting to collect, the current benefit schedule cannot be paid with the current level of revenues and it will not be able to be sustained in deficit for more than 30 years.

So why are senoirs at risk? if their is 22 trillion in Social security

The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies.

And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.

Every dollar we pay in interest is a dollar that is not going to investment in America's priorities.

Senator Barack Obama
Senate Floor Speech on Public Debt
March 16, 2006

or

President Obama, sounding at times exasperated that talks broke down with Boehner (R., Ohio), said no matter what happens, the debt ceiling must be raised. He said he'll tell that to congressional leaders Saturday when they meet at the White House.

"I am confident simply because I cannot believe that Congress would end up being that irresponsible that they would not send a package that avoids a self- inflicted wound to the economy at a time when things are so difficult," Obama said.

He also signaled he'd take the responsibility himself. "I'm happy to do it," Obama said.

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107222008dowjonesdjonline000514&title=president-obama-willing-to-raise-debt-ceiling-on-his-own

Obama made clear Monday that any changes to Social Security would be designed to ensure money is available for beneficiaries years from now – as opposed to trimming costs to reduce the deficit. One possibility would lower cost-of-living increases for recipients

http://www.huffingtonpost.com/2011/07/11/obama-debt-ceiling-press-conference_n_894416.html

The article makes a good point, if there is actually 22 trillion in Social security ...then we dont need to raise the debt ceiling...as the President said in 2006 , then turned around completely and said otherwise.

Apparently this eveidence shows that republicans were right all along we are putting seniors at risk by not raising the debt ceiling.

The question who is lying???? this chart?, The President or himslef in 2006?

Of course you guess it all 3 ..when anything is done by the daily kos it is always wrong.

A long term fix for Social Security is needed but we need to study what all other major industrialized countries have done to restructure their SS type pension programs. We are the one and only country, thanks to the Republicans, considering privatization. Why privatize after our recent experience of Wall Streets rape, pillage and plunder of our 401K pensions?

The key to a solvent national pension is absolutely full and aggressive regulation of Wall Street white collar criminals. Republicans are for deregulation, exactly what they did to enable the Great Recession.

I would question the term "surplus." They are expected to be solvent until 2037, and SS should NOT be a part of the current political budget discussions. Actually SS is a piggy bank that other departments in government borrow from to stay solvent. It is the "internal" national debt. When you shake this piggy bank, you don't here the rattle of coins, just the rustle of paper IOU's.

I would question the term "surplus." They are expected to be solvent until 2037, and SS should NOT be a part of the current political budget discussions.

It has to be because SS is the single largest long term contributor to the budget. Followed by Medicare/Medicaid and the Military.

The simple fact is, if something isn't done soon, it gets a whole lot more unpleasant and difficult to fix later.

Has anyone here ever found themselves in hard times? General question.

So....was it easier to manage when it was starting to get bad, when your credit was still ok, etc. Or was it harder after bad credit, bankruptcy, and a larger debt?

You should fix what you can as soon as possible upfront.

So Andre I'm stupid? that was a hurtful thing to say, does that mean we are no longer friends?

Didn't know we ever were. I will tell you this, being honest doesn't equate to being disrespectful. When someone calls others liars based upon a poor grasp of facts and history, I have to question their intelligence and their motives. Your post showed a poor grasp. You reinforce my assessment by turning to some sort of silly partisan rhetoric in your subsequent post, for the third time completely unrelated to the topic.

You should fix what you can as soon as possible upfront.

The point still stands, as you pointed out, the fix is easy. There is hardly a crisis.

Maybe if the 12 trillion that has been "borrowed" were paid back we wouldn't be having this discussion.

LCS

Ripley and Andre

America is ignorant? that does'nt sound patriotic to me. hmmm

actually it's very patriotic. ... it's honest and patriotism would want ones country to be better .... obviously your not patriotic if you want to ignore the fact that many Americans are ignorant.

Yep, there's $22T in nice, crisp IOU's in the fund, just waiting for boomers and all the rest!

Oh, actual money? Well, that's a little different situation...

$22 trillion Social Security surplus revealed on C-SPAN

I'd be really skeptical of a claim like that. A big problem with Social Security, etc, is.. the Baby Boomer generation is getting on it.. or will be soon... and our country is going to have a very large senior citizen group. Essentially... there will be more people pulling from social security.. then younger people paying into it. It's going to be lopsided... whereas before.. you had a huge baby boomer generation paying into it.. with a smaller pool pulling from it. (More people paying in then taking out) That's one of the huge issues and why my generation.. (I'm 27) basically better not even count on it even being around when we hit that age because all studies show thus far it won't be.. unless something drastically changes and issues get fixed / resolved.

I'm a Conservative that thinks Social Security shouldn't be in the talks as well. People pay into it.. have there entire life's most of them.. they deserve and are entitled to it.

Nicey...et al...

I think you missed the point: the 22 trillion was a projected surplus, some years out (not specified how long).

(not specified how long).

They project things all the time in Washington. Do any of them ever turn out even close? Lol.

Unfortunately, long term financial predictions are as worthless as forecasting the weather for 2020, and for the exact same same reason: too many variables interacting in too many unpredictable ways. The CBO might as well use tarot cards to determine what the Social Security "trust fund" will look like a few years out.

Some thoughts on this story and subject.

The important part of this story is that the so called economist who is being relied on as a supposed expert on why we need to hack entitlements was hoisted on his own petard, and clearly didn't pay any attention to his cute little graph intended to show how @!$%#ed we are. His graph is totally pointless BS because it's carried out into "the indefinite future"...which could be 10 years, or 500 years. That makes it totally and completely useless. This guy is a corporate talking head for the Republican/Tea party, and proved on national TV that he's totally clueless about his area of intended expertise.

Another important issue is that SS was intended to be a supplemental pension plan TOTALLY separate from the federal budget. The only reason it's being included in these discussions is that the federal government borrowed the @!$%#ing money to do with as it pleased, and now wants to change the rules so it doesn't have to pay it back. That's just not right.

I used to be extremely conservative, but as time goes on, and I see what passes for conservative thought these days, I'm becoming a really cranky old liberal who still firmly believes in the 2nd Amendment. If the clowns in DC think that they can make me pay into a pension plan and then change the goddamned rules, they've got another think coming.

The whole reason for this debt limit farce is to raise fed bond rates for the big investors, and to tank the market so that those same investors can buy up stocks at bargain basement prices.

Funny how every economic crisis benefits the people who got the big tax cuts, and then we're not supposed to raise their tax rates because they'll quit creating jobs (in Sri Lanka).

I'm mad as hell, and just about ready to not take it any more.

Try to be a bit respectful. The sons and daughters and some of these same "dam (sic) lazy and gullible" Americans are on foreign shores putting their lives in danger to protect your ..... well you know what.

Yes, they are lazy and gullible...and furthermore, they are selling the future of those men and women down the drain. The very people that are out there on the frontlines today will be the ones that need these programs the most. But while they are out there risking their lives for this country, their selfish parents are selling out to a party that couldn't care less about those men or women.

It's the poor and middle class that have carried the burden of fighting this nation's war, the rich elite never have the balls to wear a uniform. They cheerlead from the sidelines while destroying the very programs that veterans and their families depend on.

Bush enacted 2 massive unfunded tax cuts, 2 unfunded wars and numerous unfunded programs and the very people that will have to pay those bills are the ones that are fighting the wars.

The poor and middle class are not only fighting wars but they will also pay for them with cuts to their Social Security and Medicare...

...yeah, lets not be disrespectful.

Reflections On Dumb And Lazy Except When ...

we want to rationalize ending life support to force the slobs to search for nonexistent jobs.

In my opinion, anyone who signs onto discretionary 'for profit' wars is stupid. On the other hand, those who survive are apt to recognize that it is within the state that resides the seditious malfeasance and offer real resistance to it.

Problem is, right-wingers don't watch C-SPAN...

The problem is, the fascistic right supports what it does for profit. For all the insistence on 'conservatism,' the fascistic right is the quintessence of post-modernity. Therefore information is irrelevant.

As an aside, from what exactly is political authority derived, and where is that truth seen. In other words, exactly what MAKES that so?

As an aside, from what exactly is political authority derived

Well, there's a thought provoking question, and one that cuts to the heart of the matter.

I've come to the conclusion that a great number of our countrymen who reside politically on the right are ignorant and gullible. I say to you right-wing sloths to pull away from FNC and do your own research. The correct information is definitely out there ...

The money is there, but what I believe has happened is our own politicians are lying to the people saying SS is broke just so they can print up more money and rob what's there.

All we have in office today are a bunch of manipulating, lying, and thieving politicians we no longer need.

We all need to cut back on government. We have way too many people in there robbing the rest of the the American people.

They have been busted for their lying and deception, now its time for the people to march in and throw all their lying asses out to the curb where they all belong.

I think that most people, including you, American Latina, are missing the point on Social Security. (First, let me say that I agree with you; SS should be left out of this debate. However, the problem occurs next month if the government doesn't have enough money; if they pull from the Trust Fund to make up the difference, that $22 Trillion goes away pretty fast, creating an SS crisis a lot sooner than it should.)

However, more to my original point: Social Security is part of FDR's New Deal. This automatically makes it number one on the GOP's hit list. Medicare was passed under LBJ, so it is a close #2. Do you think that it was an oversight that the Medicare Prescription Drug Plan was so expensive and not funded? Does anybody? The quickest way to kill something, like Social Security and/or Medicare, is to make it so expensive that they can convince people that either, we don't need it, or private enterprise can handle it better. The GOP are not as dumb as they look. It is precisely why these programs are at the forefront of every one of their discussions and numbers 1 and 2 on their hit list for funding cuts.

grumpy_jon

It's not so much the borrowing from the trust fund, if we default, the damage to the trust fund will far exceed the damage done by "making up the difference".

All the past loans SS has made to the gov't are secured with US Treasury Bonds, the downgrade to the US bond rating is far more costly to SS.

The GOP are not as dumb as they look. It is precisely why these programs are at the forefront of every one of their discussions and numbers 1 and 2 on their hit list for funding cuts.

But there is no public support for their (GOP) position, they keep handing Obama the winning issue (cuts to SS and Medicare) but Obama is bounded and determined to give it back.

Obama has to stop asking congressional to support positions that them defeated. He can't ask Dems to cut SS, Medicare and Medicaid, that issue will guarantee defeat for many House Dems. After the midterm disaster, he can't afford any Congressional losses.

The quickest way to kill something, like Social Security and/or Medicare, is to make it so expensive that they can convince people that either, we don't need it, or private enterprise can handle it better.

But that's why we elected someone we thought would fight for our position, Obama tolded us he was the person to defend us, now he's selling us out.

There comes a point when the party becomes more important than that party's President. After the health care vote, the President has reach that point with the party. The Democrats have to protect seats even if that means voting no to any cuts on entitlements offered by the President.

I just wish he was as bold with GOPers and he was with Bin Laden.

Ok,

I call what this guy is saying as mostly bunk.

Unfortunately he is NOT an actuary, so he has NOT included the actuarial reality that as the baby boomers, who are responsible for the increase in cost pressure, are eventually going to die off. The population group/generation AFTER the baby boomers do not have the same population level, so the cost pressures won't be as high. All he is doing is expanding the benefit costs going forward indefinitely.

That he got caught with his numbers (cost/revenues) not matching what he is stating and coming out that he is going to look at that for next weeks story is just another indication that this guy really hasn't done his research because the thesis of this story is that SS benefits will need to be scaled back.

Projected money

The 2011 annual report by the program's Board of Trustees noted the following: in 2010, 54 million people were receiving Social Security benefits, while 157 million people were paying into the fund; of those receiving benefits, 44 million were receiving retirement benefits and 10 million disability benefits. In 2011, there will be 56 million beneficiaries and 158 million workers paying in. In 2010, total income was $781.1 billion and expenditures were $712.5 billion, which meant a total net increase in assets of $68.6 billion. Assets in 2010 were $2.6 trillion, an amount that is expected to be adequate to cover the next 10 years. In 2023, total income and interest earned on assets are projected to no longer cover expenditures for Social Security, as demographic shifts burden the system. By 2035, the ratio of potential retirees to working age persons will be 37% — there will be less than three potential income earners for every retiree in the population. The trust fund would then be exhausted by 2036 without legislative action.^[9]

Proposals to privatize Social Security recently became part of the Social Security debate during the Bill Clinton and George W. Bush presidencies.

http://en.wikipedia.org/wiki/Social_Security_%28United_States%29

I think you missed the point: the 22 trillion was a projected surplus, some years out (not specified how long).

????????????????????

So, I can see you didn't look at the links to the SSA.gov site. Or the CBO.

How can you project an additional surplus when the fund will be *overdrawn* to current deposits within just a few years?

By 2013/2014 more payments will go out for SS than money will be taken in. SO HOW CAN THE SURPLUS GROW? That is nonsense.

All the past loans SS has made to the gov't are secured with US Treasury Bonds, the downgrade to the US bond rating is far more costly to SS.

A ratings downgrade would mean the intragovernmental holdings would require more interest. But intragovernmental holdings are "internal debt" to a nation. So....paying higher interest.....to itself?

They don't loan out of SS. They spend the taxes we pay every year and issue "special interest bonds" into the trust fund.

A ratings downgrade has an impact on the "debt held by the public" because that is interest we pay to creditors who own T-bills. The US gov owns the special interest bonds in the SS trust.

mjl:

And I believe that before that time, the population pressure will have started to recede as the older baby boomers start to die.

The assets in 2010 being adequate for 10 years is assuming that there are no further contributions. The 22T is going out who knows how many years, ( I don't think he states exactly how far out. The only time period i heard in the video was 'indefinite' )

I agree, the 'economist' is really a political hack trying to justify cutting SS benefits.

To the gen-Xer's and other young people: As long as there is a United States government, there will be Social Security. There will always be some with a gun held to their heads, to "contribute" (except of course for some government workers, who had, or have the sense to avoid the program).

For everybody else, the income and payoff will have to be adjusted back to a realistic match. First, remove the maximum limit on SS tax; second, enact means testing in recipients, to ensure the money is actually needed; third, tell those outside the US that the checks are gonna stop. Presto, the program is saved!

Well Thanks, Old Crankster ...

Well, there's a thought provoking question, and one that cuts to the heart of the matter.

But the idiot that I am, I've never seen the point in asking questions of other kinds ...

Nicey, it isn't the government paying interest to itself. they are paying interest to us, the taxpayers who have paid into SS and therefore the trust fund as well (because the seed money for the trust fund comes from the FICA tax)

that's your money, earning interest, for your future.

why did he continue to insist that Social Security cuts are needed?

Because that $22 trillion only exists as government IOU's. Every president since LBJ has spent the SS surplus.

This is why it is laughable the claims that Clinton had a budget surplus in the 1990's.

space,

every government since Roosevelt has done that, it is how SS has worked since it was created.

As for the surplus comment, you do realize that what you are suggesting is exactly what Enron was doing right?

every government since Roosevelt has done that, it is how SS has worked since it was created.

Nope. SS was lockboxed away from the rest of the budget until LBJ and the congress of the time changed the rules. All three houses were controlled by the democrats. Suckers.

As for the surplus comment, you do realize that what you are suggesting is exactly what Enron was doing right?

Yep, they learned from the best.

Space, that was just bookkeeping. All LBJ did is move it from being reported on a separate ledger to being on the general ledger. The actual accounting was the same. It makes no difference. You can still separate out the numbers, and since the government holds the actual risk associated with the trust anyways, it really doesn't make sense to split it up.

And ENRON was splitting up assets into different corporate entities to hide risk, which is really what is important when looking at a balance sheet to determine if you want to invest in a company or not. Now if SS was truly shut away from the government by being able to invest in outside securities (which I don't support by the way), then yes it makes sense to separate the two sets of books. But SS has always essentially been intertwined with the governments overall books that it is really misleading to split them up because it makes it look like the government is of higher risk than it is, and it makes the SS Trust look as though it is of lower risk than it is.

Space, that was just bookkeeping. All LBJ did is move it from being reported on a separate ledger to being on the general ledger. The actual accounting was the same. It makes no difference. You can still separate out the numbers, and since the government holds the actual risk associated with the trust anyways, it really doesn't make sense to split it up.

No, it was not. It was in a trust account that was specifically set aside for SS and not spent in the general budget. LBJ and the congress changed that in 1968.

makes it look like the government is of higher risk than it is,

In case you have not noticed, the government is a high risk to lend to or we would not have $14 trillion in debt.

space,

the money that the government securities were exchanged for has ALWAYS been in the general fund

and the US government is STILL (until probably tuesday) the most risk FREE entity to loan to. It isn't the amount of debt that is important, it is the ability of the country to pay off that debt that is important. The US has that ability, now it doesn't seem to have the desire/willingness.

and the US government is STILL (until probably tuesday) the most risk FREE entity to loan to. It isn't the amount of debt that is important, it is the ability of the country to pay off that debt that is important. The US has that ability, now it doesn't seem to have the desire/willingness.

Horsepucky on both accounts.

really? please tell what country is of lower risk?

Nicey, it isn't the government paying interest to itself. they are paying interest to us, the taxpayers who have paid into SS and therefore the trust fund as well (because the seed money for the trust fund comes from the FICA tax)

that's your money, earning interest, for your future.

For something that supposedly belongs to the citizens.....nothing about it behaves that way.

No, it was not. It was in a trust account that was specifically set aside for SS and not spent in the general budget. LBJ and the congress changed that in 1968.

That is pretty meaningless though. 99% of all the funds that have every been contributed (that is surplus above expenditure) have occurred since 1980.

Aside from the fact that where the funds go has *always* been at the perview of the Secretary of the Treasury. The official "policy" was to invest in marketable securities (public issue). That policy changed in 1960 (well before what you're talking about), to invest primarily in non-marketable (special issue) that were gov bonds exchanged for the money.

And if it's about 1 party or the other, how come none of this got changed in 2001? When all 3 were the same (including the Supreme Court as well).

nicey:

They are in essence the same FEDERAL GOVERNMENT securities. The only difference is that the special issue securities can only be 'owned' by the federal government, so they are 'not negotiable'.

The bottom line is that the money does not exist. It has been spent, mostly by the same people who want you to borrow another several trillion dollars from China, i.e, the democrats.

space

Money doesn't exist at all. It is only a concept that only has value because we give it value.

They are in essence the same FEDERAL GOVERNMENT securities. The only difference is that the special issue securities can only be 'owned' by the federal government, so they are 'not negotiable'.

In terms of being something tangible, there's a big difference. One is actual debt (that is part of the national total debt), the other would not be accounted as debt because it wouldn't be classified as an intragovernmental holding. (given the current situation, that would be preferable)

Not only that, the ability to actually use those funds is greatly improved if the security is a marketable one.

nicey

They are both considered debt. The only reporting difference is that the SS trust is not considered debt held by public. If you are looking a debt figure, you need to be careful which one you are looking at. Debts held by public is debt not held by the government (SS Trust is the only really large entity excluded from that, though there are some others). Total debt is the all debt instruments.

Whether it is a special issue or not makes no difference from a reporting standpoint.

They are both considered debt.

They don't function the same way economically in terms of GDP growth to government debt.

When analyts talk about hitting a 100% debt ratio (and then per 10% of additional debt you lose something like 0.5% GDP growth). They are exclusively talking about debt held by the public. That is where that measure comes from.

The only reporting difference is that the SS trust is not considered debt held by public. If you are looking a debt figure, you need to be careful which one you are looking at. Debts held by public is debt not held by the government (SS Trust is the only really large entity excluded from that, though there are some others).

Since intragovernmental is around 5 trillion and the SS is only 2.6 trillion of that, there are some other ones in there.

Total debt is the all debt instruments.

Whether it is a special issue or not makes no difference from a reporting standpoint.

If it was a bought marktable security, it wouldn't be considered debt. Because the government wouldn't have issued against.

The only real reason they do a special issue is to spend the money recieved from SS taxes in the budget and replace it with something considered as good as cash (a T-bill). If the Treasury invests it in marketable bonds, it's not debt at all. The Treasury is not limited to investing only in US bonds for marketable selections.

Nicey:

On paper they do, but in reality they don't. With the SS Trust, there is a schedule as to how that money will be spent. That is people retiring and drawing on it. With 'debt to the public', the government cannot assume that the debt instrument will be cycled, they have to assume that when it matures, that it will be redeemed. This makes the debt to itself far less onerous.

if it was a marketable debt instrument it is STILL DEBT. The ONLY difference is that the government can trade it if they need to. And if you are going to consider that a bond is not debt, I think we need to stop this conversation and wait until you take a basic securities course.

Yes and it is much less then the rate the law says they should be paying because of write offs, off-shoring, corporate tax welfare, capital-gains giveaways, etc.... Yes I am aware and I agree write offs and tax welfare needs to be reduced in middle and lower income brackets as well because we can't afford it any longer. That said I don't think those in poverty and low income should be required to pay federal income tax, the taxes they do pay such as local sales taxes and payroll taxes are already burdensome enough to someone who can barely afford to put food on the table. I never allow myself to be brainwashed by any media liberal or otherwise, rather I think for myself.

Are you even aware that 51% of people pay no income taxes ?

Repeating the same old lie over and over again does not make it true.

Except that it's not a lie, he stated income taxes specifically, and that's pretty much the truth.

Alan, a lot of the poor you are referring to don't pay taxes as is because most received government assistance. So basically the sales taxes you are referring to are just being sent back to them considering that it is those same taxes that is given to them to pay for their groceries.

That's why delivering the message as a suppository would be beneficial. It would be harder to ignore.

I'm sure one of the Bachmann's would approve... praise Jesus.

Tea Party Caucus Lists:

http://bachmann.house.gov/News/DocumentSingle.aspx?DocumentID=199440

http://gawker.com/5592861/bachmann-releases-tea-party-caucus-member-list-alleged-members-confused

This is a pretty good one

http://tpmdc.talkingpointsmemo.com/2010/07/meet-the-tea-party-caucus.php

http://motherjones.com/mojo/2010/07/tea-party-caucus-members

Here is the bing search site, lots of Lists:

http://www.bing.com/search?q=tea+party+caucus+members+list&form=HPDMHP&qs=SC&sk=SC1&pq=tea+party+causus+m&sp=2&sc=3-18

That doesn't excuse the fact that most Americans are gullible.

Ok, so we apparently we have decided most Americans are not lazy.

Interesting. So let's debate this - Why do you think most Americans are gullible ?

It would seem fairly clear that given what passes as a federal government, most are past gullible and given the obesity rates, have been proven to be quite lazy as well. Hence our current problems.

given the obesity rates, have been proven to be quite lazy as well.

Finally, a valid point.

However, I don't think that was what American Latina was referring to when she said Americans are lazy and gullible. In fact, she did not even make it clear why she characterized Americans that way.

I think the far-Left is really pissed that the GOP has gotten into the position where they can obstruct some policies that they want eg. unlimited spending power, free healthcare for everybody etc.

That's why ALL Americans are suddenly lazy and gullible. Note that they weren't that a few years ago when they gave power of ALL branches of the executive over to the Democrats - House of Reps, Senate and the Presidency

It would be interesting to see how American Latina would view the Americans when they vote Democrat again in 2012 (which they will I think).

So what evidence is that? If you're referring to this piece, then you clearly paid about as much attention as the so called economist who presented the "projected into the not defined future" graph. The point of the article is that the dumbass who chose to use the graph didn't even know what it represented.

Evidently, you don't get the fact that the graph has no timeframe makes it meaningless.

Social Security receipts have exceeded Social Security payments for many years. If not to finance future needs how can this be justified? It also suggests the arrival of a time when payments will exceed receipts. Since SS receipts have been co mingled with the federal general receipts and spent, we do have a crisis. The crisis is that our Federal Government is facing the prospect of debt repayment. Default seems a better and more responsible solution to some.

As Randy points out, these funds are self-sustaining. For SS, there is a law that the fund cannot pay our more than it takes in, for any given year. So why all the right-wing fuss?

The fuss is because the government stole (borrowed) our money. Now they want to pay back less than they borrowed, simple deal. Perhaps there should be a grass roots movement to force the government to pay the SS trust fund back NOW, with interest, and use the money to fund low cost mortgages and small business loans. Even with defaults on loans, the net interest would be far higher than what the government is paying us. It's our money, not the government's. It was never intended to be part of the general fund budget.

Any talk of changing the contract I was forced into is going to make me REALLY cranky.

Well that's just too damned easy and sensible.

Extremely informative and great post, Nicey.

Another great piece on this is an interview conducted by Mark Levine where he tears apart Teresa Ghilarducci who parrots the same piece of crap about Social Security having 2 trillion surplus.

Susan Swain can thank her lucky stars she is not dealing with the likes of him ....

nicey:

The SS Surplus has always gone into Federal Government securities. The difference between marketable and non marketable is the type of government security. The non marketable ones can't be traded on the bond markets and the marketable ones can be. The functional difference is that if there is a social security deficit in any given year, the marketable ones can be traded on the open market in exchange for cash. The non marketable ones essentially have to wait until maturity.

As to your examples, actually Bethleham steel is a better example. At the end, there was something like 38,000 employee's that were supported by 8000 workers. The big 3 are a lesser example of a similar property.

The difference with SS however is that it will partially correct itself as the population will start to decrease as the baby boomers pass on. The next generation didn't have as many children. Will it be enough to save it, the actuaries would have a better handle on that.

The SS Surplus has always gone into Federal Government securities.

I didn't say it didn't. I said they didn't always primarily invest in "special interest bonds" (special interest are defined as non-marketable by the treasury).

Special Issues are those exclusive to these type of funds. Public Issues are the marketable securities. Primary policy initially was to invest in marketable ones. The difference being, if they were all still marketable ones, it would actually not be debt but more like a sovereign wealth fund.

The only reason to do special issues is when you are using the tax money for something else. Which is what they do with all the SS taxes collected today.

The functional difference is that if there is a social security deficit in any given year, the marketable ones can be traded on the open market in exchange for cash. The non marketable ones essentially have to wait until maturity.

They don't treat it like that.

The cash exchanged for the securities goes into the general fund of the Treasury and is indistinguishable from other cash in the general fund.

They issue both daily (certificates) and yearly (bonds), which essentially means on a daily basis they can redeem any number of them for cash. Of course, this can be manipulated like this when you're the Treasury and you have a relationship with the Federal Reserve.

In 2010, they bought 1.020 trillion, they sold 920 billion.

And if they had a shortfall in social security (like in the 80s), they'll just borrow from debt markets, or leave some of the taxes out of the unified budget, and sell bonds like they normally would out of the fund on a daily basis.

The difference with SS however is that it will partially correct itself as the population will start to decrease as the baby boomers pass on. The next generation didn't have as many children. Will it be enough to save it, the actuaries would have a better handle on that.

Actually, it won't correct itself till after 2050 (*after the projections say SS is exhausted*). Population booms have consequences way down the line that generally have too much momentum to change.

The only difference between a special interest bond and a marketable bond (in the context of the SS Trust) is that one is negotiable and the other isn't. The SS Trust really isn't in the business of trading its securities. (now if they were buying non negotiable company securities, that would be a different matter). They are both US government issued debt instruments. A sovereign fund would normally invest in companies, not itself.

I am not sure myself what years the baby boomers refer to, but given the average life expectancy in the low 80's, if you take the mid 60's as the cut off (again, I don't know the actual dates that are generally referential to a baby boomer definition, it would be around the early 2040's that the last of the baby boomers would start to die off. So the correction should start before then, however you are right that it won't be complete until the mid 2050's.

I personally don't see SS as being a real problem that requires major restructuring, however some tweaks may be helpful. The payroll tax cut to me is definitely NOT the way to go in solving this however.

There are other things that should be dealt with before SS.

Now medicare, that is a different issue, however, it isn't medicare itself that is the issue, it is the cost of health care delivery.

Actually, it won't correct itself till after 2050 (*after the projections say SS is exhausted*). Population booms have consequences way down the line that generally have too much momentum to change.

That again is a great observation.

Like Europe and Japan illustrate, population trends and demographics don't change directions on a dime. Societal changes are too difficult to overcome.

The future, as Mark Steyn puts it, belongs to the fecund and the confident. As a society, US fecundity is falling ..... and falling rapidly. Confidence , with the sure rise of the welfare state, will erode (Just look at the hate and loathing for the US by people like the seeder of this article). Leaving the cultural decline aside, the financial implications are tremendous.

I am not sure myself what years the baby boomers refer to, but given the average life expectancy in the low 80's, if you take the mid 60's as the cut off (again, I don't know the actual dates that are generally referential to a baby boomer definition, it would be around the early 2040's that the last of the baby boomers would start to die off. So the correction should start before then, however you are right that it won't be complete until the mid 2050's.

First baby boomer 1945, the last is 1963. It will start to gradually correct itself around 2025-2030.

I personally don't see SS as being a real problem that requires major restructuring, however some tweaks may be helpful. The payroll tax cut to me is definitely NOT the way to go in solving this however.

I think it will be a big problem. Too few workers. Too many collectors. I think tweaks from both sides. Less benefits, older retirement age for collection, raise to taxes.

There are other things that should be dealt with before SS.

Now medicare, that is a different issue, however, it isn't medicare itself that is the issue, it is the cost of health care delivery.

Providing an unlimited fund of insurance in and of itself is a problem. Anytime the government spends it will create business that wouldn't otherwise naturally be there.

Also, healthcare is impacted because there's so many people getting older globally. The population portion is changing and healthcare, of course, is moving to make a buck on that. By charging higher than normal prices.

(And other feeders on that, like health insurance, and people who expect continual 10% year over year profit growth)

nicey:

The problem is the delivery system. Lets say we get rid of medicare (not the gift to the rich that Ryan proposed), what does that do, it just literally transfers the cost somewhere else. From an economy standpoint, it doesn't lower costs. It may lower them from the 'government bucket' but it doesn't lower the costs from a societal standpoint, in fact it stands to increase the costs (assuming that people get insurance). Health insurance has been increasing in cost at a far greater rate than what it has within medicare. Take away medicare, you take away those cost controls that are created by the 'bulk' purchasing power that medicare has.

The Ryan plan was just a complete abomination in my mind. The vouchers wouldn't cover private insurance and anyone that can't afford to buy that private health insurance would end up not being able to use the voucher for anything else so it would not be used. At that point, medicare would essentially become a subsidy/entitlement for the rich only.

Scott, VERY well said. The cornerstone of democracy is compromise. It should be apparent to anyone that our government's income must go up, and spending needs to go down. We have some hard years ahead of us, because of globalization. In an ideal world, we would have been seen this coming and planned ahead. We didn't, and now have to work hard and long to fix it.

Those who espouse instant fixes are liars or ignorant, or both IMO.

Very well could be the 22 Trillion is in the form of IOU's left there by Ronnie Reagan and the Bushies. thats how they covered the rich tax cuts Transferring SS money. Reagan invented stealing from the lock box.

. Reagan invented stealing from the lock box.

Both parties partook in that bull@!$%#. That should of never been allowed legally or publicly to happen. It wasn't suppose to be able to happen.....

bloated defense spending that was more than the rest of the world put together.

While I agree that we spend too much on our military, we're far from spending more than the rest of the world put together. As a percentage of GDP, we're actually 25th. In absolute spending, we're definitely first, but not even close to outspending the rest of the world.

http://www.globalsecurity.org/military/world/spending.htm

Our defense contractors found out during the Vietnam war, they could make a pile of money from war and started selling "fear" to the Americans.

olldecrankyman

I would say 48% of the entire globes military spending, which does not count military aid which is mandated to be used to buy US arms, is pretty close to more than the rest of the world.

Pretty much. Ideally (to them), they "privatize" it, so the Wall St boys have another way to bend us over.

This is fairly common knowledge. Haven't you ever noticed their are three separate tax deductions on your pay stub one for general revenues, the one with the deficit, also the one that was cut for the rich. you SS deductions and your state deduction. The three don't mix, however SS does buy government debt. The president and others who are honest about the debt issue have mentioned this time and time again. People just don't listen or listen to Fox News. Don't blame the president blame Republican and Fox for obscuring this well know fact.

general revenue transfers equivalent to $5.4 trillion in present value could be made during the period,

Which means that we could demand that our government start paying back the money that they "borrowed" from us. Essentially, SS is all good if we make the fed government pay us back. If the trust fund had the money it's was forced to loan the general fund, and it was invested in low cost mortgages and small business loans, the economy would be doing quite a bit better than it is, and the trust fund would be awash in money.

Of course, the banksters wouldn't get their cut, and campaign donations would suffer... can't have that.

FICA isn't a tax, it's a forced pension plan, hence your confusion.

well, its included in total tax revenue lists.

and its not a pension plan because your funds are not invested for you to get back later.
you pay into the fund. this years recipients receive money. and future workers pay in while you receive funds. Its insurance.

digcreation:

pension plans work the same way.

And that the funds are not invested is a bookkeeping thing. It is the way that group pensions generally work, the only difference here is that for simplicity, the current years revenues pay current benefit obligations and the surplus/deficit goes into/comes from the trust. That is just bookkeeping. The accounting is generally the same.

I could be wrong, never having had a traditional pension.

but I was under the impression that pension plans were more similar to mutual funds, in that everyone invested into the portfolio (plus some matching funds) and then when you retired the portfolio paid you out based on a formula of time and earnings, paid out of your investments.

SS is designed to pay you based on time worked, paid out of funds currently coming in.

that's not just book keeping, that is an entirely different fiscal strategy.

digcreation:

ok so think of this.

Scenario 1: - SS

Step 1) Collect contributions
Step 2) Pay out beneficiaries
Step 3) Invest remainder

Scenario 2: - Pension

Step 1) Collect contributions
Step 2) Invest contribution
Step 3) Pay out beneficiaries.

Both these scenarios are during the same fiscal period.

It doesn't make a difference which one you use. It just differs in the order. The 'interest' earned is the same. The OVERHEAD is actually slightly lower in scenario 1 because you aren't cashing in securities. The only reason why SS does the first bit is because they KNOW there is cash on hand (the general fund) and it is the path of least resistance. Actually I wouldn't be surprised if most pensions actually operate exactly the same way as SS (I haven't seen the insides of one myself) as it would be of lower cost as there wouldn't be any transaction costs for the conversion of an investment into cash to pay out as benefits.

as for the effect to the user.. you're correct it is the same.

but the legal issues and more importantly fiscally, it is different.

legally its a twisted web which I can't speak on all that well.

fiscally, in SS the payment is contingent on the cash inflow, the Pension payments are contingent on the health of the investment fund. The market crashes and you could lose your pension, but (theoretically) SS should keep paying the same. The population balance changes to more retired people than working, your pension should remain unchanged but SS will suffer.

The money in the pension is mine being paid back. The money in SS is my "children's" being paid to me as I did for my parents.

digcreation:

The problem with pension plans (well defined benefit, defined contribution plans don't have this issue but that is because the employee has no promise with DC pensions, they aren't even guaranteed to receive anything), is that if the company restructures or there is some change in the industry that changes the economic makeup, then it creates a risk factor on the pension plan's viability (guess who covers that by the way, it is the taxpayer).

For example Bethleham Steel had 40,000 pensioners being supported by 8000 employee's at the end of that company's existence. Why? Well it was because of changes in the industry that allowed the creation of the same quantity of steel with far far fewer workers. Same thing in the auto industry. This is one of the reasons why I personally don't like DB plans, not because I don't believe in the idea of a defined benefit plan, but because I believe that the sustainability of the pension should be independent from the corporate entity, for the protection of the workers that depend on it for their retirement.

The wisdom of putting that into a government entity is that it drastically reduces the impact of changes in subsegments of the economy. Does it completely avoid it, no, it doesn't, but it does drastically reduce it. And a national entity has far more flexibility in dealing with it than what a company would.

Any pension plan is fiscally dependent on cash inflow, that goes for a company pension plan as well as a government system. It makes no difference. SS has close to 5T in the 'bank' so to speak. It is not dependent on cash inflows right now. Mind you, previous governments have pretty much wasted the investment that the money in the trust offered, but people are completely deluded if they think things would have been any different with or without the SS Trust. We unfortunately live in a consumption society that does not value investment.

And NO it is NOT different. If the SS receipts are in deficit in a given year, then the SS Administrators will 'cash' in some of those bonds that they have in the till. That puts a double impact on the government, but again, that goes to the government for years preferring deficit spending as a matter of course. It has NOTHING to do with the SS Trust. Unless you think that 'money in the bank' truly doesn't mean that you have money in the bank.

And by the way, your bank operates the same way. If you take out your money, they don't take YOUR money out, that has been invested in something. That is how banks make a profit. They give you money out of their current cash flow. If they don't have enough in the current cash flow, then they cash in some of those investments. It makes NO difference from an accounting or legal perspective.

the bank example at the end is obviously true. but the the money they hand me represents my money, obviously they are not handing me my specific dollars.

I remember when Bethlehem steel failed, I grew up in the Lehigh valley. management never upgraded because all the money was spent on management and union benefits. Then they went bankrupt and the bosses walked away with golden parachutes and everyone else lost everything.
because all the money was gone.

I am not suggesting we should privatize SS. I was just saying it functions differently. One invests your cash (alongside your coworkers in a pool) with the intention of paying it back it to you later. The other intends to create a river of money from worker to retiree. That's not just semantics. Its operationally different.

dig, and the money that you put into SS is not your money, nor is the money you put into a pension. It belongs to the trusteeship that manages it. There is NO obligation other than to meet the terms of the 'pension' agreement. It is the same thing if you bought an Annuity from an insurance company or when you make your SS contributions. It isn't your money. It belongs to the SS Trust, UNTIL such time that you are eligible to redeem that investment when the agreement allows for it.

The ONLY real fundamental difference is that the SS Trust is restricted as to what it can invest in. In this case, it is restricted in that it can only invest in US Federal Government securities. This was done specifically because of the abuses of wall street in 1929 (remember that SS came in to being in the 30's). Just because the bookkeeping is a little different doesn't mean that legally it follows the same structure.

And the bookkeeping IS different because the risk component is different. Because the law states that the SS Trust can only be invested in Federal Government debt instruments, the risk is entirely borne on the US government. EVERYTHING about it is on the US government. So in that sense, separating it is cooking the books, a la Enron, who shifted things around to make it look like the risk was elsewhere, when it really wasn't.

The SS Trust ISN'T the issue. What is the issue is that we have lived for most of the last 30 years that we can survive on debt. The US government isn't alone in that. One of the BIGGEST stumbling blocks for our economy is that consumers and businesses by and large have far too much debt, which means that they can't actually get out and buy things. The US government, as sad as this sounds, is actually among the LEAST indebted components of our economy. And considering how the US government has screwed things up, THAT IS SCARY all unto itself.

And just so you know, the debt instruments that SS Purchases, they pay interest. It is the same thing.

One of the BIGGEST stumbling blocks for our economy is that consumers and businesses by and large have far too much debt,

My total debt right now is no more than one paycheck. I HATE paying interest payments and my only debt is at zero percent interest for 24 months.

:)

space:

Note that I said BY AND LARGE.

Anecdotal evidence doesn't prove anything. I also have NO debt, none at all.

and the money that you put into SS is not your money, nor is the money you put into a pension. It belongs to the trusteeship that manages it.

that is incorrect. a trustee's job is to caretake someone else's property. I do not surrender ownership when I invest my money.

dig,

dig, and the trustee's job is to the owner of the trust. In this case, you as an individual are not the beneficiary, you are one of, this case, more than 300 million beneficiaries.

the owner of the trust is us. the 350 million. everything the US government has, does, and owns is ours.

dig,

ok this is turning into a circular argument. I really don't have the time or the desire to go into the statutes to prove you wrong (and they are there). I really do wish that there was a way so that short sighted people could opt out of SS and see how well they do in retirement (and no, no opting in later on just before you get to retirement). Think you would plan for it? Hell no, very few will. But hey. what ever.

Social Security is not a trust account and never has been. The democrats formally disposed of that fantasy in the 1960's. Try to tell that to someone that grew up in the depression, they were uniformly lied to by Roosevelt and the democrats.

space,

you believe whatever delusions you want.

Fact check (dot) org reports a completely different story.

Some senior Democrats are claiming that Social Security does not contribute "one penny" to the federal deficit. That's not true. The fact is, the federal government had to borrow $37 billion last year to finance Social Security, and will need to borrow more this year. The red ink is projected to total well over half a trillion dollars in the coming decade.

$22 trillion dollars would have never been untouched by the government as it would have been spent a long time ago to fund our wars.

Nina.

What you are saying is that last year there was an annual deficit of 37 Billion dollars.

Lets ignore the causes of that and look at what it actually means.

All the annual deficit means is that the government had to redeem 37 billion dollars of the SS Trust securities to pay the SS benefits for the year. It doesn't mean that the government had to borrow 37 billion dollars to fund SS. The SS Trust fund is in the black by close to 5 TRILLION dollars.

This is akin to you starting the year out with 5000 dollars in your savings account, and you spent more than you bring in by 500 dollars. You didn't have to borrow that 500 dollars from anyone, you just take it from your savings account so you end the year with 4500 dollars.

As to the causes for the deficit this year, well there are two main causes.

1) Our society is aging, and more baby boomers are starting to retire. This has been known for several generations that this would occur so anyone in a position of responsibility should know what this actually is. That is why the SS Trust surplus has been built up in the first place, so that as this group of our population retires, that the later generations aren't paying for it. (lets ignore the fact that the government essentially wasted those surpluses, as federal government debt instruments, for what I would call consumption spending because that has nothing to do with the SS Trust, that is our governments. And NO I am not saying ignore it as a whole, I am saying ignore it in relation to the SS Payments).

2) Because of the depth of the recession after the bubble of 2008, there are so many people that are either unemployed (meaning they do not contribute payroll taxes) or they are underemployed (meaning that they contribute, but not at levels that they normally would if employed to their capability, e.g. they are making 20K when they should be making 80K)

As far as the question of how the SS Trust should have been 'spent' because by law, the SS Surplus's in the SS Trust must be held as Federal Government securities, not as equity or debt instruments of publicly traded companies or derivatives. That is a wasted opportunity, for 30 years, ever since the Reagan Revolution, we have treated the SS Trust as a slush fund. This was wrong, and now we have to start paying the piper. The work that the Clinton Administration & Congress did to bring the deficit to an essentially balanced budget should have been continued as well, to lead to surpluses to pay down the national debt. This would have left the SS Trust situation that we are facing now, along with the structural economic problems we are facing right now in a far less precarious position.

Nina, the statement that the federal government needed to borrow money to pay Social Security benefits is true only because the money collected for Social Security has been used to supplement the general fund for years. This practice has used the excess of Social Security collections over Social Security payments to create the illusion of a more balanced budget than in fact existed. Borrowed money has to be repaid and tax revenues are insufficient to accomplish that repayment so borrowing is required.

The problem began with Lyndon Johnson who wanted to finance the Great Society while feeling compelled to escalate the war in Viet Nam. He declared that only the difference between all government receipts and all government expenditures mattered thus using Social Security receipts to make the deficit look smaller. The obligation to repay the Social Security funds to the trust did not go away.

This failure to recognize a liability for future obligations should say much about the plausibility of a Balanced Budget ammendment. Many states have some measure of a Balanced Budget requirement and they also have huge unfunded liabilities for the defined benefit pensions given state employees over the years. Fund accounting is the standard for government entities, were it used properly this confusion could be cleared.

the statement that the federal government needed to borrow money to pay Social Security benefits is true only because the money collected for Social Security has been used to supplement the general fund for years.

My point exactly. It is the reason we do NOT have $22 trillion dollars in social security.

The problem began with Lyndon Johnson who wanted to finance the Great Society while feeling compelled to escalate the war in Viet Nam. He declared that only the difference between all government receipts and all government expenditures mattered thus using Social Security receipts to make the deficit look smaller.

The Vietnam war not only killed 57,000 men it also injured (psychologically, physically, emotionally) hundreds of thousand men and women. It was also the first "Credit Card" war. It did start just prior the Kennedy admin with advisors; however, LBJ escalated it to a full war. Companies like Bell Helicopter went from almost bankrupted to billion dollar companies during that war. It is probably when defense contractors realized how much money they could make on war and started selling Americans…the "fear" bullet!

Many states have some measure of a Balanced Budget requirement and they also have huge unfunded liabilities for the defined benefit pensions given state employees over the years.

Public employees pay through the nose for their benefits. I have almost 1/3 of my paycheck taken out for retirement. There are 3 different mandatory retirement funds because our state is broke and the county I work for filed bankruptcy 16 years ago. In retirement, my medical monthly premiums for an HMO is $787 a month for one person. Americans are always whining about public employee's benefits, but they really never see the true picture. Granted Federal employees are paid on a much higher scale with excellent benefits. But in local government, the wages are always ½ that of the private sector. We accept the lower wage because we bought the "job protection" bill of goods which is no longer in effect!

All the annual deficit means is that the government had to redeem 37 billion dollars of the SS Trust securities to pay the SS benefits for the year. It doesn't mean that the government had to borrow 37 billion dollars to fund SS. The SS Trust fund is in the black by close to 5 TRILLION dollars.

Thanks for the information.

As far as the question of how the SS Trust should have been 'spent' because by law, the SS Surplus's in the SS Trust must be held as Federal Government securities, not as equity or debt instruments of publicly traded companies or derivatives. That is a wasted opportunity, for 30 years, ever since the Reagan Revolution, we have treated the SS Trust as a slush fund.

My point exactly; hence, the reason we do NOT have 22 Trillion in Social Security!!! Reaganomics has created a "melt down" in our economic system.

Nina,

The Social Security trust fund is backed by the Federal Government. The loan was made with that assurance. If the government begins defaulting on its obligations the trust may become worthless. I have money in the bank but if the bank fails the money may be lost - similar situation.

The current trend of bashing public employees is disgusting. The failure of governments to either control spending or raise revenue to recognize future obligations is the cause of bankruptcies. I am truly sorry to hear of the problems you are experiencing.

Nina:

The Social Security Trust has what it would have regardless of whether the money was 'loaned' to the government. The sum total of all SS contributions - SS benefits paid out. There would NEVER have been 22 Trillion dollars in the SS Trust.

Don't forget, when the money goes into the trust, it is then exchanged for UG government debt instruments (bonds, t-bills, etc..). When those debt instruments are put into the trust, it is listed as an asset for that value. So what is in the trust is what should be in there.

Scott:

The reality is that if the United States were to ever TRULY default on its debt (not the political shenanigans that are being played now), then the United States will have far more serious problems than defaulting on the debt.

Nina:

One other thing, the article/story refers to a 22T Surplus at some point in the future. I don't even think that an end point in his projection he is using. I did think of something else though. He is factoring inflation in his calculations, so the impact of inflation will show up in the figures. There isn't necessarily wrong with this as long as your costs component is being measured on the same dollars. It just makes the numbers look higher than what you may think of when you first see them.

the article/story refers to a 22T Surplus at some point in the future.

Which is the main point. Without a time frame number, all the other numbers are meaningless.

the very first post that I made chronologically for this story was exactly that point