Social Security blunder in the State of the Union.

[alberg]

Here is what President Obama said in the State of the Union:

"Now, even after paying for what we spent on my watch, we'll still face the massive deficit we had when I took office. More importantly, the cost of Medicare, Medicaid, and Social Security will continue to skyrocket. That's why I've called for a bipartisan fiscal commission, modeled on a proposal by Republican Judd Gregg and Democrat Kent Conrad. (Applause.) This can't be one of those Washington gimmicks that lets us pretend we solved a problem. The commission will have to provide a specific set of solutions by a certain deadline."

This misinformation, echoed by the president, is constantly repeated by the punditocracy. And it's wrong.

Aside from the $11 billion that will be spent on administration in 2010, which is less than one percent of the $650 billion Social Security pays out in benefits, the cost of Social Security will not skyrocket. It is not a drag on the budget. It is self sustaining and even earns nearly $1 billion a year in interest. In 2009 it ran $180 million in the black. It has nearly $3 trillion in its trust fund.

Now repeat after me, Social Security does not add to the budget deficit..if anything, it helps finance the deficit.

http://www.huffingtonpost.com/saul-friedman/social-security-blunder-i_b_440852.html

[DURHAM D]

1. Obama has been pushing this rightwing tripe about SS since he-

first began to campaign for the White House.

He did it to create a generational divide and cause the youngsters to wage war against seniors with rightwing talking points, but shouted by "progressives". They bought it and I would say it has been very effective.

After the primary Donna B. said the Dems have a new coalition. They don't need real liberals or older citizens or working class or middle class - because Obama's got the creative class and faux-progressives. I would say this new coalition didn't deliver in MA.

[Political Heretic]

5. It's not just Obama - its part of the "elite concensus" that sets the parameters all politicans use

Democrats and Republicans are OK to present different ideas on social security, as long as they play within the boundaries of elite consensus - that social security is broken and there's no solution possible other than cutting in some way from the program.

Once upon a time, we looked for ways to increase revenue to support our social investment programs. But those days are long gone. Now after every tax cut, politicians point out that now suddenly new social programs are "unsustainable."

Even if that were true, it would only be true because politicians effectively "defund" the programs through tax cuts, and then complain that the programs are "unsustainable."

[blindpig]

57. yep

self-fulfilling prophecy.

[G_j]

130. exactly

well said

[glitch]

6. Hopefully they'll rethink their rather rigid ideology and get practical.

IOW, keep the lockbox and simply raise the taxable income limit.

Hardly a commission required unless you need to rationalize doing something the people do not want.

[MisterP]

12. same pattern as the insurance bailout:

% move the goalposts from universal to open public option to public-option buy-in to a public option most Americans are barred from: add some clinic subsidies so you can scream "40K die a year and you're going to block this?!"

% try to "convince" the public to accept the fait accompli

% blame GOP "obstructionists" laying low and voting against a crap bill, or blame the "rampant" filibuster: this attracts the angry--and deflects them from your bought-and-sold complicit arse

[glitch]

20. pattern recognition: a gift and a curse. nt

[Name removed]

53. Deleted message

Message removed by moderator. Click here to review the message board rules.

[GinaMaria]

149. Great post

We are being screwed. There is no way Rahm and the administration will allow a medicare buy-in. Their plan is to end medicare. The first step is the Insurance Industry Bailout Bill. When everyone is mandated to buy insurance, they can end medicare and have people mandated to buy insurance in their old age. SS is next. Sadly, they view these as entitlement programs when they are actually, paid benefits. We paid for these benefits. Your third point... about deflection, seems more people are waking up on that one. I hope so. I also hope something can be done to stop this destruction.

Peace

[Mithreal]

24. +1

[truedelphi]

42. I am just so very very

Sick at heart.

But I knew this was coming.

When watching the working of the Baucus Committee as it flipped the chairs around on our Health Insurance needs, the Repugs on that Committee ended one session by saying, "Well as soon as we get the Health Care reform patched together, we should start to reform MediCare."

All of the energy of so many good people who thought that should the Obama Administration come about and get in power, then the President was going to finally look after We the People.

But no -it's come to this - that the very word "reform" now means to take apart and abolish any aspect of a program that doesn't benefit Obama's first concern - the Corporations!

[Ardent15]

48. Thanks for telling me that I'm not a "real liberal." REALLY appreciate that. nt

Yes, I am young.

[marshall]

81. That's the bipartisanship

Only the dolts can't see it.

[DJ13]

2. Our political class (on both sides) seems determined to

turn over a good portion of Social Security to private interests.

We need to stop them before they screw people over on SS like they did by coercing workers into 401k plans in place of real pensions.

[Hardrada]

9. As George Carlin observed about the greedy elite. "They want it all

and they are going to get it all." Maybe over our dead bodies though.

[Foo Fighter]

38. Correction. There's only one side to the political class. The rich side.

What this country really needs is a second party. All we have now is a dog-and-pony show. The whole "good cop, bad cop" routine.

They never used to be this blatant about it but the facade is wearing very thin these days.

[Winterblues]

3. It has nearly $3 trillion in its trust fund.

[DJ13]

4. Like sugar to an ant

It attracts those greedy asshats from Wall Street, they cant help it.

[Igel]

23. Wall Street likes IOUs?

I thought they like cash.

Those IOUs have to be repaid before the trust fund money can be spent. After all, the Congress took it out to fund general expenses, whether education, military, or something else. The money will have to be repaid from general expenses (if it's repaid).

So the SSA will soon start to say, "We drew down part of part of our trust fund, expensing $150 billion of it over the last fiscal year" and the President will have to have as part of *his* budget, "$150 billion to redeem bonds issued to the Social Security trust fund." Or words to that effect.

Where do you think that $150 billion is going to come from? Yep. Raised taxes, primarily on those earning less than $250k/year, shifting money from other programs, or increased bonds bought by places like China, Brazil, and, by 2050, probably even North Korea and Vanuatu.

There are alternatives, but not that most people here like. They have trouble figuring out the problem.

[Hannah Bell]

95. rescinding the bush income tax cuts on the top 1% alone would pay off 1/3 of it in 10 years.

www.ctj.org/pdf/bushtaxcutsvshealthcare.pdf

The top 1% got about $700 billion, 32% of the bush tax cuts 2001-2010.

[truedelphi]

43. Possibly it had that in its trust fund.

But how many times has that money been looted to pay for some war? Or to pay for Bernanke writing up the "digitized accounts" that he has offered to banks and financial institutions that come to him for his "guidance?"

Bernanke did tell "Sixty Minutes" that the taxpayer wouldn't be on the hook for his offerings to the banks..

So maybe it won't be the "taxpayer." Maybe it will be all of us older people, who certainly are not on this Administration's radar. And certainly not on Bernanke or Geithner's radar either.

[Foo Fighter]

87. Bernanke said that?

If the taxpayers aren't going to be on the hook, then who will be? Did he explain that? (Sorry, I don't watch TV so this is new to me.)

And if they slash "entitlements" to the older folks, how is that not putting the taxpayers on the hook? Oh wait. Apparently, all you older folks never paid taxes. Yeah, that must be it. You older folks are nothing but a damn bunch of freeloaders.

It sickens me the way the government treats Seniors. I first noticed it in the 80's with Reagonomics. Other societies had a reverence and respect for Seniors but in this country, they were treated like they had served their usefulness to society (as taxpayers) and, as such, were nothing but dead weight. Nothing could be further from the truth IMHO. Seniors have the knowledge and wisdom that only comes with years. I have a great respect for that. Unfortunately, the only things the people in DC respect are the almighty dollar and the top 1%.

[truedelphi]

90. Here is what Bernanke told Sixty Minutes

(MAybe two or three months ago?)

I am paraphrasing "Many Americans think that the taxpayers will be liable for the money that I am offering various companies. But they will not be liable. When I issue money to a firm from the Federal Reserve, people think that I am handing over cash. But I am not doing that.

"Instead, I create an account for that firm, and then I am adding to that account with digitized dollars - and that way the tax payer will not be liable for it."

He really didn't offer much more insight than that - but if you listened to what he was saying, he seemed to be indicating because the accounts were on computers, and the cash was not cash but "digitized" that no one would Be liable for it.

I would really love to live in that world.

This statement of Bernanke's contains enough illogic to be right on a par with Obama's statement that "Single Payer Universal Health Care would be the best and most logical solution to the health care crisis, IF WE WERE STARTING from scratch. But since we already have a system in place, then we have to work to find an uniquely American solution."

[Foo Fighter]

91. Wow, so "digitized" dollars don't really count.

Gee, in that case, people with credit card balances shouldn't have to pay them because they're just "digitized dollars." I think a mortgage could fall under that category as well. After all, when you take out a mortgage, the bank doesn't hand you a wad of cash for the amount of the mortgage. They just create an account that shows the amount you own them. Using Bernanke's reasoning, you're not liable for it. That should come as a great relief to all those that are currently threatened with foreclosure.

Of course, Bernanke is off his rocker if he thinks we actually buy his explanation. Anyone with two firing neurons can tell he's full of it.

I fully agree that Obama's statement on single payer made every bit as much sense as Bernanke's claims. These guys are really scraping bottom trying to find ways to justify stealing our money and selling us out.

[truedelphi]

132. If we had a real true media that cared enough to parse these things

We would not be in this mess.

I cannot imagine a Walter Cronkite letting Bernanke or Obama get away with these types of statements.

It is so easy to see why the Powers that be worked out a way to destroy the Fourth Estate, and they didn't care that it took them thirty years to do it.

Once the press was gone, it was easy to guarantee their take over of our nation with people who would insure that the Upper One Percent gets everything.

[Alias Dictus Tyrant]

45. Basic math says that is not enough under any reasonable set of assumptions

Seriously, run the numbers. Social security has a lot of *structural* problems. Even if we can fix it now with semi-heroic efforts, that is really just pushing the inevitable into the future. I'm not sanguine about Social Security at all. Even if it is there for me, it won't be for future generations when you add all the numbers and assumptions up. It can't unless there is some law of the universe that allows us to discard elementary mathematics.

The people that say it is fine are adding epicycles to the model. At some point they are going to have to acknowledge it is fundamentally broken, even it happens after they are dead. I'm not so immoral as to "get mine" and screw future generations. I'm not going to drink the politically expedient Kool-Aid so that I can feel good about screwing over people I'll never meet.

But what do I know, I'm just a mathematician that never learned to do "political policy math".

[Hannah Bell]

92. i've run the numbers, & looked at all the SS projections of the last 10 years. so i can confidently

say, you're full of it.

[On the Road]

79. You're Right, the OP Grossly Overstated the Case

It's closer to $2.4 trillion. Jackass.

http://www.ssa.gov/OACT/STATS/table4a3.html
http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

That was President Bush's position, by the way. Republicans have made that kind of dishonest claim since Social Security's origin in order to discredit repeal it. Along the way, it has quietly done its job and run in the black.

The projections of the SS funds' supposed "bankruptcy" in 2042 or some other date stems from the estimated GDP growth rate of 1.9%. Over the last century, average GDP growth was closer to 3%. Over decades, that makes an enormous difference. Unless growth falls precipitously in the next 32 years, the fund is not in trouble.

[Hannah Bell]

96. $2.504 trillion is latest balance.

http://www.socialsecurity.gov/OACT/ProgData/assets.html

So "almost 3 trillion" doesn't seem a gross error.

[dkf]

148. The fund is in trouble because it will only be paid if general revenues can pay for the budget

Plus paying back the trust fund with interest when outflows to ss start getting bigger than inflows.

Unless we want to borrow from the chinese to pay those Funds out.

[Yupster]

116. You got my thought perfectly

So I have $ 200,000 in my retirement account and I loan it to my worthless brother-in-law who gives me an IOU, then he puts it all on red and loses it in Vegas.

I guess my retirement account still has $ 200,000 in it -- more with interest.

However since the money was loaned out to a broke guy who can't pay it back do I really have the $ 200,000?

Of course because I have the IOU.

[doc03]

7. In a few years after us baby boomers start collecting

our SS that so called trust fund will rapidly dry up, something has to be done to assure the long range funding of SS.

[Vincardog]

10. May be can raise the limit and collect SS tax on ALL income and bonuses. That should fix the faux

'problem'

[doc03]

28. Sounds good to me n/t

[JCMach1]

88. exactly

and/or means test the system...

We have billionaires who draw SS... there is something wrong with that I think.

[Hannah Bell]

99. If you'll enjoy being branded as a welfare queen & having SS turn into a political

football like "welfare," with constant pressure to cut benefits from those who'd be paying for something like 80% of it but collecting ~20% of it.

[Yupster]

117. How about making it universal by bringing

all schoolteachers into the program.

That would help considerably.

I have no idea why so many teachers are not required to be in the "univesal" program anyway.

[dflprincess]

34. It isn't just the SS trust fund they're worried about

what's going to happen to the market when all us Boomers start pulling the money out of the 401Ks we were conned into?

It's one reason I think more employers are moving to crappy health insurance plans that come with "health savings accounts". Once you have $2,000 in your HSA you can choose to "invest" it in a mutual fund. I don't imagine may Boomers will do that (or if they do, I sure hope the market isn't down when the need to pay for that by pass surgery comes up) having seen what happened to our 401ks - but I'll bet a lot of young ones will think that sounds like a great idea.

[Foo Fighter]

40. Oh gawd, you had to bring up "health savings accounts."

I have a lot of hours of vacation time saved up, intending to eventually cash it out once I retire/get laid off. Well, last year, my employer pulled the rug out from under me and everyone else in my situation. Rather than get cash for our vacation time, the money will be put into a Health Savings Account. IOW, instead of giving us our well-deserved money, they will hand it over to Wall Street. So, the dedicated workers that have saved up their vacation time get screwed and Wall Street gets their bonus. Par for the course.

Oh, and part of my employer's reasoning for doing this is that by doing it this way, they won't have to pay SS tax on the money. Like I would see that as a GOOD thing? I wonder who got the big kickback for that decision.

[Lorien]

41. That's just flat out evil. nt

[Foo Fighter]

49. No doubt.

My plan is, if possible, to reduce my accrued hours to under 200 in which case the HSA rules wouldn't apply. However, that would require either a major advance notice of a layoff (so I could just take vacation time until I get under the 200 hour limit) or, in the case of retirement, my taking a number of weeks of vacation, returning for a last day of "official" employment, and then taking retirement and cashing in the remaining hours. Luckily my boss is great and will work with me on anything but we're both up against the corp rules. In any case, I'll be restricted to "cashing in" less than 200 hours of vacation time which royally sucks. I don't like having to "burn up" vacation time that should have been money in my pocket,.

[Statistical]

65. HSA is money in your pocket (unless you think you will NEVER have medical costs).

See #64 (below)

[Alias Dictus Tyrant]

46. Your employer is sort of correct

By doing it that way, he minimized the tax burden on disbursing the money. The nice things about HSAs is that you can still liquidate them or roll them over into retirement accounts. You can access that money any time you want, and for any purpose, but you don't pay income tax on it until you withdraw it and withdrawal now for non-medical purposes (assuming you don't roll it over into a retirement account or other approved transaction) only has a 10% tax penalty attached to it.

The only thing you really lost was the time required to jump through the hoops if you want your money now. If you were only going to put it into a retirement account or similar, your employer did you a favor.

[Foo Fighter]

82. Oops. I used the wrong term. It's not an HSA. It's a "Health Care Savings Plan."

Sorry for any confusion this may have caused as HSAs and HCSPs are different animals. All I remember is getting the email and being livid at how they had screwed us over. I'm not alone in that sentiment.

With a Health Care Savings Plan, the money can only be used for approved medical expenses. There is no option to roll them over into retirement accounts, cash out, etc. Also, the list of "approved" expenses can change so we could all end up getting royally screwed.

From the info given to us at the time of the "switch", a HCSP can lose money, depending on the investment option chosen but there are investment options that preserve the principal. Oh goodie! I can preserve the principal! In the meantime, Wall Street gets to play with my money.

Also from that info, when the savings plan is set up, the money will be put into a money market account. I will have seven types of investment choices available under the plan. The funds can be moved among the seven investment options. Oh boy! Seven choices! I bet all seven are with Goldman-Sachs.

So I'm forced to invest money I have rightfully earned and could potentially lose it. If I received cash instead, I could choose what to do with it. I could invest it anywhere I wanted and if I lose, that's entirely on me. I could put it in savings or a CD if that's what I wanted. Or I could use it to buy myself a nice retirement present (yay!) or travel. Or hell, I could go to Vegas and bet it all on red. IOW, whatever I did with it would be MY choice. With the HCSP, I don't have a whole lot of choice. Seven to be precise.

Prior to forcing the HCSP on us, my employer had sent out a poll inquiring why those who had many vacation hours accrued had decided to save up the time rather than use it. It was no secret they were looking for a way to steal our vacation time from us. We all knew what they were trying to do. Of course, once it dawned on them that they really couldn't legally take our vacation time away from us, they looked for any way to minimize the "payout." BTW, I replied to the poll and told them the reason I had so many vacation hours was because I didn't earn enough to take a "real" vacation. I know many others that told them the same thing.

Lucky for me, one way out of the HCSP is to move to a foreign country. If I can't exercise that option (which I sincerely hope to do), I will do everything I can to cut my vacation hours down to under 200 and cash them out. Of course, moving to a foreign country would be easier if I actually had the funds from my accrued vacation time in cash on hand. But with the HCSP, I have to find a way to finance it up front and then apply for my vacation time to be cashed out. One more obstacle for those of us that don't earn the big bucks.

In the end, no matter how I look at it, I got screwed. This isn't the first time. My previous employer suddenly decided to switch from "vacation and sick time" to "personal time off." Guess what happened to all the sick time I had accrued? Gone. Nice way to reward those that called in sick the minute they had 8 hours of time on the book and punish those that showed up every day and busted their butts. The forced participation in HCSP by my current employer is just another slap in the face.

[dflprincess]

63. OMG that's awful

Check with the IRS on whether its legal to force you to hand it to Wall Street. We were told that whether our HSAs stay in a savings account or go to a mutual fund is strictly our decision. Maybe they've set yours up as an opt out?

[Foo Fighter]

83. It's a "Health Care Savings Plan", not an HSA. Sorry for the confusion.

I posted some info on the HCSP in post #82. There is no choice to opt out. It's mandatory and I have a whopping seven investment choices. Wall Street wins and I lose.

Again, sorry for the confusion. My bad.

[dflprincess]

86. Always thinking of new ways to screw us, aren't they?

This just bites.

[Foo Fighter]

89. Yeah, that pretty much sums it up.

The guy in your avatar would be appalled at the state of the nation today. He was one of the greats and is sorely missed.

[Statistical]

64. You don't need to invest your HSA money. By default money is like savings account.

Now investing is an option (usually only on larger balance HSA) but it is just that AN OPTION. You can just let your HSA collect interest (money market rates) while you use it to pay for medical costs.

Plus you can use HSA money for virtually anything....
OTC drugs, prescription drugs, copays, deductibles, aspirin, cough syrup, band aids, contact lenses, eyeglasses, lasik, etc.

Virtually anything medical you can spend HSA money on.

Still don't like it. Pay the taxes + 10% penalty and cash it out (10% penalty waived if age 65 or disabled).

The odds are in the rest of your life you will rack up medical costs equal to value of HSA.

Almost all of them give you a debit card so it is as simple as paying with that debit card rather than another form of payment.

[Foo Fighter]

84. It's a "Health Care Savings Plan", not an HSA.

Sorry for the confusion. Please see post #82 for a few details of the HCSP.

[truedelphi]

44. It all depends on who you listen to.

Some time ago, the good folks over at "tinyrevolution.com" did a study and found that we were secure.

For one thing (And it is a dirty little secret) a lot of boomers have been killed off. If you die before you are sixty five, your money stays in the system - and if you read the obits, you often see that many people now die in their thirties and forties from cancer. I have lost two of my best friends to cancer, while my mom still has her bestest friend. (She turns 90 in April.)

[Hannah Bell]

97. The Trust Fund is currently projected to pay out full scheduled benefits

until sometime* around 2040, by which time the youngest of the baby boomers will be 79. When/if it's depleted, SS is *still* projected to be capable of paying out something like 3/4 of scheduled benefits with *no* adjustments, & pay full benefits with a 1-2% increase in SS taxation.


That's not a crisis, sorry. No action is required 30 years before the event, either, as the predictions are based entirely on assumptions & projections that future events may render inoperative.

The projections change year to year, as do the predictions of the date of SS's future "bankruptcy".

http://www.cbpp.org/cms/index.cfm?fa=view&id=2819

[sendero]

8. Ah yes..

... the "trust fund". Once someone says "trust fund" without a sarcasm smilie or quotes, I know they don't know what they are talking about.

There is no "trust fund".

[Hannah Bell]

102. every time someone says there's no trust fund, i know they don't know what a trust fund is.

[WhiteTara]

11. they've been trying to steal every penny we have

put into it.

[stray cat]

13. Repeat after me - in the next few years with retirements it adds to the debt

[Hannah Bell]

103. repeat after me: bull.

[Make7]

14. Status of the Social Security and Medicare Programs

 

A SUMMARY OF THE 2009 ANNUAL REPORTS
Social Security and Medicare Boards of Trustees

A MESSAGE TO THE PUBLIC:

Each year the Trustees of the Social Security and Medicare trust funds report on the current and projected financial status of the two programs. This message summarizes our 2009 Annual Reports.

The financial condition of the Social Security and Medicare programs remains challenging. Projected long run program costs are not sustainable under current program parameters. Social Security's annual surpluses of tax income over expenditures are expected to fall sharply this year and to stay about constant in 2010 because of the economic recession, and to rise only briefly before declining and turning to cash flow deficits beginning in 2016 that grow as the baby boom generation retires. The deficits will be made up by redeeming trust fund assets until reserves are exhausted in 2037, at which point tax income would be sufficient to pay about three fourths of scheduled benefits through 2083. Medicare's financial status is much worse. As was true in 2008, Medicare's Hospital Insurance (HI) Trust Fund is expected to pay out more in hospital benefits and other expenditures this year than it receives in taxes and other dedicated revenues. The difference will be made up by redeeming trust fund assets. Growing annual deficits are projected to exhaust HI reserves in 2017, after which the percentage of scheduled benefits payable from tax income would decline from 81 percent in 2017 to about 50 percent in 2035 and 30 percent in 2080. In addition, the Medicare Supplementary Medical Insurance (SMI) Trust Fund that pays for physician services and the prescription drug benefit will continue to require general revenue financing and charges on beneficiaries that grow substantially faster than the economy and beneficiary incomes over time.

The drawdown of Social Security and HI Trust Fund reserves and the general revenue transfers into SMI will result in mounting pressure on the Federal budget. In fact, pressure is already evident. For the third consecutive year, a "Medicare funding warning" is being triggered, signaling that non-dedicated sources of revenues—primarily general revenues—will soon account for more than 45 percent of Medicare's outlays. A Presidential proposal will be needed in response to the latest warning.

The financial challenges facing Social Security and especially Medicare need to be addressed soon. If action is taken sooner rather than later, more options will be available, with more time to phase in changes and for those affected to plan for changes.

Medicare

As we reported last year, Medicare's financial difficulties come sooner—and are much more severe—than those confronting Social Security. While both programs face demographic challenges, rapidly growing health care costs also affect Medicare. Underlying health care costs per enrollee are projected to rise faster than the earnings per worker on which payroll taxes and Social Security benefits are based. As a result, while Medicare's annual costs were 3.2 percent of Gross Domestic Product (GDP) in 2008, or about three quarters of Social Security's, they are projected to surpass Social Security expenditures in 2028 and reach 11.4 percent of GDP in 2083.

The projected 75-year actuarial deficit in the Hospital Insurance (HI) Trust Fund is now 3.88 percent of taxable payroll, up from 3.54 percent projected in last year's report. The fund again fails our test of short-range financial adequacy, as projected annual assets drop below projected annual expenditures within 10 years—by 2012. The fund also continues to fail our long range test of close actuarial balance by a wide margin. The projected date of HI Trust Fund exhaustion is 2017, two years earlier than in last year's report, when dedicated revenues would be sufficient to pay 81 percent of HI costs. Projected HI dedicated revenues fall short of outlays by rapidly increasing margins in all future years. The Medicare Report shows that the HI Trust Fund could be brought into actuarial balance over the next 75 years by changes equivalent to an immediate 134 percent increase in the payroll tax (from a rate of 2.9 percent to 6.78 percent), or an immediate 53 percent reduction in program outlays, or some combination of the two. Larger changes would be required to make the program solvent beyond the 75-year horizon.

The projected exhaustion of the HI Trust Fund within the next eight years is an urgent concern. Congressional action will be necessary to ensure uninterrupted provision of HI services to beneficiaries. Correcting the financial imbalance for the HI Trust Fund—even in the short range alone—will require substantial changes to program income and/or expenditures.

Part B of the Supplementary Medical Insurance (SMI) Trust Fund, which pays doctors' bills and other outpatient expenses, and Part D, which pays for access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet next year's expected costs. However, expected steep cost increases will result in rapidly growing general revenue financing needs-projected to rise from 1.3 percent of GDP in 2008 to about 4.7 percent in 2083-as well as substantial increases over time in beneficiary premium charges.

It is expected that about one quarter of Part B enrollees will be subject to unusually large premium increases in the next two years. This occurs because it is projected that the other three-quarters of Part B enrollees will not be subject to premium increases in those years due to low projected Social Security benefit COLAs and a "hold-harmless" provision of current law that limits premium increases to the increase in Social Security benefits.

Social Security

The annual cost of Social Security benefits represented 4.4 percent of GDP in 2008 and is projected to increase to 6.2 percent of GDP in 2034, and then decline to about 5.8 percent of GDP by 2050 and remain at about that level. The projected 75-year actuarial deficit in the combined Old-Age and Survivors and Disability Insurance (OASDI) Trust Fund is 2.00 percent of taxable payroll, up from 1.70 percent projected in last year's report. This increase is due primarily to the recession, slightly lower estimates for real GDP after the economy recovers in 2015, and faster reductions in mortality rates. Although the combined OASDI program passes our short-range test of financial adequacy, the Disability Insurance Trust Fund does not; DI program costs have exceeded tax revenue since 2005, and trust fund exhaustion is projected for 2020. In addition, OASDI continues to fail our long-range test of close actuarial balance by a wide margin. Projected OASDI tax income will begin to fall short of outlays in 2016, and will be sufficient to finance 76 percent of scheduled annual benefits in 2037, after the combined OASDI Trust Fund is projected to be exhausted.

Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16 percent increase in the payroll tax (from a rate of 12.4 percent to 14.4 percent) or an immediate reduction in benefits of 13 percent or some combination of the two. Ensuring that the system remains solvent on a sustainable basis beyond the next 75 years would require larger changes because increasing longevity will result in people receiving benefits for ever longer periods of retirement.

Conclusion

The financial difficulties facing Social Security and Medicare pose serious challenges. For Social Security, the reform options are relatively well understood but the choices are difficult. Medicare is a bigger challenge. Its cost growth can be contained without sacrificing quality of care only if health care cost growth more generally is contained. But despite the difficulties—indeed, because of the difficulties—it is essential that action be taken soon, particularly to control health care costs.


http://www.socialsecurity.gov/OACT/TRSUM/index.html

[customerserviceguy]

18. Pure bureaucratic bullshit

And it doesn't even consider the possible loss of half a trillion dollars if HCR as currently configured gets passed by Congress and the President.

I'm 54, and I don't expect to see a dime.

[bvar22]

15. "Entitlement Reform"...next on the DLC Hit LIst.

So far, the DLC has gotten everything they want from the Obama Administration.

It is NO secret the the DLC (Republican Wing) of the Democratic Party has always lusted after Social Security. One of their primary goals was to give Social Security to their friends on Wall Street.


The DLC New Team

(Screen Capped from the DLC Website)

The above people are NOT friends of the American Working Class.

The seeds for the destruction of Medicare are planted in the current Health Care "Reforms".
($500 Billion Dollar "defunding").


”I am a New Democrat!”---Barack Obama
http://www.dlc.org/ndol_ci.cfm?contentid=254931&kaid=85&subid=900184

[Mithreal]

25. +1

[Individualist]

60. +1

[Foo Fighter]

85. Exactly right.

Bush tried to hand over SS to Wall Street but wasn't able to get it through. The DLC intends to succeed where Bush failed.

[Juche]

16. Saul Friedman is wrong

Two things

1. $11 billion is not less than 1% of $650 billion. It is 1.7%. Its a minor goof, but doesn't fill me with confidence.

2. Social security will face a shortfall of 10-20 trillion over the next 75 years. The fact that it is in the black now is meaningless. He is either being manipulative/disingenuous, or he really doesn't know what he is talking about. I'm an asshole today.





However the right wing wants to use that shortfall as an excuse to privatize the system. I'm opposed to privitization, but we do need to make modest changes to SS to keep it solvent until the 22nd century.

Increase the tax rate
Increase the cap
Raise the retirement age
Lower benefits


It really doesn't take much to fix it. The tax rate is 12.4% now. If it were raised to 14.2%, I think it would be solvent until 2075 or later.

Raising the tax rate to 13.4% (as an example), raising the cap by 30k (to tax all income to 130k instead o just up to 102k) and raising the retirement age by 6-12 months would probably keep it solvent until the 22nd century. So SS does need reform, but modest reforms will do it. All attempts to privatize it are going to make the problem worse and are just an attempt by the corporate class to take over the system and must be resisted. But there is a funding problem over the next 75 years.



Medicare on the other hand is a bigger problem. The medicare red ink is about 4x bigger than SS. We have to dramatically reform how we do medicine in the US if we want to keep medicare solvent.

[alberg]

27. I'm for 2 easy fixes: Increase the tax rate and Increase or ,better, remove the cap.

[Juche]

50. That'd work

My understanding is just raising the tax rate to 15% or so w/o even touching the cap should keep it solvent 'forever'. There are different projections on SS's deficit (75 years vs basically forever). And minor fixes can keep it solvent for a long time.

I'm of the same opinion, it is best to remove the cap. We did that with medicare in the 1990s under Clinton (medicare used to be capped the same way SS was). If we hadn't done that, the medicare deficit would be way worse than it already is.

Doubling the cap alone w/o touching the tax rate would probably keep SS solvent for 100+ years.

[inna]

61. The cap needs to be removed. It's just obscene.

[Yupster]

118. and make everyone join.

Why are so many public schoolteachers allowed to pass on social security?

[laughingliberal]

32. Now, do you mean raise retirement age more than it's been raised

cause people born the year I was (1955) now have to wait until 66 years and 2 mos old to draw our full benefit, then they can get an additional amount if they wait til 70.

[Fire1]

78. I'm older than you and I have to wait until 67! What's up with that!?

[alberg]

80. No raising of the retirement age - just eliminate the cap. That fixes it.

[Hannah Bell]

98. it doesn't fix anything, unless you think giving the feds more surplus $$$

to "borrow" into the general budget = "fix".

it's a "fix" like heroin is.

Rescind Bush's tax cuts on the top 5% & let them repay the $2.5 trillion currently owing to the SS Trust Fund.

SS taxes tax only WAGES.

Income taxes tax wages + CAPITAL income.

The top brackets take a big hunk of their income as CAPITAL income.

Raising SS taxes wouldn't touch it, & they can easily adjust their compensation to take more as capital income, less as wage income.

[ChimpersMcSmirkers]

39. I'd prefer a means test as the solution myself. It's gauling seeing millionaires collect it.

[Alias Dictus Tyrant]

47. +1 but then it becomes "welfare" and people don't like the sound of that

[Statistical]

56. Exactly.

You means test SS and within 10-20 years it will be gone.

The universality of SS has allowed it to last as long as it has.

Let millionaires collect. The tiny number of them is not meaningful in terms of balancing receipts. You are reducing the outlays by <1% while substantially increasing risk that SS goes away.

Simply remove the cap on wages.

[Hannah Bell]

104. removing the cap on wages has exactly the same effect as means-testing.

& all it does is give the feds more surplus money to "borrow".

the trust fund has $2.5 trillion dollars in it, projected to grow to over $4 trillion before being drawn down.

Repay the trust fund -- from INCOME TAXES on CAPITAL, not increased collections on WAGES.

[FLDCVADem]

62. Why?

They paid into it.

[Hannah Bell]

100. Why? They paid in, they get something back. That's why it's the most successful

federal program EVER, & that's how it's been able to fend off political attacks for 60 years.

Your plan would position it ever more firmly on the chopping block.

[Statistical]

55. Exactly.

This should be a seperate post.

Even worse is the so called trust fund is worthless.

Because the IOU will need to be paid by federal govt and the fedeal govt is already $11T going to $14T in debt.

So SS has "$3T" surplus. Lets say today the federal govt paid that back.
So federal govt writes a check for $3 trillion. Now SS has 3T so that moves the SS chart "upwards" 3 trillion. HOORAY.

Well that just increased the national debt $3T!

It is like having 2 checking accounts overdrafted and saying don't worry about the SS checking account because it has IOU where money was transfered to the second checking account.

2 problems with that
1) BOTH CHECKING ACCOUNTS ARE OVERDRAFTED
2) HELLO! you own both Checking accounts. You can't generate wealth by paying yourself = moving money from one account to another.

[Hannah Bell]

105. The figure of "10-20 trillion over 75 years" is also meaningless. As a percent of projected

GDP, the (projected, i.e. guessed-at) actuarial difference is about 2% of GDP. SS is projected to be able to pay out 75% of scheduled benefits into infinity without any adjustment.

A 1.5-2 pt increase in SS taxes would cover the difference in that eventuality -- SHOULD IT OCCUR, IN THIRTY MORE YEARS, AS IT'S "PROJECTED" to -- per the middle range projection of the SS Trustees, which has notoriously been wrong even in the short term, more often than its been right.

There's no need, no reason, no rationale, to doing anything to SS now, while it's still running surpluses and ballooning a trust fund that's already the BIGGEST component of the national debt.

Anyone saying there is is trying to con you.

http://www.cbpp.org/cms/index.cfm?fa=view&id=2819

[Hannah Bell]

110. Correction: NOT 2% of GDP, 2% of taxable payroll, .7% of GDP.

[Hannah Bell]

138. life expectancy over 65 is exactly 5 years more than it was in 1950.

The retirement age has already been raised to 65, & SS taxes have been repeatedly hiked to cover the other three years. Including taxation of benefits.

A 75-year economic forecast is bullshit.

Lets see the 75 year financing for our war machine. Oh, we don't doooo that. Cause that benefits the super-rich.

The "solutions" you offer are the wrong answers to the wrong problem.

[customerserviceguy]

17. What you cite are nothing but accounting tricks

They rival only the fairy-dust 'securities' that brought about a near-collapse of our economy just a bit more than a year ago.

Social Security and Medicare are two high-speed rail trains that are hurtling toward a cliff known as the Baby Boom. The peak year of that population phenomenon is 1957, those Boomers will be 62 in 2019, all among them who cannot find work will sign up for early Social Security just to survive.

In about a decade, the 'magic' accounting will spring a leak, and we'll face some really hard decisions regarding this program. If you want a preview of what it's going to look like, observe what happens when Congress no longer can pass unemployment compensation extensions.

[Bluenorthwest]

26. You have some hyped up language, but you get basics wrong

For example, you refer to two separate programs, Medicare and Social Security as 'this program' as if it was one. Incorrect.
The rest of your ravings are similarly imprecise and misinformed. If you can not tell one from two, you should step off the grandstand. Typing about trains and cliffs and the like are not facts, this is just purple prose, which has no place in discussing such issues.
In government, the biggest accounting trick is the one you use, hyperbolic language where numbers and facts belong. Rails! Cliffs! Tricks! Hurtling! Verbiage such as that is always a red flag. Fairy dust! Magic!

[customerserviceguy]

31. Ok, you have a point

Two programs, both going off the cliff from the same cause, my generation.

It's inescapable, my generation is the straw that breaks that camel's back. Or both it's humps, if you prefer. It really doesn't matter if your cute accounting considers it one program or two, we're headed for a collision course with reality.

Hyperbole? Rhetoric? Verbiage? It really doesn't matter, the whole thing is a Bernie Madoff Ponzi scheme that collapses when there are less people to support it than are getting benefits from it.

[alberg]

71. Not a Ponzi scheme - it's an Insurance Policy. But the right wing pushes the PONZI label to justify

their efforts to abolish it.

Social Security is essentially an INSURANCE PROGRAM (for retirement, death, and disability).

Insurance is about shifting risk. More specifically, you buy insurance in order to shift the risk of some potential event to someone besides you. ... It’s better for insurers to have this risk because they can more efficiently spread it to a large group. For example, let’s say that 10 people have car insurance and only one gets into an accident that costs $100. Having everyone pay $10 (and free themselves of risk) is better than everyone keeping risk and only one person paying $100.

Social Security works the same way.

The government assumes the risk, and spreads the costs to a large group (the American public). If there were no Social Security, we would all bear the risk of losing our savings and having nothing in old age. We don’t like that risk, so we pay taxes to shift it to the government. Remember, not everyone who pays in gets to collect. Some people are going to die.

In Florida, the insurance companies raise rates to cover hurricanes. The Social Security Administration can cover the "hurricane" of the baby boomers reaching retirement (a temporary event with a finite duration - all the baby boomers will be dead in a few decades) by raising the income cap that currently exists. This simple step will ensure the viability of Social Security for the foreseeable future. Nothing needs to "go off the cliff".

The private accounts idea as the sole source of retirement income is a bad idea. In a world of private accounts, we would again bear more risk than before. If the economy plunged, or our investment collapsed, or whatever else might happen, the risk is ours. We are screwed unless the government decides to bail us out – which of course would defeat the whole purpose of partial privatization in the first place.

People who have the ability should invest in ways that make Social Security unnecessary — just like people who have the ability should do things to their home to make fire insurance unnecessary. That doesn't mean, though, that it's smart for them to therefore not pay for insurance. Regardless of the specific issue, insurance is one of those things that people should have and pay for even while hoping that they will never actually need. This is obvious when it comes to car insurance or home insurance, but the same attitude should hold when it comes to Social Security as well.

Trying to change Social Security from a form of insurance to a form of retirement investment necessarily means shifting all of the various risks being insured against away from the large groups/government and onto the shoulders of individuals.

[Hannah Bell]

107. People who call SS a Ponzi scheme don't know what a ponzi scheme is.

In a ponzi scheme, i take A's "investment" & pay him off with B & C's "investment".

They in turn must be paid off with D&E & F&G's "investment".

Ponzi:

1. doesn't "invest" in anything, just transfers money up a pyramid into different hands. There's no production backing the scheme.
2. Absolutely requires an ever-larger pyramid of "investors".


SS, on the other hand, is

1. backed by the real PRODUCTION of workers
2. doesn't require an ever-increasing pyramid of workers.


The most important requirement is that workers produce a surplus capable of feeding, clothing & housing non-workers, that's all.

If workers produce a surplus, SS works.

If they don't, SS doesn't work -- BUT NEITHER DOES ANY ALTERNATIVE, for the simple reason that there's NOT ENOUGH SURPLUS production, not because SS is a "ponzi scheme".

[Statistical]

19. THERE IS NO TRUST FUND

The surplus is spent by Congress each year and worthless IOU and put in the trust fund.

So guess what will happen when Baby Boomer begin to retire in mass and payments exceed receipts?

Oh yeah we will just cash those IOUs in? Oh wait the IOUs are to are fracking self.

So each IOU paid will strengthen SS but at the same time WILL contribute to the deficit.

Basically given the past decade of massive surplus from SS we should have a national surplus and have purchased interest paying debt from other countries that will make payments when we need them.

But we didn't so we have a pile of IOUs to ourselves paid by ourselves.

[Samantha]

29. The CBO has a record of how much Uncle Sam owes SS

I found this out recently when I looked up the make-up of the 12.5 trillion dollar Republicans are constantly complaining about. The number one item is the Iraqi war debt. Bush* was keeping this off the public record. I think they had the amount Uncle Same owes SS as between 2 and 3 trillion. It's out there on the Internet and very easy to find. They also had Medicare Part D (unfunded and passed by Bush* I believe thru reconciliation) as a significant piece of the deficit pie, and the TARP I believe was a part. Of the four parts I reviewed, I couldn't believe the Republicans were harping on Obama for this deficit. He's accrued about 1 trillion over the 12.5 if Health Care passes.

If I have a chance I will look it up again and see if I can post it.

[customerserviceguy]

33. Yeah, and Bernie Madoff's "investors"

had paperwork telling them how much they had in their accounts. Until he 'fessed up, that they didn't have squat.

It's not just Bush and the Republicons, the whole government is full of funny money accounting.

[Hannah Bell]

106. The accounting of SS trust funds is publicly available, & always has been.

It's quite explicit; there's $2.5 trillion in the TF. In-goes, out-goes, interest payments, bonds -- it's all there in black & white, publicly accessible.

That's a debt to the American people, & it will be repaid, unless enough people buy the bullshit you've fallen for. "There's nooooooooooooo money!!!!!"

I wonder if you'd buy that if your banker told you the same thing: "Well, we loaned your deposits to someone else. They spent it, so there's noooooooooo money for you!"

[Hannah Bell]

101. YOU HAVE NO MONEY IN YOUR BANK! Everything you put in is loaned out to someone else, who spends it!

[Yupster]

119. That was the mistake in 86

When they decided to create a surplus that would pile up over many years they needed to keep it away from the federal government where it was quickly spent.

It would have been better to put it into foreign bonds, or even cd's. Then it would still be there for when we need it.

[Hannah Bell]

134. '83. better not to have an SS surplus in the first place. there's no economic reason to "prepay"

ss, except to siphon money from workers for banksters to play games with.

Money "invested" in foreign bonds, cd's, or any other investment vehicle is SPENT no less than money parked with the government is. Do you think when you put money into a cd the bank digs a hole out back? No, they loan it to someone else, who SPENDS it.

Depending on what kind of spending occurs, it might be a better bet to park it with the gov. For example, spending on transportation, research, education, etc. = investment in future productivity & theoretically, better jobs for the next generation.

Whereas maybe the guy who borrows your cd $$ just has a coke habit.

[slipslidingaway]

21. I just heard Gregg on CNBC with Kudlow about tackling the entitlement

spending.

:(

"It has nearly $3 trillion in its trust fund."


Sorry to be blunt, but it comes down to who are you going to screw.

The American workers who hold government bonds or foreign governments who also hold US bonds.

[Statistical]

54. Its even simpler than that.

The bondholders WILL be paid. Not paying a single bond would cause such a run on Treasuries the US govt would be lucky to borrow at credit card rates.

The problem is the taxpayer via federal govt pays the bondholders.

So:
foreign govt has bond = bond paid = money flows from taxpayer -> federal govt -> foreign govt (or corporation or other bondholder)

SS trust fund = bond paid = money flows from taxpayer -> federal govt -> ss fund -> taxpayer. WTF?

So we are essentially paying ourselves.

It is like you have an IOU and $100 in your pocket and $0 in checking account.
You put $100 in the checking account (taxes) and then cash in your own IOU to yourself (SS trust fund).
So you withdraw $100 from checking account, rip up IOU and put the $100 in your pocket.

Net result is all you did is move money around but you still only have $100. You didn't magically turn $100 into $200.

Having to an IOU to yourself doesn't make you richer.

Here is an experiment if you believe that SS has a $3T trust fund.
Write and IOU from yourself to yourself, date it today, set a redemption date for 5 years from now, make the amount $3 trillion.
Do you honestly think you will be $3 Trillion dollars richer in 5 years?

[slipslidingaway]

66. I get all that ... Bush was right, the government needs to default on some bonds ...

they will choose the workers of America over foreign interests.

If we forget about the 2-3 Trillion in the Trust fund and blame the anticipated deficit on SS, instead of the general budget (tax cuts, wars), then when it comes time to cut or look for additional revenue they will look to Social Security.

We planned for this back in the 80's, remember when the doubled payroll taxes to build up the Trust Fund for the boomers, then they used the surplus to pay for other things.

The surplus should take SS through 2040.

Why not look to other areas for a solution? Sure we have to pay for this ourselves, the big difference is how funds should be raised.

Should we tell a new generation of workers they need to pay more for SS and then give more tax cuts to the rich or invade another country based on lies?

[alberg]

73. The IOU is paid from future taxes. Social Security becomes solvent by raising the existing cap on

high income tax payers. All income is subject to the same Social Security Tax.

A Progressive Tax is the basis of an equitable and humane society - one that has and supports institutions which are there for the benefit of its' citizens. These include things like Health Care, Consumer Protections and Insurance against destitution for Seniors. Republicans believe it's a dog eat dog model where only the elite and the elect (themselves) are entitled to the good life. Democrats (old school, not the new "corporate" Democrats) believe in shared social responsibilities. We work together to build a better world.

[Hannah Bell]

112. Raising the cap = a flat tax, not a progressive one. Raising the cap is also a BAD

solution to a near non-existent problem.

[Yupster]

121. The tax may be regressive, but

the bendpoints of the payout formula are already incredibly progressive.

[Hannah Bell]

124. Which is my point as well. The total package works out progressively in terms of the population.

[Hannah Bell]

109. "we are essentially paying ourselves" no, not exactly. you've forgotten something important.

$2.5 trillion (well, a bit less, because part of the $2.5 trillion in the TF = interest payments, but for simplicity, I ignore it...)

The federal government borrowed $2.5 trillion in money taken from workers' paychecks, & only workers' paychecks, on income < $106.8K in current dollars, was borrowed by the feds.

Most of it (1.5 trillion) was produced in the last 10 years, when the Reagan-instituted excess collections of SS taxes were producing sizeable surpluses:

**

Fiscal year 2000 Budget Summary for SSA's OASDI Trust Fund

Total 2000 Receipts (taxes and interest): $568.4 billion

Less: Total 2000 Expenditure: $415.1 billion

Equals: Net Increase in Fund for 2000 $153.3 billion + 1999 TF assets of $896.1 billion

Equals: 2000 Fund Assets $1,049.4 billion

http://www.frbsf.org/education/activities/drecon/answerxml.cfm?selectedurl=/2001/0101.html

**

That is, in 2000 SS collected an excess of $153 billion, some of it from interest payments on the $896 billion already in the Trust Fund, but MOST of it from ~20% over-taxation of workers above the amount required to fund retirees.

Meanwhile, Bush II began his tax cuts, 33% of which went to the top 1%. Over the next 10 years, this small portion of the population got $700 Billion, worth of tax cuts. The next 4% got another
$300 billion -- almost $1 trillion in tax cuts to the top 5% over 10 short years, & 50% of ALL Bush's cuts.

This amount is approximately equal to the $1.5 trillion, less interest payments, that was borrowed from the SS Trust Fund in the same period.

www.ctj.org/pdf/bushtaxcutsvshealthcare.pdf



Now, let's reexamine your premise:

SS taxes: assessed on all WAGE income under $106K.

Income taxes: assessed on all INCOME, including CAPITAL income (e.g. capital gains, interest income, trust income, corporate income).

Tax cuts: 50% to top 5%.

The super-rich: derives large portion of its income from CAPITAL.

Wage workers: derive most of their income from WAGES.


In effect, workers' wages were borrowed into the general budget while capitalists' taxes were cut.


So when you say "WE" are paying "OURSELVES," this isn't true.

Because, while workers pay ALL SS taxes, and most workers are taxed on ALL of their income, most INCOME taxes are paid by the top brackets.

For example, the top 1% pays about 40% of all income taxes.


So, no: SS is paid by workers; their money was borrowed, in essence, to help fund income tax cuts to the super-rich.

Rescind Bush's tax cuts to corporations & the top 5% & let "them" repay the money they borrowed from "us".

[alberg]

126. Love your analysis. I agree. Get more revenue for SS from non-payroll income. Let the Bush tax cuts

expire and raise the top brackets. And I'd also remove the cap on SS contributions. If we did all those things we would no longer have a SS or a Medicare problem. The next step would be to open up Medicare to everybody.

[Hannah Bell]

127. why would you want to raise the cap when 1) you don't need the revenue 2)

it would destroy the funding structure that mades SS politically successful?


sorry, that's suicide.

[alberg]

129. My reasoning for raising/eliminating the cap is 1.) simplicity and 2.) my belief that it would,

in fact, be politically easier to accomplish.

Most people "get' the fact that higher wage earners stop paying the social security tax at some point. The "simplicity" of continuing to apply the SS tax on every dollar earned appeals to many people and that change alone would eliminate the accusations that SS is broken. There is already political support for raising/removing the cap ( I believe Obama has mentioned it as a possible fix). I'd like to encourage conversations that go in the direction of raising additional revenue vs conversations that suggest we should be cutting benefits or raising the retirement age.

Thanks for the detailed work you've done on this subject. You've taken the discussion to a whole other level. Great Job!

[Hannah Bell]

135. It wouldn't eliminate the accusation that SS is broken. The accusation was never sincere in the

first place, it was politically motivated, & still would be.

The people making the accusation were never operating in good faith.

All you do by lifting the cap is bring more workers over to their side -- people who begin to feel their taxes are way too high, with very little return.

[Yupster]

120. They'll eventually fold the social security system into a unified budget

At that instant the trust fund will disappear.

The asset of the trust fund will be canceled out by the debt of the treasury and the trust fund will disappear with a poof.

Then congress or more likely a new commission will set a new bendpoint formula and payout what they think they can afford.

The trust fund is completely immaterial. It might as well not exist.

Congress will pay out what they think they can afford whether there is a trust fuind or isn't one.

[Hannah Bell]

128. it's been in the "unified budget" & it didn't disappear. If you mean, everything will eventually be

funded from straight income taxes, maybe - but there's no indication it's going to happen anytime soon.

if you're just talking about showing SS off or on budget, that has nothing to do with anything.

[Hannah Bell]

108. exactly. but don't forget the US capitalists who hold bonds, also.

including the US capitalists chartered in china & the cayman islands.

it ain't just "foreigners".

[slipslidingaway]

131. Very true and glad you posted in a separate thread. n/t

[slipslidingaway]

22. And why not let Medicare negotiate drug prices with Pharma...

we need to protect their profits!

[unkachuck]

30. K&R....n/t

[democratus]

35. I think that's called

a shot to the bow.

[LSK]

36. why do we need a commission?? why not just everyone pay 100% fica tax???

Again, the poor and middle class must pay 100% fica tax but the upper incomes get off. What the fuck is wrong with this country???

[slipslidingaway]

37. Social Security Trust Fund Data - link

http://www.socialsecurity.gov/OACT/ProgData/funds.html

"The Social Security Trust Funds are the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. The OASI Trust Fund began in 1937; the DI Trust Fund in 1957. These trust funds are managed by the Department of the Treasury.

Trust fund tables

•Calendar year data
◦OASI Trust Fund, 1937 and later
◦DI Trust Fund, 1957 and later
◦OASI and DI Trust Funds, combined, 1957 and later

•Fiscal year data, OASI and DI Trust Funds, combined"


Old-Age, Survivors, and Disability Insurance Trust Funds, Fiscal Year



2009 - 2,503,612

[TexasObserver]

51. Recommend. I can't believe he allows that GOP rhetoric into his speech.

Social Security and Medicare are awesome programs that work. Too bad our banks, stock market, and health care industry can't work as well as they do.

[Festivito]

52. NOT a blunder. Starting 2015 the soaring goes deficit not surplus. See 16. /nt

[slipslidingaway]

67. That chart on SS is fine IF You Ignore the almost 3 Trillion dollar Trust Fund ...

if you use the Trust fund, then SS does not need money til 2040.

We really should be focusing on Medicare, yet in the current HC bill, Medicare will not be allowed to negotiate for drug prices and any savings in Medicare will then be transferred to help pay for the HC bill.

Does that make sense to you, when the boomers will be enrolling in Medicare?

[Festivito]

70. Still, borrow and spend will be replaced by TAX AND REPAY.

It's not as though the money is out there in a trust fund. That money is what would to be in the wallets of Americans far into the future who must repay the that trust fund / obligation / entitlement program / Social Security ... .

[slipslidingaway]

75. The focus needs to be on the general budget and not pretend ...

it is a SS problem, which is solvent until 2040, IF the US Government honors their obligations to the bond holders.

When we just forget about the trillions and focus on SS we leave many other areas of the budget unlikely to be cut.

Do you think there is enough excess money in Medicare to partially fund this HC bill while enrollment in Medicare is set to go up significantly - been trying to figure that out for months.

:shrug:

[amandabeech]

94. If we get out of the war business, tax the wealthy, put a surcharge on capital gains

it might not be so bad.

[Hannah Bell]

113. Since the top 1% pays 40% of income taxes, & it's the top 1% who got 33% of Bush's

tax cuts, which over the last ten years netted them $700 billion dollars, about what was "borrowed" into the general budget from excess SS tax collections from WAGE income in the same period, I don't have any problem with rescinding Bush's income tax cuts for the top 1% so that they can repay the TF.

From their CAPITAL income.

[amandabeech]

93. That's how it is supposed to work while baby boomers are in retirement.

We and everyone else have been paying an increased rate since at least 1983 in order to have enough for the baby boomers.

[Hannah Bell]

114. yes, "building up the trust fund for the boomers' retirement" was how reagan's boondoggle was sold

in the first place.

now, suddenly, it's a "crisis" that we're going to draw it down.

what kind of idiots buy into this doublespeak?

[amandabeech]

115. There was lots of bad in the Reagan admin.

I could barely read the front page of the NYT during the first 3 years.

However, this wasns't one of them. The previous generation was living longer than anticipated.

I'm sure you don't agree, but I'll leave this thread with that.

[Hannah Bell]

123. I disagree because it's false. If you prefer your own opinion to fact, too bad for you.

The SS administration tracks life expectancy year to year. SS rates were repeatedly raised, long before Reagan, to keep covering all expected increases in life expectancy. Life expectancy is one of the variables the SSA uses when they run their models every year, & it doesn't suddenly jump dramatically year to year "unexpectedly".

Life expectancy AT AGE 65:

1950 = 13.9 years (78.9)
1960 = 14.3 years (79.3)
1970 = 15.2 years (80.2)
1980 = 16.4 years (81.4)
1990 = 17.2 years (82.2)
2000 = 18.0 years (83.0)
2005 = 18.7 years (83.7)

CDC numbers:

http://www.cdc.gov/nchs/data/hus/hus08.pdf#026

So let's see, SS began paying out full benefits in 1940. In 1950, a person who lived to age 65 could expect to live to age 78.9.

Today, 60 years later, a person who lives to age 65 can expect to live to age 83.7 -- a whopping increase OF 4.8 WHOLE YEARS over what he could expect in 1950!!!!

In addition to the rate increases ALREADY PUT IN PLACE over the previous 40 years to keep up with rising life expectancy, Reagan started taxing benefits, raised the age for full retirement two years, & jacked up rates more than required to stay in actuarial balance for the next 30 years -- to produce what will be nearly a FOUR TRILLION DOLLAR TRUST FUND by the time the boomers start drawing on it in 2016.

Yeah, that Reagan, he just *had* to do something!!

PS: Run the calculations & learn that year-to-year increases in life expectancy over 65 peaked by 1980 & have been below the 1960-1980 rate ever since.

[Hannah Bell]

111. No, it doesn't go into "deficit". "Deficit" = spending more than assets.

2016 (not 15) is the year that tax income is PROJECTED to be less than disbursements, & it becomes necessary to start cashing some of the bonds in what will then be a trust fund of over $3 trillion dollars.

The trust fund is PROJECTED to run out in 2037. The youngest boomers will be 76 then & the oldest 91. Life expectancy in the US is 78, life expectancy for those who reach age 65 is 83.

Even after the TF runs out, if it does, SS is still projected to be able to pay out over 75% of scheduled benefits (which, because of increases built into the schedule, would provide MORE than grandma receives now).



I write PROJECTED in caps because:

1. The SS Administration makes THREE yearly projections, not just one, all based on different assumptions & coming to different conclusions. The conclusions CHANGE year to year, because of the different conditions year to year. For example, in 1997 the mid-range forecast PROJECTED that the TRUST FUND would run out in 2029 -- eight years earlier than the 2009 projection.



Of the three forecasts, the one that has been most historically accurate in predicting the short term is the OPTIMISTIC forecast, in which SS NEVER goes into deficit.

These factoids are never included in the scare stories in the press.


http://www.cbpp.org/cms/index.cfm?fa=view&id=2819

[inna]

58. it's not a blunder, it's a deliberate misrepresentation.

[gulfcoastliberal]

59. This is such bullshit. There is no need for this commission - Obama is honoring the wishes of the

of far-right billionaires in doing this. Shame!

[thesquanderer]

68. Where's Al Gore's lockbox? (n/t)

[Hannah Bell]

144. There never was a lockbox, it's impossible to have a lockbox by the terms the original SS

legislation, & Gore knows it.

He's as big a liar & obfuscator as anyone else on this issue.

[Babel_17]

69. The IOU's are backed

by the full faith and credit of our government. Defaulting on them would be no different than defaulting on other treasury bills.

The US has never defaulted on such.

So let's get that straight for our discussions.

Baby boomers retiring represent a temporary bump.

Raising the maximum amount of payroll income that is taxable, in the way Obama pretty much said he would do, would keep Social Security solvent for a long time.

Just that one fix alone.

Republicans argue that the debt they incurred doesn't matter because it will be insignificant as our economy grows.

They're right and wrong. The debt they incurred, by way of their not very cost effective tax cuts that helped the wealthiest, does matter.

But they're right when they say our economy will grow.

In a nutshell, attacking the social security system is usually just cheap political grandstanding.

Social Security has for decades financed the growth of our economy on a huge scale. The interest earned is extremely modest by comparison.

http://interestingtimes.blogspot.com/2005/02/full-faith-and-credit.html

[Yupster]

122. It's not the same

Owing money to yourself is not the same as owing money to someone else.

All the government has to do to default on the SS Trust Fund bonds is to unify the budget by bringing social security into the federal budget instead of keeping it off-budget.

At that moment the trust fund will disappear since the fund's asset will be canceled out by the treasury's debt. You can't owe money to yourself. The trust fund will just go poof.

So when will they unify the budget?

In just a few years. Right now keeping it separet still performs the function of hiding how bad the defecit is. In a few years it'll reverse. The social security system will make the defecit look worse so they'll fold it into the "unified budget."

The trust fund has no meaning. It is immaterial.

[Hannah Bell]

125. Baloney. "On-budget" & "Off-budget" don't mean what you think they do.

And whether SS is reported on or off budget has nothing to do with increasing the likelihood of gov't default on the SS TF.

MYTHS AND MISINFORMATION ABOUT SOCIAL SECURITY

Myths and misstatements of fact frequently circulate on the Internet, in email and on websites, and are repeated in endless loops of misinformation. One common set of such misinformation involves the history of the Social Security system.


"Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting.

Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget."

This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget.

But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself."

http://www.socialsecurity.gov/history/InternetMyths.html

[earth mom]

72. Social Security is NOT broken. Anyone who says so is lying. nt

[defendandprotect]

74. TRUE -- Social Security runs a SURPLUS - a HUGE SURPLUS ...

which Bush used for tax cuts for the rich and to pay for his wars!!

This goes on and on with Social Security $ being "borrowed" and serving as a slush

fund for presidents!

SS is viable thru the year 2038 -- and if all "borrowed" monies were returned to the fund

it would be infinitely solvent --

What we're really looking at is a corporatist-DEMOCRATIC PRESIDENT getting ready to knock

out Social Security and the last of our social safety nets in Medicare/Medicaid!!

*******************************************************************************************


AND, I think we're just going to sit her and let him do it!!

[SlingBlade]

76. Yep. Ree, Ree, RePuke Proposals followed by......

Thunderous Applause, Now what's that remind ya of ??? :)

[RedCloud]

77. That's it! On with his head!

[Divine Discontent]

133. kick

[dkf]

136. It earns fake interest.

Just another IOU.

[Hannah Bell]

137. so's your savings account. so's everything, including a dollar bill.

it's only a no-good iou if you get enough people to believe it's so.

you seems like you might be on that team.

[dkf]

140. Social security is a pass through system.

The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system.

The portion of the national debt that is not considered "publicly held" represents the obligations incurred by the government to itself, the bulk of which consists of the government's obligations to the Social Security Trust Fund.

http://en.m.wikipedia.org/wiki/Social_Security_Trust_Fund?wasRedirected=true

it's kind of like taking a $10,000 loan from your 401k and paying yourself interest on your loan. The money is really gone. If you lost your job and couldn't pay your loan back it wouldn't reappear. Instead that money would be gone like it was a distribution. Really there is no money unless you put it back.

[Hannah Bell]

141. It *was* a pass-through system until Reagan jacked up rates to produce an escalating

30-year surplus, you mean.

about 2 trillion was passed from SS taxes & into the general budget to fund operations that should have been funded by progressive income taxes, not regressive SS taxes. The top 5% pays 60% of income taxes.

That 2 trillion has not been "passed back" to SS retirees yet. 1 trillion of it was taken from workers during the reign of Bush II & given to the top 5% in the form of income tax cuts. They used it to "invest" in speculative bubbles.

That's two trillion workers could have had in their pockets instead.

[dkf]

142. Sad reality is we have a hugely regressive tax that we the little guy may or may not see

For all you know they will raise the age to 80 years old by the time the younger crowd gets done.

[Hannah Bell]

143. "For all you know" an asteroid may hit the earth tomorrow. We fight the battle currently at hand.

Social Security has paid out scheduled benefits for nearly 60 years. It will continue to do so unless people like you accept the bullshit being fed to you.

[dkf]

145. Well you can plan your entire future expecting to get social security.

Just because I think it's a bad way to plan doesn't mean you have to.

[Hannah Bell]

146. one doesn't plan their future expecting SS. Nevertheless, for 1/3 of retirees it's

their sole income source, & half of retirees rely on it for the majority of their retirement income.

So the country as a whole is going to be shit out of luck if it disappears. Maybe we can bring back poor farms, the pre-SS alternative.

The income distribution is such that about 1/3 of workers would die in absolute poverty without it, however well they tried to "plan".

And by absolute poverty I mean that once they quit working they would have no income whatsoever, because they never made enough to accumulate anything resembling a "retirement".

Median income in the US is about $15/hour & dropping.

[dkf]

147. So we agree younger people should not count on ss.

Our problems are significant without ss and Medicare. With them I really don't know how things will work. I just hope people prepare now

[alberg]

150. The Right Wing Elite started the meme that SS would not be there for younger workers

as part of their campaign to eliminate it. There is no inherent reason why SS will not be there for all workers for as far into the future as we can project (See many of the above posts for the detailed financial reasons for this. Any short fall that might occur as a result of the baby boomer retirement bubble could be easily handled with relatively minor adjustments. Remember, most of the baby boomers will be dead in a few decades and then we return to a situation where the working population is big enough to easily support SS.)

The Right Wing Elite has pushed the "SS is broke" meme for 30 years. Now that a large percentage of younger workers believe the meme, it is significantly easier to talk about doing away with SS. The fact that the meme is a lie does not matter. If enough people believe it, it becomes a self-fulfilling prophecy.

It will be a huge tragedy for the coming generations of Americans (the folks in their 40's, 30's and 20's) if the Right Wing pulls this off. They will discover, too late, that their future security and well being in the later years of there lives has been stolen from them by the same 5% of the population that now control 90% of our national wealth.

The folks at or nearing retirement (the baby boomers) will probably not be as badly effected by this as a lot of people think. The money that has been promised to them will need to be paid (it is an obligation, after all, an "earned benefit" that these people paid for with every pay check for their entire working lives). The politicians will be reluctant to renege on this obligation, not out of any sense of morality, but because older folks vote in a lot higher percentage than younger folks. So, we'll end up with the Government still needing to meet its' obligation to older people and come up with the money some how, and the younger folks losing what is probably the best government program ever implemented in the US.

What a bad bargain!

Younger folks need to wake up and join the fight to preserve and strengthen Social Security. They will be fighting for their own retirement and peace of mind as well as the folks that came before them and the ones who will come after. Our Great Grandparents understood this. It's time we did too.

[Hannah Bell]

151. huh?

[alberg]

152. Did you actually believe that the persistent misinformation regarding SS that has been spread around

during the last 30 years was just the result of some honestly mis-informed folks who didn't understand the numbers?

Check out the Powell Memo for evidence of the detailed plan the right wing implemented to shape public opinion in support of their policies.

[Hannah Bell]

155. no, i don't. but that has nothing to do with the post i responded to.

[alberg]

156. Sorry! I thought the "Huh?" referred to my post. Check out Brooks' column in the NYT today -

another example of the mis-information/manipulation campaign in full swing.

[Jeffersons Ghost]

139. yes, either it's a blunder or an expensive rolex watch

[OllieLotte]

153. His speech only lasted an hour.

It would have taken him days to explain our predicament to you in a manner that you could understand. You would have forgotten everything anyway by now.

[branders seine]

154. truth does not suit Obama's reagan rhetoric