Bush: Social Security "trust fund" doesn't exist!

[regnaD kciN]

Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust. We're on the ultimate pay-as-you-go system -- what goes in comes out. And so, starting in 2018, what's going in -- what's coming out is greater than what's going in. It says we've got a problem. And we'd better start dealing with it now. The longer we wait, the harder it is to fix the problem.

http://www.whitehouse.gov/news/releases/2005/02/20050209-15.html

To add Jonah Marshall's analysis:

Setting aside all the actuarial and financial gobbledegook, the basic idea was that the boomers and others would start paying not only their own taxes but also advance paying to cover the costs of their own retirement. The Social Security Adminsitration used the monies in the Trust Fund to purchase bonds -- debt that otherwise would have had to have been purchased by private individuals, pensions, foreigners, all the parties that buy US Treasury bonds. (The majority of the US government's debt is in the hands of those folks; and you can be sure they're going to get paid back.)

So if you've paid Social Security taxes in any of the years from 1983 until today, you've been advance paying. And now President Bush just said that that money is gone. So, you thought you were advance paying to cover part of the future expenses of your generation's retirement. But it seems you were just a sucker since President Bush is now saying the money ain't gonna be paid back. You're just fresh outta luck, you could say.

http://www.talkingpointsmemo.com/

So that's the way Bush is going to play it. Don't like his privatization plan? Tough, because he's spent the money that was to cover the difference after 2018. We either take his plan, or lose all benefits then. Heads, he wins; tails, we lose.

Is there anything that can be done about this?

[Goldeneye]

1. Somehow that money being completely gone

is going to work out for the republicans. Its obviously the key to getting privatization passed.

[Cha]

9. I just read in my AARP

newspaper that Britain tried privatization of Social Security("25 year experiment") and it bombed and they're looking for a way out!

[sadiesworld]

20. Ironically enough...

they are leaning toward a system based on our SS.

[Cha]

25. Right! Now why can't we learn

from their mistakes? Nevermind..I know the answer to that.

Jeez!..I hope we beat back the bastards on this one.

[GHOSTDANCER]

36. When has the US ever looked back at the old world for any guidance?

This is the New World. We have no need to study the past!!!!

[LynnTheDem]

51. Britain's SS privatization disaster (links)

A Bloody Mess

http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=8997

Privatization Bombed in Britain; Now they’re looking for a way out

http://www.aarp.org/bulletin/socialsec/ss_britain.html

Pension Privatization in Britain: A Boon to the Finance Industry, a Boondoggle to Workers

http://www.econop.org/SocialSecurity/SS-SocialInsecurityBritain.htm

[Cha]

58. Thanks!

We needed more info on this!

[nothingshocksmeanymore]

2. Bush's plan is like punishing a rape victim instead of the perp

[damntexdem]

28. Hey, don't forget that there IS a Trust Fund,

and it does hold those government bonds. The U.S. is a debtor nation, and it dares not default on ANY government bonds.

[Wright Patman]

3. It's good that he admitted this

There are literally tens of millions of Americans who think there is an account with their SS# on it that has been building up.

The Congress has never wanted to disabuse the public of this fantasy.

What can be done? Voting doesn't seem to work anymore. I really don't know. Get ready for a lot of turmoil as the "safety net" is slowly ripped to shreds over the next few years.

[NNN0LHI]

4. It existed 4 years ago. What happened to it I wonder? n/t

[Igel]

13. It barely existed 4 years ago.

Since SS was running a surplus the money has routinely been used for the deficit. SOTUS is clear in two rulings: FICA is tax money, and Congress can do with it what it wants. They've been using it to cover the deficit.

That's Krugman's trust fund: it's full of IOUs. Imagine you are saving for a new car for your wife; her's will die in 7 years. You put aside $200 a month. You borrow that $100 each month to dine out. After 7 years you tell your wife that the "car account" has enough assets for a fairly cheap new car: but they're all IOUs that you have to pay back from your general income stream. You're screwed. Your wife "votes you out of office."

For a year or two there was a small amount of money in the "trust fund". As long as we weren't running a deficit. That was Gore's "lock box". Before Clinton ran a surplus, there was nothing to put in the lock box but IOUs. Even then, I don't think the surplus covered the entire amount that *should* have been put in the lock box--but don't quote me on that.

It's possible to create a small trust fund with the FICA surplus between now and 2018. (Truth be told, the date will probably be later ... SS is always a bit more conservative with their math than turns out to be justified.)

That money plus interest will be due from, estimates today are, 2018 to 2042. SS Admin. estimates that to be a bit shy of $11 trillion, $1 trillion of that coming in the last year. (Probably a high estimate, but they follow Congress-mandated assumptions.) That will need to be in the *general* budget, in addition to the usual spending (Medicare, customs, roads, military, schools, EPA, DOE ...). I don't want to think about the US bond rating late in that run of deficits.

[papau]

19. Say what - you mean if Congress gives the Trust the right to sell those

Bonds on the open market, the trust would not get cash for them?

Either full faith and credit of the federal government has some value - to Japan and to the SS Trust - or it does not.

Should be interesting if the GOP assert it does not have value and Japan begins to believe them.

Clinton in 1998 asked the GOP to let the Trust get out of Gov Bonds and inro equity and real estate and non-gov bonds - seems he saw the theft of payroll taxes by the GOP that is now being attempted - and the GOP of course refused to pass that bill.

Indeed since the payroll tax surplus has financed the tax cut for the rich, what we have here is the rich refusing to pay back that debt.

[Yupster]

22. That is the answer

The surplus must e taken out of the reach of the congress.

Let the trust fund invest the surplus each month is CD's or corporate bonds. Nothing risky or wild, but somewhere where the money will actually physically exist.

As long as the congress can spend it, it will.

[Igel]

41. But the trust is a creation of Congress; the money paid under

the guise of FICA is just tax money that Congress earmarked. It's not independent.

I agree; as long as Congress can spend it, it'll find a way. Balanced budget's definitely the way to go (with FICA and others "dedicated" taxes off the books).

[Igel]

40. That they would.

But it would depress the value of the bond greatly ....

I'm saying that if the US defaulted, it would wreak havoc in the US. On the other hand, paying that much money from the general fund will produce some righteous deficits, or really "kill the beast", or raise taxes. Look at that last year (ok, I know the estimates have to be taken with at least a tsp of salt). If it happens that we have to tack on $1 trillion to the general expenses of the US budget ... nasty. Less nasty than defaulting ....

[Yo_Mama_Been_Loggin]

26. Those IOU's are Treasurey Bonds

The safest investment around. The irony is that Bush wants to finance privitization by issuing more Treasurey Bonds.

[damntexdem]

29. Look, the Trust Fund is as real as any other investment ...

in Treasury bonds. If Dubya really means that such bonds are worthless, then SS recipients in the U.S. are going to have to get in line with millions of others, including powerful countries, that have invested in such bonds.

Those benefits WILL be paid, or we are going to take it out of the hide of U.S. politicians.

[Igel]

42. Yes, but it's worse because the debt is owed by the same

people that paid the debt. It's a zero sum game.

The bonds will be paid. And it'll be bloody.

[Romberry]

55. On DU you aren't allowed to call people who parrot...

...dicredited Republican talking points Republicans...so I won't.

You have a basic misunderstanding of the trust fund. It's backed by the full faith and credit of the United States of America and any deficit it may have is dwarfed by the Bush tax cuts for the top 2 percent of Americans earning in excess of $340,000.00 per year.

The Social Security Trust Fund is as real as US Savings Bonds, US Treasury Notes or the 14th Amendment to the Constitution of the United States of America.

[zann725]

53. It is NOT gone. Dem. Senators had a hearing last week, & had Speakers

from SS Admin, Economists, and FDR's Grandson (who worked many years heading-up SS Admin). (It was on CSPAN.) They ALL said the System was in NO trouble until about 2050. And that even then, with MINOR adjustments (like the $90K cap adjustment) would make the System solvent indefinitely.

This is ALL a lie. A Bush lie. Do NOT "buy" it. Come on, we're Not as gullible as the general public. How could any of you believe that there was THAT much money there just days ago, and not now????

MANY experts have spoken out on how solvent SS is for years. And suddenly LIAR-face says it isn't and we believe him? When has he ever told the Truth???? Please!

[pinto]

5. "There is no trust" Truer words were never spoken from this Prez...

and I don't mean the Soc Sec Trust Fund, which certainly does exist. I mean Trust.

[BadGimp]

6. right George it's a fallacy

Just like Compasionate conservativism.

[muriel_volestrangler]

7. How to embarrass Bush in front of the right wing

point out that he's talking about taking the money that their honoured St. Ronnie promised would pay people's pensions. How he's pissing on Reagan's grave, etc. Try to win back some of those 'Reagan Democrats'.

[tubbacheez]

8. Actually, there IS a soc. sec. trust fund.

Listening to an NPR show (TTON?) a couple weeks back, I learned that there really IS such a thing as a "Social Security Trust Fund".

But it's not the big horde of cash that one might envision upon hearing that phrase. It's several hundred million dollars in size, and it's just a general fund for rainy days in the Social Security Administration.

It is NOT a collection box for every worker's SS taxes. It is NOT used to pay today's benefits to today's retirees. The pay-as-you-go system has other accounts for these activities.

It however IS considered a juicy prize for any financial services firm that can convince the government to let it "hold" the money for a while.

[punpirate]

11. There is an account in government...

... for SS funds held in trust. Much of that money (during the Reagan and Bush years, and about 3/4s of the Clinton administration) was loaned back out to the government to cover deficits. Congress is required to repay those loans as the money is required by Social Security. So, there is money in trust, and a helluva lot more a few hundred million. It's just been loaned for deficit spending.

The only way that money doesn't exist is if Congress reneges on making appropriations out of general revenues to pay it back.

Cheers.

[damntexdem]

30. Interest on debt and debt repayment are not 'discretionary' spending --

no matter how much Dubya wants to fantasize.

[regnaD kciN]

12. According to Joshua Marshall...

...the "trust fund" was invested in nearly two trillion dollars worth of U.S. Treasury Bonds -- bonds that Bush, apparently, now plans to default on.

:grr:

[Yupster]

21. Well how are they supposed to pay them back?

They're supposed to create $ 2 trillion out of thin air, or raise taxes by $ 2 trillion?

Of course the money is gone. There has never been any hope of paying it back.

[sadiesworld]

24. Don't make the * income tax cuts permanent.

It ain't rocket science.

[RUMMYisFROSTED]

38. $2T in bonds. $2T in tax cuts.

:think:

[damntexdem]

33. If you are correct, then ...

the U.S. government will default on its debts. It will then be sanctioned by every other developed economy. It will have no credit. The U.S. economy will be in a real tailspin. The government will likely fail. All fun and games, huh?

But do you really think that Dubya's rich friends are going to let this happen?

[Romberry]

56. You pay it back...

...in the same way that all our other debts are paid. You either borrow it (as Bush is proposing to do to fund a transition to private Social Insecurity accounts) or you raise taxes.

The trust fund is backed by the full faith and credit of the United States of America and any deficit it may have is dwarfed by the Bush tax cuts for the top 2 percent of Americans earning in excess of $340,000.00 per year.

The Social Security Trust Fund is as real as US Savings Bonds, US Treasury Notes or the 14th Amendment to the Constitution of the United States of America.

[randr]

10. In 1983 our SS payments increased as a hedge

against the possible shortfall foreseen as the baby boomers retired.
Just another huge lie by our temp help and possibly another case of grand theft by you know who.

[Old and In the Way]

14. Why didn't he make that statement before the election?

Remember those trillion $ taxcuts? Maybe if you hadn't killed the federal budget, we wouldn't be in this mess.

Impeach the prick.

[hector459]

15. Talk about spreading panic and endangering our safety and security!!!

FEAR, FEAR, FEAR. This administration lives by spreading FEAR!!

I guess he won't say there is not "trust fund" because they poo pooed Gore's lock box and he (Bush) gave all the money away in the form of tax cuts and loopholes to the wealthy! We all know for sure the ENRON was an empty trust...so now Bush is going to bash the Federal Treasury to get people on board with his attack on Social Security.

If investing is so great, why not just invest a fraction of the total Social Security trust in the markets and let a Federal government fund manager manage the money? But then, the brokers and Bush buddies would not be able to collect all those fees from individual accounts, would they?

[creeksneakers2]

16. They plan to keep stealing the money too.

SS runs a surplus and if the private accounts plan works the way the Bush cabal says it will recipients will continue to get robbed. How do we end up paying in extra and owing money? We have to borrow back what they stole.

[Martin Eden]

17. Where has the money gone?

The payroll taxes increased in 1983 on working people has gone into the coffers of the wealthy in the form of tax cuts; hundreds of billions have also been used to stage an election in Iraq.

Regressives (aka conservatives) have always been against any kind of government program that redistributes wealth from the rich to the poor, but they're quite enthusiastic about redistributing wealth from senior citizens to the rich.

[zann725]

54. It's NOT gone. Read #53 everyone.

The Senate hearing on this from about a week ago may still be accessible in CSPAN archives.

Shrub is lying!

[CindyDale]

18. It's a nice way of saying I stole your money, haha

[karynnj]

31. Well, he said "there is no trust"

for once he's telling the truth, we should have no trust in him

[sadiesworld]

23. Well, at least he has finally admitted it...

time for dems to hit back HARD. Bushco is stealing from the middle class in order to cut inheritance, corporate, capital gains taxes, etc, for his rich contributors. C'mon dems...JUST SAY IT!

[damntexdem]

27. Is Dubya saying that the U.S. Government will ...

default on its bonds? If so, this will not be good for the economy.

Of course, in one sense Dubya is right: a surplus was being built up under Clinton that COULD HAVE retired these bonds, and the proceeds invested in the stock market. Instead, Dubya and the GOP Congress gave away the surplus, and much much more, to their rich friends through tax cuts. Of course conservatives would have had a fit because the gummint would have too much control over the Market. Besides, it was assumed that government bonds were more secure than risky investments in stocks. Well, with the Bushistas in power, nothing the U.S. Government touches may be secure.

[FredScuttle]

39. Not only not good for the economy, but an impeachable offense

As Josh Marshall so skillfully points out:

(snip)
"Second, what the president said today almost certainly violates his oath of office in which he swears to "preserve, protect, and defend the Constitution of the United States."

That would be the Constitution which reads (Am.XIV, Section 4): 'The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned'"

[kskiska]

32. Then what was his debate with Al Gore all about

when Gore spoke of the "lockbox"?

[damntexdem]

34. Gore didn't spell out any details of his lockbox.

But he did want to keep the surplus somewhere as a hedge against SS default -- not just cover the trust fund, but to keep the trust fund from dwindling.

[seasat]

43. I thought Gore's lockbox was to use SS funds to...

only retire outstanding debt. The result would be lower interest payments on debt in the future and more money to fund SS.

[Junkdrawer]

35. So...we're only going to renege on the SS purchased bonds...

Or are other bonds worthless now too. :shrug:

[regnaD kciN]

47. That's sure what it sounds like...

The Repugs wouldn't dare renege on their other bonds...so I would guess they'd find a loophole that would allow them to only default on FICA bonds.

[Massachusetts]

37. Why is there not more OUTRAGE from the average American?

We are consistently getting "porked" by the majority of ELECTED officials who work for US.

If we expect decent service from a contractor (no matter what they do), and will accept nothing less, then why do we keep taking this SHIT?

The TOLERANCE LEVEL that AMERICANS have towards MEDIOCRE ELECTED officials ceases to AMAZE me. :wtf: :wtf: :wtf: :wtf: :wtf: :mad:

WE get what WE DESERVE!

[peacebird]

44. "we" get what the average red state amurikan deserves..

"we" are paying attention. "we" tried to protect the country. THEY simply couldn't be bothered to check out the facts. "we" reality based types suffer because of those who voted repuke, or didn't bother to vote at all.

[antigop]

45. Article: Social Security crisis? Not if the wealthy pay their way

http://www.csmonitor.com/2005/0127/p09s01-coop.htm

>>But there was a twist: Knowing that the baby boomers would begin retiring around 2010, Mr. Greenspan recommended raising payroll taxes by much more than was needed to pay benefits at the time. The surplus would be used to buy Treasury bonds, which could be redeemed when the boomers retired and payroll taxes were no longer sufficient to fully fund retirement benefits.

This is where the second twist comes in. Because the surplus payroll taxes were handed over to the federal government (in return for Treasury bonds), this meant ordinary income taxes could be kept low. After all, the federal government has a fixed need for money, and if it gets excess money from payroll taxes it can afford to keep income taxes lower than they'd otherwise be.
>>

The people who make more than the Social Security wage cap are getting a free ride on the part of the federal budget that is being paid out of the surplus Social Security funds.

If there is no intention to redeem the trust fund bonds, then what Ronnie passed was an INCOME TAX hike.

[regnaD kciN]

46. Not just an income tax hike...

If there is no intention to redeem the trust fund bonds, then what Ronnie passed was an INCOME TAX hike.

...but a tax hike only on income below the payroll-tax cutoff. In other words, an income tax hike that predominantly hit middle- and working-class wage-earners, while leaving much of the rich's income untouched.

:argh:

[tedzbear]

48. the government has borrowed the trust fund to run the Pentagon...

...and other pork subsidies for corporate America. It's only because the chimp never intends to pay it back that there's a crisis in the trust fund.

Of course nobody in the media will mention this fact because the media is connected to Wall Street and Wall Street wants to get it's hands on what's left of the trust fund and future payments into it.

[zann725]

49. LIAR! LIAR!

n/t

[zann725]

50. If he spent all OUR money...let's "freeze" his personal accounts!

Grand Theft IS Grand Theft, let's file a Class Action. Because I just know some of EACH of our monies sits in their accounts right now...as well as Cheney's (and all those Haliburton "missing" Millions).

[earth mom]

52. This is utter bullshit! I am outraged! They stole the money

so they can say SS is bankrupt and incite fear! No doubt they planned how to do this from day one and are now going to scare everyone into going with * plan. Mother f-ers! :grr:

[marcologico]

57. Remember that hundred-dollar "rebate" check you got?

That was your social security pension. Hope you liked it. Love, W