NY Times: It's Even Worse Than You Think

[Snellius]

Last week the federal government ended the fiscal year with a reported deficit of approximately $400 billion, pushing the federal debt held by the public to nearly $4 trillion. Sobering though these numbers are, they actually understate the problem. Through an accounting sleight of hand with far greater consequences than the corporate scandals of recent years, the federal government distorts public debate, threatens social programs and impoverishes future generations.

What's missing from the $400 billion figure is an accurate recognition of the mounting obligations of the Social Security system. Under current practices, Social Security reports its financial performance on a cash-flow basis: it compares annual revenues to annual costs and reports a surplus or a deficit. Last year, Social Security enjoyed a surplus of roughly $160 billion. The government used this money to mask what would otherwise have been a $560 billion federal deficit.
...
Were the federal government to account for its Social Security obligations under the rules of accrual accounting, which govern public companies, its financial outlook would be far worse. By the end of last year, the Social Security system owed retirees and current workers benefits valued at $14 trillion. The system's assets, in contrast, were only $3.5 trillion. These assets include not only the trust funds' current reserves ($1.4 trillion), but also the present value of the taxes that current workers will pay over the remainder of their working lives ($2.1 trillion).

In other words, the system's current shortfall — its assets minus its liabilities — is $10.5 trillion. Unless Congress chooses to rescind Social Security benefits that have already been earned, this shortfall must be shouldered by future generations. This implicit debt of the Social Security system is more than two and a half times larger than the government's public debt.

http://www.nytimes.com/2003/10/09/opinion/09JACK.html

[trotsky]

1. And like any of *'s people care.

They'll never need Social Security, so what does it matter?

[lebkuchen]

2. Baby boomers are starting to retire

Things should start getting interesting.

[Kolesar]

3. They will cut benefits by raising the retirement age--again

That is my prediction.

[demon67]

4. This accounting fraud has been going on for decades

This is why we never had a genuine "surplus," even at the height of the economy. Even more outrageous is that we have known about this baby boomer/social security problem since at least the early 1980s and no one has had the political will to fix it. And, of course, every year it goes unchecked it only gets worse, because there is less time to put money away to shore up the fund. The parties have been pointing fingers at one another for years on this issue, but now the republicans have no one to blame but themselves.

[soothsayer]

5. Congress just bettered their retirement---need only serve one term to get

what is it, $15k per month for life?

That's why they don't worry about the things that trouble us mere mortals. They are above these types of petty concerns.

We'd better all run for congress...!

[beyurslf]

6. The only true fix

I have ever seen is to remove the caps on earnings that are taxed. Or, at a minimum, raise the caps. People who earn 100K, 250K, or 1 million a year all pay the same amount in social secruity taxes. If we eliminated that cap, the income above 80K (or somewhere near there) would still be taxed for SS.

[Grins]

8. Damn! Good for you.

I have had that same thought for a few years now! Only I recently looked at it as a response to Bush’s criminal tax cuts. Forget Bush’s income and dividend tax cuts. Deductions, and loopholes deplete the former, and the big dividend corporations don't pay taxes anyway.

Bush’s argument for the tax cut was to put money into people’s pockets so they could spend it and get the economy moving. An income tax or dividend tax cut takes the longer route because you have to wait until next year to see any real cash (little as it is for most).

But, you could do exactly what you suggest, and the money could be in people’s pockets in a month or two, and it would be fairer as well. As you mentioned, the really wealthy are getting a free ride.

Also, by lifting the cap you could also adjust the FICA percentage downward. Companies should love that as well, because, currently, they are forced to do matching amounts. Tell them their contribution is going to go down a couple of points and look out for the big slobbery kisses.

In fact, by lifting the caps, you could change the FICA tax rate to really help out those at the bottom and struggling middle-income types. Maybe earning less than $26,500 you pay no FICA. Scale it up from there to 1, 2, 3, 4, 5%… as income increases.

I’d love to hear the arguments on why this would not work. Anyone got anything? I’m sure some will say it breaks the social “agreement”, but the government uses the SSA Trust Fund as it’s private bank today for general obligations anyway – so what’s the diff?

[KoKo]

7. My congressman said in a Town Meeting last month that just one of Bush's

Tax cuts would fund Social Security for the next 75 years. He said they play games with the numbers and use it as an issue. I believe him. David Price is my congressman. And, he voted against the Iraq Invasion, too!

I also remember that Senator Hollings has been saying for years that they raid Social Security whenever they want to disguise debt. It was a big issue before Clinton was elected. It's a political football.

Now the Repugs are trying to get all the 20 and 30 somethings "up in arms" about how their parents and grannies are going to rip them off by taking their paychecks. Yes the SS deductions are too high for all of us. But, the funding was already paid in by those who are going to retire IF the Repugs and Dems didn't keep raiding it for other purposes.

In this case be careful what you read because Bush and the Repugs want to get rid of SS because it's part of Roosevelts New Deal. They will do anything to do that. They want us all to be dependent on the Corporate Crooks in the stock market.

Just beware anything you read about this.

[gulliver]

9. Working class rip-off.

FICA money goes into SS and under Bush goes right back out as tax cuts. It's the slimiest, most underhanded rip-off I've ever heard of, and it's happening right under our noses.