from04:Social Security is solid forever -ask an actuary or the Society of

[papau]

Feb-29-04

Social Security is solid forever - ask an actuary or the Society of Actuaries, the Academy of Actuaries, or the Actuaries at the SSA whose projected solvency numbers are what EVERYONE - including Bush and Greenspan - work their analysis and what ifs from.

It is rather amazing and sad that posters at DU would buy the crap that the GOP is selling about Social Security. A Poster named Rog has a beef with the Gore "lockbox" - but is obvious that he does not understand what the lockbox meant - albeit the term "lockbox" was not clear. All Gore was saying was that he would not finance general expenses like defense with the payroll tax - and indeed Clinton-Gore in calendar year 2000 did not - and because there was no deficit even with the payroll tax surplus removed, that year the National Debt decreased (check the numbers for 12/31/99 and 12/31/00 at BEA.DOC.GOV). A better way of saying the lockbox concept may well have been to say that portion of the National Debt - that which was not owned by the Social Security system as part of the "Assets" of the Social Security Trust Fund - would decrease under GORE. Thereby providing room to borrow - without hurting the economy - a few dollars in the future to fund any Social Security payroll tax shortfalls.

Bush is on the exact opposite path. Those Trust Fund assets are promises to raise the Federal Income Tax in the future so as to raise real cash that can be sent out by Social Security as benefit checks, and getting bonds sold to the public on 2017 (if we try that route rather than raise FIT taxes) is more difficult with a huge National Debt.

Again - raising FIT is what upsets BUSH

WHAT THIS IS ALL ABOUT IS NEVER PAYING BACK THE SS PAYROLL TAX SURPLUS THAT WAS STOLEN SO AS TO PAY FOR TAX CUTS FOR THE RICH.

Here at DU we sometimes hear that SS is an unworkable program, a ponzi scheme - with so many people retiring in the next ten years with so few people supporting them we would be headed for a crisis - but you never see any reference in such a post to the FACT that the Trustee's Report Social Security Actuaries projection - where the talk of many more old folk originates - shows the payroll tax in surplus through 2017 - so what is the next 10 year problem? And after 2014, cashing in a few bonds each year keeps the system running positive through 2042 under the NOT-OPTIMISTIC economic assumption projection. There is no forgotten item in these projections - the lifespan used by the actuary max's out at 120.

We do not need immigration and excessive perpetual growth to make the system work quite well.

When on Friday on Bill Maher's TV show, Ralph Nader said that Social Security is fine as long as it is kept separate, that is what he meant - the payroll tax should not be used to build roads and bombs.

So what does keeping money separate mean - if lockbox "separate" means reduce the National Debt not held by Social Security with payroll surplus, totally separate as Nader suggests is going back to to the 1936-42 idea that SS, once it was running smoothly would buy equity and real estate assets. Of course as Meyers Book SOCIAL SECURITY notes, the GOP SCREAMED"SOCIALISM BY THE BACK DOOR" and since then SS has kept a minimum size Trust fund which was invested in US Bonds - which are no more than promises to raise monies in the future to pay off said bonds.

Those that say what sits inside the GORE lockbox is a bunch of IOU's from the federal government are correct - but the lockbox was about a process - no deficits- and had the payroll tax surplus reducing the National Debt. The pledge by the federal government to make good their social security obligations is easier meet if the increase in the FIT needed after 2017 is small and the size of the deficit permits borrowing that does not affect the capital markets.

While Clinton/Gore were opposed to social security surplus being physically removed from the federal government and set aside and invested in bank Cd's or insurance separate accounts - because the Socialism by the back door scream of the GOP - they were in favor of automatic asset buying savings accounts run by the Federal Gov - on a voluntary basis you could put up up to 5% of your income - get IRA treatment - and one would direct the assets be put into real world assets rather than government bonds.

But the media made fun of the idea - and indeed Gore was busy defending the lockbox terminology in 2000.

Why reporters are so stupid that they believe that Social Security is bankrupt, or will be any day now, when a simple lookup will reveal that Social Security paid out $383 billion in checks, and received $436 billion in taxes and an additional $49 billion in interest making for a $102 billion in profit?..., well that is for folks that defend the lies the media is now feeding us

When Reagan in 1983 raised the retirement age to 67 over 30 years, with higher payroll taxes, the idea was not to use the extra funds coming into the Social Security system to buy bombs - we were going to pay down the National Debt that was not owned by Social Security - making room for Social Security borrowings after 2020. And Reagan lied - and the media hid the lie.

I've posted at DU the Bob Weiner (former chief of staff of the House Aging Committee)paper that asserts that "Federal Reserve Chairman Alan Greenspan's testimony today calling for reduced social security benefits is rash and wrong and based on an incorrect myth of a Social Security deficit." But I had not posted Dean Baker's "Greenspan's Social Security Scam
http://hnn.us/articles/3642.html -Mr. Baker, an economist, is co-director of the Center for Economic and Policy Research."It is worth noting that Social Security is currently running a large surplus and is projected to continue to run annual surpluses for more than two decades into the future. The Social Security trustees projections show that the fund's trust will be able to support all scheduled benefit payments for nearly forty years into the future. If Social Security benefits are cut, without any corresponding reduction in the tax rate (which is exactly Mr. Greenspan's recommendation), then this would mean that Social Security taxes are being used to finance the general budget, not Social Security.<snip>

An excellent paper.

Indeed as others have said, The Heritage Foundation is working overtime on this issue, and to a lesser extent so has a few folk at CATO (the difference is that CATO may slant but it rarely lies). The Derailing of Social Security -How Cato and Heritage paved the way for privatization http://www.fair.org/extra/9905/ss-ttm.html is worth a read.

[BlueInRed]

1. Thanks for reposting; it will help those trying to understand "lockbox"

There is so much misinformation and deliberately misleading information out there on the trust fund and the lockbox concept, and this really helps anyone understand what is going on. I really appreciate you reposting this.