Social Security Isn’t In Crisis – WE ALREADY PAID FOR IT!

[Why Syzygy]

http://www.addictinginfo.org/2011/07/25/social-security-isnt-in-crisis-we-already-paid-for-it/

Because past payments into Social Security exceeded benefits paid out, the fund currently has a surplus of something like $2.6 trillion (money already paid by American workers and their employers). The “deficit” to which the fact-check article refers, then refers to current Social Security payroll tax revenues falling short of benefits being paid out. The government has to buy back Treasury securities sold to the Social Security Trust Fund in order to cover current benefits. If the US government doesn’t have the revenues to buy them back, this creates a deficit, but that is not a deficit in Social Security. That is a deficit in the general budget. And by law, Social Security operates entirely outside the general budget. They are two completely separate entities.

[BeFree]

1. Exactly

SS actually loans money to the general fund.

It is the general fund that is in deficit. SS is in the black.

Problem is the general fund owes SS and if it were all paid back tomorrow the deficit would increase by 2.7 trillion. From 14.7 to 17.4 overnight.

[Why Syzygy]

5. There is a lot of disinformation...

and misleading statements. By design. I'm looking for the source I have showing how SS checks MUST go out.
And btw, does anyone believe that any military is going to miss a check? That would amount to touching
the Federal budget for Military! They're not going to do that. War is what they live for!

http://www.treasurydirect.gov/NP/BPDLogin?application=np

I'll keep looking for that reference.

Found it!

(If you can't stand that the President might be a bit less than honest, do not click this link. As far as I know, it is a non-partisan site.)
(There is also the matter that I don't fully understand all the $$ amounts, etc. Not a math magician.)


http://www.treasurydirect.gov/NP/BPDLogin?application=np

THERE IS NO SHORTAGE OF FUNDS TO PAY SOCIAL SECURITY AND MEDICARE UNDER THE EXISTING DEBT CEILING. IN FACT, TREASURY COULD PAY THOSE BENEFITS EVEN IF THERE WAS ZERO TAX COLLECTED FROM ANYONE IN THIS COUNTRY FOR SOCIAL SECURITY AND MEDICARE - SUCH AS IF UNEMPLOYMENT WAS 100% - FOR A PERIOD OF MORE THAN THREE YEARS, AND NOT VIOLATE THE DEBT CEILING.

[RaleighNCDUer]

12. Only it doesn't have to pay it back all at once. They only need to purchase

back such amounts as are necessary to bridge the gap between incoming SS receipts and outgoing payments - and that is a whole lot less than 2.7 trillion.

Put it this way. SS has $1000 in treasuries. SS has $99 coming in. SS needs to pay out $100. The government does not need to pay back the entire $1000. It needs to pay back $1, leaving $999 in treasuries.

So the deficit increases by $1.

Take that, plug in the real numbers, and you see there is no crisis. There is a blip, caused in insufficient revenue.

[BeFree]

16. It was hypothetical

And it was spot on.

The general fund owes SS 2.7 trillion dollars. If it were all called overnight you'd notice. It won't be called overnight, duh.

[sinkingfeeling]

2. And if there is zero money in the general revenue fund, they can't buy them back and only a

portion of those monthly checks can go out.

[sabrina 1]

7. And that is not the case, and won't be if the Fed Govt

starts facing reality. It has debts, we the people are among those they owe money to. It's time for them to stop playing games and starting facing reality.

1) Create jobs, stop firing teachers and other public workers to begin with.
2) Raise the cap on SS
3) End the Bush tax cuts, they helped cause the deficit. Continuing them was insane.
4) Raise taxes on the very wealthy, it's about time they paid their fair share.
5) Tax cuts for businesses and the wealthy ONLY if they create jobs. No jobs were created during the ten years of the Bush tax cuts.
6) Slash, yes slash the Pentagon Budget, in half and that would still be too much money going to the most wasteful Govt agency of all.
7) End the wars, bring home troops from every country where they are not needed, which is probably every country in which they are currently stationed.
8) Start prosecuting Wall St. criminals who caused this disaster and start looking for the money they stole.
9) Legalize undocumented workers and let them start paying into the system. They're here anyhow, and they are working and they are probably going to stay.
10) Raise SS benefits as that will stimulate the economy and prevent the Fed Govt from going into even further debt.

We are a rich country. The problem was never SS or any of the other social safety nets. The problem is allowing the wealthy to continue playing their war games and gambling with the people's money,.

This problem can be solved easily with the right people in Congress and the WH. It will take leadership, something that seeems to be sorely lacking in DC right now.

[Why Syzygy]

10. YOU are elected!!

And I would add -- decriminalize Hemp and its variants. The oil barons HATE Hemp for good reason. It is the biggest competition they have.

[sinkingfeeling]

22. Is the case according to the SSA.

http://www.ssa.gov/oact/trsum/index.html


Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years. Through 2022, the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow.

[sabrina 1]

24. And yet it still had a surplus, both this year and last year.

It has two other sources of income, not just FICA. And this is not the first time there was a shortfall of income taxes, it happened 11 times before since the program started.

There is a surplus and it must be paid, and that surplus will take care of SS for decades to come.

I don't understand why ANYONE, (other than the far right) is even contemplating that this surplus will not be repaid.

That figure you are referencing will change many times over the next years, it always does. And since we are currently in the middle of a 'recession', that is the worst case scenario.

If the Govt fails to honor its debt to SS, we will have a lot more than SS to worry about.

But for right now, unless they are hiding something even worse than we already know, SS is fine and does not need to be and never should have been, a part of any discussion regarding the deficit.

[mmonk]

8. Currently, social security is meeting its obligations.

It will continue to for the next 25 years.

[mmonk]

3. Yep.

So we have to ask ourselves why social security is on the table with the grand deal or a target of a "deficit commission" if it does not contribute to running deficits, is not failing at the moment, is not the problem, nor pulling tax money from other sources. Then we have to ask ourselves why let it happen?

[reformist2]

4. The money SS has coming to it must come from higher income taxes.

There's no other way around it.

[mmonk]

6. How so?

It hasn't contributed to current deficits. The income tax has to be raised to cover what income taxes cover which isn't social security. Payroll taxes cover the cost of this insurance by practice and law.

[BeFree]

9. Try looking at it like this

IF the general fund did NOT owe 2.7 trillion to SS trust fund, the general fund deficit would be $2.7 trillion lower.

[mmonk]

13. Look at it this way. Social Security is currently meeting the out go.

It will continue to do so for 25 years. It did not contribute to the deficit so why should it cover it in reductions to benefits to those paying in?

[BeFree]

14. It shouldn't

If you don't grok that, I don't know what to say.

I am just telling you the facts.

[joeglow3]

18. It is a sunk cost

You are playing accounting games. The reality is that we need to look at the Federal government as a whole and that $2.7 trillion does NOT exist.

[Ganja Ninja]

25. Here's another way of looking at it - the correct way.

The government used the Social Security trust fund the same way it uses China to fund it's deficits. Blaming the trust fund for the government's debts is bassackward. It's like blaming the bank for your credit card debt. Just because the government found it convenient to borrow from the fund does not mean it's the fund's fault and it by no means would insure the government wouldn't run up debt.

If Social Security hadn't been used to bankroll the general fund to the tune of $2.7 trillion, taxes in previous years would have been much higher. The fair and correct course of action now in view of the shortfall in payroll taxes is to pay down the debt by raising taxes and let the general fund repay it's debt to the trust fund.

[BeFree]

27. Spot on

I totally agree. Some people just don't get it. But you do.

[reformist2]

15. Sorry for any confusion - I was talking about the long term.

Social Security won't run surplusses forever. That's why there is a trust fund. And when SS starts dipping into the trust fund, that's when income taxes will have to go up to pay for it.

[BeFree]

17. Exactly

Where else is the money gonna come from?

Tax the workers even more.

[RaleighNCDUer]

20. No, tax the rich who 'borrowed' from the fund in the first place. nt

[Ganja Ninja]

26. It was the workers who payed the payroll taxes in the first place.

That's what built the surplus the government has been using to keep taxes low on the rich for the last 40 years. Not honoring the debt would be robbing them of their money plain and simple.

You seem to have a backward way of looking at this as if you've been listening to Rush.

[BeFree]

28. Rush?

Who is it that pays the most taxes in this country?

That's who will pay for the deficit. If it is ever paid off.

Frankly, since you seem so interested, I will tell you this...

I think we should drop the SS charade and have everyone taken care of by the general fund.
Yup. General welfare for everyone, anytime they need it.

Is that cool, or what?

[Matariki]

11. This needs to be discussed every time cutting Social Security comes up

People need to realize that they are talking about theft, not "shared sacrifices".

It makes me angry that it doesn't seem to be mentioned in the MSM or by any politicians at all.

[Why Syzygy]

19. Me too.

That's why I keep posting stuff here and at facebook. The Meme is still very powerful. And unfortunately, some people don't want to think.
They just want to parrot Beck, et.al.

[exelwood]

21. Maybe it's time to rethink Social Security..

SS is comforting but it's also limiting. Most of us on this board will receive amounts based on what we put in. In my case, it ain't much. What if SS was reformatted to pay out what you have paid in plus 10% or so and after the money runs out there is a new program, Old Age Assistance or something, that looks at senior care in a new way.

What if OAA was a "whole care" system, cash, housing, health, everything if you need it. If you are living in a 500K house with company retirement, income investment then losing the SS payment is not going to affect your lifestyle. You have gotten everything you have paid in plus a nice interest so no complaints there. There are millions of people in this category, all collecting SS until they die.

You either go on OAA or you don't. If you are self sufficient you cannot go on OAA, Medicare will protect those people from catastrophic illness but they will pay a reasonable amount for this insurance.

What this does is target income to those who need it but reduces overall costs by eliminating benefits for those who don't.

Just thinking folks, don't rip my head off.

(I originally posted this as a response in LBN but what is your opinion?)

[jtown1123]

23. Sorry but means testing will be the death of SS. It will get cut along with all the other welfare

programs competing for limited federal dollars. It must be universal, otherwise, it loses all support.

[Why Syzygy]

29. taxable

I can't recall which Senator pointed out that with his income, his SS is Taxable. That isn't generally the case.
Many folks don't have any other retirement.

They need to raise the cap on Medicare payments into the system. Not surprisingly, the Rich do not pay 100% of the Medicare taxes we do.

[ProgressiveEconomist]

30. 'Follow the money' and understand 'STRENGTHENING' SS: Link and SIMPLE analogy

Why Syzygy, I agree with everything you put in the lead-in. But you left out one crucial detail: Congress always can change the rules for Trust Fund payout to retirees and the disabled. Congress can trim substantially and repeatedly the payout rate retirees and the disabled are expecting, all the while calling it "strengthening" Social Security! Decades ago, evil genius Alan Greenspan saw to it that this could and would happen. Here's a simple analogy and a LINK to SSA cash flow projections:

-------------------------------------------------------------------------------

Imagine you and your spouse put away tens of thousands of dollars a year over DECADES for your retirement. You target $3000 a month in retirement income starting at age 65, and you actually accumulate $2 million in your IRA by the time you hit age 65.

Then you request monthly withdrawals in the amount of $3000. But the brokerage administering your IRA says, "Sorry. We're only going to give you $1500 a month. But just think how fast your account will grow!"

Outrageous? Not in the bizarro world of Social Security finance. As Chairman of Ronald Reagan's "Social Security Commission", in 1983 Alan Greenspan moved Social Security from a "pay as you go" system where FICA revenues each year just covered benefit payouts that year. Instead, Greenspan and Reagan raised FICA payroll taxes were raised dramatically, to generate a long-term "Trust Fund" something like a huge national IRA.

But instead of giving Social Security trustees publicly traded Treasury bonds they could cash at will when FICA revenues fell short of benefit payments, Greenspan saw to it that paying back the Trust Fund would require budget appropriations or new Treasury debt auctions.

Thirty-eight years later, the Social Security Trust Fund stands at almost $2.7 TRILLION; see the projections of revenues, outlays, and assets at http://www.ssa.gov/oact/tr/2011/lr6f8.html .

Subtract "costs" (payments to the elderly and disabled) from "income excluding interest" (FICA payroll tax revenue) to see year-by year Social Security cash flow. Thanks to Dubya's deep recession, SS cash flow already has turned negative, years ahead of schedule, and stands at $45.6 billion just for the year 2011. Projected future shorfalls grow rapidly, reaching almost $200 billion for 2022. This is the amount Congress must appropriate or Treasury must borrow to start paying back the $2.7 trillion "accumulated in the Trust Fund" since 1983, (and squandered, mainly for income tax cuts for the very wealthy, by Reagan, Daddy Bush, and Moron Bush).

Do you see clearly now why "strengthening Social Security" by raising retirement ages, increasing penalties for early retirement, or un-capping FICA payroll taxes is "on the table" for deficit negotiations? "Just think how fast the Trust Fund will grow!"

See my earlier GD thread at http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1473492 .

[Why Syzygy]

31. Bravo!

Thank you so much for posting here. This is a Big Deal. I have not heard it explained any clearer than that.