Top 5 Social Security Myths Debunked! Tell them to keep their hands off SS!

[sabrina 1]

This is going to be a battle! The best way to fight is to have information ready to counter the same old rightwing lies that are still being used to scare people.

Here is a simple response to the most often told lies:

Top Five Social Security Myths Debunked

Myth #1: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a ‘T’). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it’ll still be able to pay out 75% of scheduled benefits—and again, that’s without any changes. The program started preparing for the Baby Boomers’ retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.

Myth #2: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago.3 What’s more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth #3: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn’t need to be fixed. But if we want to strengthen it, here’s a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth #4: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn’t full of IOUs, it’s full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth #5: Social Security adds to the deficit

Reality: It’s not just wrong—it’s impossible! By law, Social Security’s funds are separate from the budget, and it must pay its own way. That means that Social Security can’t add one penny to the deficit.8

Defeating these myths is the first step to stopping Social Security cuts. Can you share this list now?

Yesterday a friend of mine told me her mother had informed her that back in the seventies they were told that 20 years from then when they were ready to retire, there would be nothing left for them collect. It was lie then and it's a lie now.

People are growing very angry over this issue. Democrats must start fighting any attempt to connect Social Security to the Deficit. They know it is a lie and they need to start saying so.

All polls show that Social Security is one of the American people's favorite programs. Democrats should be proud of that as it is one of the most successful programs ever and still one of the most popular. It was based on the very best of Democratic ideals and on FDR's commitment to the priniciple of the General Welfare and provides for the most vulnerable people in this society.

They should be using it in their campaign ads. Boasting that it was a Democratic administration that provided for the American people and that it is Republicans who want to take it away and leave the disabled, the poor and the elderly with nothing. Everyone has family members who are retired or disabled, even Republicans. That is why the polls on SS cross party lines.

So why are they NOT doing proudly proclaiming that Social Security is a Democratic Program?

It is a political goldmine for Democrats in the election if they choose to use it. Republicans want to wait until after the election to discuss it. Don't let them off the hook. By doing that, Democrats are cooperating in handing over Congress to Republicans in the Fall.

And if that happens I don't know about anyone else, but I know who I will blame.

[suston96]

1. Read these to your righty friends....

...and read them slowly and loudly!!!!!!

[customerserviceguy]

21. And be prepared for them to counter most of the points presented

See below for what I mean.

If we're going to fight for equitable taxes and future cuts, then we had better have logic, reason, and reality on our side. Otherwise, we will be completely ignored.

[glitch]

34. To convince the rightwing all we really need is emotion.

Reptilian preferably.

[customerserviceguy]

35. The right wing isn't where we win the battle

It's the folks in the mushy middle who hold the balance in all elections. And there has to be some sort of middle on this commission.

[glitch]

47. The rw aren't the only ones being manipulated with fear.

It's affecting self-described independents and democrats as well. Not saying facts and logic aren't the answer, just not the only ones.

We need to respond with reassurance as well.

[pattmarty]

52. C'mon, you know than to spout that propaganda. Mushy middle..................

.........and some sort of middle of the commission, what EXACTLY do you mean by that? This is a budget deficit commission. SS doesn't even come into the budget, as the OP says it was designed as a "stand alone" system (as is Medicare too). There is NOTHING wrong with SS, Leave it (and Medicare) completely out of the deficit reduction commission.

[customerserviceguy]

59. I'll admit, the term "mushy middle" is one I found

when I was lurking on the freeper site some years ago. It describes the reason why the country switches back and forth between parties. There are bases of people who are solidly on the side of one party or another. While they might sit on their hands, or vote third party every once in awhile as a protest vote, they're never going to vote for the other side, because they feel their principles would prevent that.

What about the so-called swing voter? There's someone without any basic guiding sense of who they are politically, they often make up their minds who to vote for the weekend before the election. Whoever scares them less is the party likely to get their vote. Am I justified in calling them "mushy"?

I would expect that this commission has to come up with ideas that are politically palatable, and if they use a bit of progressive thinking, then they can be lived with by all sides. I've listed some here:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=9021996&mesg_id=9029588

Your claim about what they can and cannot look into will sound like, "But Officer, you stopped me for speeding, you have no right to bust me for that bag of weed sitting on the passenger seat!" This commission's going to get in the trunk, too.

[pattmarty]

64. I'm only going to type this once, so pay attention: Raise the cap..............

.............and tax investment income. I'll let your highness figure how the "mix" should be or how much to raise the cap or at what level to tax "investment" income.

[customerserviceguy]

65. Both need to be done

but they're only part of the solution. Any raise in the wage base will increase the maximum monthly benefit paid, without doing squat for people who make working class incomes. That's why I advocate letting the sky be the limit for the employer share, if some stupid corporation wants to overpay some fatcat, then let them help solve the Social Security liquidity crisis in the process.

That said, if you add investment income into the mix of what's taxed, do you also raise the monthly benefit maximum, as well? And what constitutes 'investment income', is it merely bank account interest and stock dividends, or is it money taken from a person's IRA and/or 401K?

[sabrina 1]

69. The commission is illigitimate, it has already been discredited

It has only one economist on it, the rest are people who in no way are qualified to make decisions on Fiscal matters, most of them having political agendas.

So I don't know what you mean by having to find a 'middle' with them.

We don't need more of this mythical 'middle'. We need people to take a stand for what is right and forget all this ridiculous labels such as lef, right, middle etc. They are meaningless to the general public and their interests. Best left to the moronic operatives in DC who quite frankly are among the least likely people to be able to solve anything, as they have proven over and over again.

[elocs]

2. By 2037 this baby boomer will be 85 years old. Do some people believe boomers will live forever?

In the 2030s and 2040s the baby boomers will be dying off.

It's like my new high school was packed the first year it opened when I was a sophomore and it was a 2 year high school (grades 10-12). Poor planning? No. They knew after the baby boomers graduated high school that the enrollment would start to decline.

My graduating class of 1970 was 575 and in 2010 the graduating class was 340. Big difference. In fact today the classes are so small that for many years my high school, which opened up in 1968 and was packed, has been a 4 year high school with fewer students than it had as a 3 year school in 1968.

Time will take care of the baby boomers burden on Social Security and me along with them.

[customerserviceguy]

15. They're going to live for quite some time

Even if there are some who cannot afford it, we have the most advanced means of prolonging life in the history of the planet. That's got to extend the payout period for quite a bit longer than was envisioned in 1935.

In any case, that shrinkage in the graduating class that you observed was part of the problem. There will be less people, probably making lower wages, than the generation that supported the folks who collected SS for the last 75 years. We will soon have two workers supporting one retiree. Now, look at the FICA deductions on your next check, do the multiplication needed to make that a monthly sum, and ask yourself if you could live on twice that amount. Either benefits decrease, or taxes increase, if we want to make that right.

[sabrina 1]

33. You really want to keep that 'baby boomer' scare tactic going,

despite the fact that it has been debunked over and over again. It doesn't matter whether there are less people paying into it, that has already been dealt with and I am getting really tired of explaining that to you.

Taxes will have to increase, ON THE WEALTHY. You keep repeating the same thing, over and over, and no matter how often you are corrected, you seem unable to grasp the fact that SS is solvent, the baby boomer retirement has been taken care of, and if anything needs to be done it can and will be done by raising taxes on the wealthy for one thing, and by other means such as the Government getting out of the wasteful wars, increasing the job market, investing in programs such as new energy programs, cutting the waste in the Penatagogn etc. etc.

The American people are not responsible for the deficit, they didn't cause it and no, they should not have to pay for it. That is the government's responsibility.

[customerserviceguy]

37. To you, it is a scare tactic

To me, it is a demographic reality. I guess you just have your own set of 'facts'.

I agree that taxes need to be increased, and the well-off should pay more. Letting the Bush tax cuts expire for everybody is a step in the right direction, and is probably inevitable, since it seems to be mathematically impossible to get the sixty votes needed in the Senate to pass a bill that exempts incomes under $250K.

Social Security is solvent only if you assume that the specialized Treasury securities are going to be redeemed. I don't make that assumption, you seem to have a blind faith that it will happen simply because it is the right thing to do. As I've said before, the HCR process showed me who wins in battles between the wealthy and the ordinary people.

It's interesting how you make a distinction between the American people and the government that made decisions for them. What past governments have done, we are saddled with, whether we like it or not, whether it's 'fair' or not.

[sabrina 1]

39. Social Security IS solvent. The focus has to be where the problem

is, you are focusing on where it is not. The Federal Government will have to resolve its fiscal problems. There is no assumption that the 'specialized Treasury securities are going to be redeemed'. The WILL be because if they are not, the Federal Government will collapse.

It isn't a question of 'fair' or 'blind faith because it's the right thing to do'.

It is a question of WHO pays the debt. And the wealthy know that the debt has to be paid. What the do not want to do, is pay it themselves. They want to make the American People pay for it out of their Trust Fund.

What it comes down to is, do we let them get away with forcing THEIR debt on the American people, or do we force THEM to take care of it?

I think the choice is clear. If my friend runs up a debt and she has the means to pay it herself, but decides she doesn't want to, am I going to pay it for her? No, she can take the necessary steps, sacrifice a little and pay it herself. Which she will do once she realizes she has no easy way out.

They have some nerve to try to get out of paying down the debt they ran up. And I cannot believe you are arguing to help them force it on people who had nothing to do with it, and to whom they owe enough money already without handing them more to waste.

It's like a spoiled child. You keep bailing them out, they will keep being irresponsible. If the people simply refuse to pay their debut, they WILL pay it because if they don't, THEY will lose even more than they would by finally doing what they are obligated to do.

And that is where the Democrats come in. They MUST start right now letting it be known that Congress has to forget about the SS Trust Fund as a means of letting the Federal Government off the hook. They have to do what is necessary to pay their debts, and they can. The only reason they are not doing it is because they have become so accustomed to getting the money from the American people, they assume they can do it again.

It's not complicated at all. You are complicating things by imagining that he Federal Government doesn't have the means to take care of this without dipping into SS. They have the means, they just don't like facing the reality of not having that huge fund to raid every time they have a war they want to start or whatever hare-brained ideas they get as to how they can spend OUR money. It's way past time to put a stop to this raiding of a fund that should off limits to them permanently.

[customerserviceguy]

43. All I've been telling you is that those IOU's

will not be redeemed, because they won't have to be. The commission will put together a package of tax increases and benefit cuts, a lame duck Congress will vote for it, and the President will sign it. Federal collapse averted. It's already happened this way twice.

This use of THEIR and THEM; well, to quote Pogo, "We have met the enemy, and he is us." Americans have seen the shell game that is the looting of Social Security, and they have been silent for decades, as long as they got their military spending, their tax cuts, and their social programs with creative deficit financing. Just like the previous two times, they'll take this without more than a few whimpers, as long as current beneficiaries are grandfathered in.

We'll see which one of us is right by the end of this year.

[sabrina 1]

60. Oh, I agree that's what they plan to do. I thought that is what

we were talking about and how to stop them this time ~

[customerserviceguy]

66. We will not be able to stop them

All we can hope to do is to persuade them to adopt tax increases and benefit cuts in ways that are less harmful than what the Repigs would do. We cannot possibly shape the debate if we deny there's a problem, because that doesn't help them play kick the can down the street.

[sabrina 1]

74. You realize that this has happened before. And that all the doomsday

predictions came to nothing? The bonds will be redeemed just as they always have. And the rich will have to suck it up unless the Obama administration allows them to steal from the American people. Something even the Bush administration failed to do.

[pattmarty]

54. You said it way better (and a lot more polite) than I ever could. Thx.

[sabrina 1]

58. The reality is that boomers paid for their own retirement.

What you are doing is making an assumption that the U.S. Government intends to default on its debt. That is an assumption based on nothing but scare tactics at this point.

What the rightwingers want is to make the people pay for their war spending and all the other little goodies they have wasted this borrowed money on, like the free ride tax-wise they have provided for the wealthy.

This is simply not acceptable and they KNOW IT. So, they are using scare tactics and lies to convince the American people that the problem is NOT their wasteful spending of the people's money, but SS, the baby boomers, anything they can think of, 'social security is broke' etc.

Now that all their lies and false doomsday predictions have been debunked, they resort to 'the government is going to default on its loan'. Because they are getting desperate.

Where are you coming up with this fantasy? The Government has the money to pay its debt to SS. All they have to do is to cut spending on some of their favorite hobbies like war eg.

To bad they don't want to pay their debts. They are going to have to.

What you are erroniously stating is that Treasury Bonds are worthless. If that is the case, then SS managers should stop buying them. Right now the debt is, or may be, two trillion dollars. The continuing surplus will double that by 2023. If you are correct and Treasury bonds are worthless, then we must demand that the SS surplus from now on not be used to buy Treasury Bonds. I bet if that were to happen, all of a sudden they be willing to guarantee those bonds.

[customerserviceguy]

61. This is the part I find laughable

"They are going to have to."

Just who is going to enforce this? The voters? What are we going to do, depend on Republicons?

Both parties have a fully vested interest in making sure that those IOU's never get redeemed, at least not in their lifetimes. I guarantee they will find a way to kick this down the street.

[fasttense]

44. The Baby Boomer Generation was the 1st to pay for BOTH their own retirement and their parent's

And that is why the trust fund was allowed to get so huge. Ronnie Raygun made the change in 1983. He doubled the Baby Boomer's Social Security payments. Some of the Baby Boomer's payments went to pay for their parent's social security. Some of the Baby Boomer's payments went into the trust fund to pay for their own retirement.

The trust fund is suppose to go away (except for minor fluctuations) and cover the Baby Boomer's retirement. This generation of working adults wont be paying for the Baby Boomer's Social Security retirement because the Baby Boomers have already paid for it. That's why there is almost $3 Trillion in the trust fund.

Your whole arguments is not based on fact.

You don't need to make anything right. The money is there, if the government does NOT renege on its promises.

[sabrina 1]

53. Thank you. I don't know why people on a democratic

board who know this is a rightwing lie would continue to play into it. I guess the decades of indoctrination is hard to erase, even with facts. Which is why the facts must be repeated until they completely obliterate even the memory of the rightwing propaganda.

Very well stated, thank you.

[customerserviceguy]

62. And all those mortgages secured by devalued houses

are going to be paid back, too, if the borrowers do not renege on their promises.

There's one big difference though. Mortgagors who go into foreclosure in mass numbers drive down the economy, causing deflation. Government, seeking to cover its nominal obligations by printing more money, causes inflation.

The only way those IOU's get repaid (as you would put it, the government not reneging on its promises) is by spending cuts and tax increases that cause budget surpluses, or inflating the currency. There's just no other way to do it.

[eridani]

45. The number of workers supporting each retiree is totally irrelevant

By that logic we are now all starving to death because the ratio of population to number of farmers has increased by a couple of orders of magnitude over the last 100 years. If you hadn't noticed, right we are totally incapable of consuming all we could produce, resulting in huge levels of unemployment/underemployment.

And further life expectancy for people who have already reached 65 has increased only by a few years since the 30s.

[customerserviceguy]

55. Here's where your analogy is wrong

Farmers have become far more productive over the last century, aided mainly by oil-fueled farm equipment. If they were still using horses, they'd have trouble feeding little more than their own families.

The Social Security System has been propped up by growing legions of workers in relatively well paid jobs over the years. The only problem is, we have slashed our manufacturing base, and the decent paying union jobs have been lost right along with it. In the future, we're going to have to carry those retirees with lower paying, nonunion service jobs that are considered disposable overnight.

And it isn't just the few years extra of survival, it's the fact that there are so very many baby boomer retirees, all drawing COLA'ed benefits (that didn't exist prior to the early 1970's) that will break the system again and again.

[sabrina 1]

67. Still clinging to the rightwing 'blame the baby boomers'

lie?

You have a very defeatist attitude. This country is more than capable of creating well-paying jobs for decades to come. The only reason it hasn't, is because of apathy among the American people. Now, they are angry. Politicians who do not listen and begin to start working for the people who elected them are going to lose their jobs.

You have very little faith in the American people. Bad as things may be right now, they have been much worse in the past and that is when people wake up and things get done.

Otoh, if we all had your defeatist attitude, things would turn out they way you predict. Fortunately we don't and I predict that this country will rebound, as it has many times in the past and I am not in the least worried about SS for at least 100 years, due mainly in part to the Baby Boomers who provided for their own retirement and also helped pay SS for the generation before them.

[customerserviceguy]

70. I am a baby boomer

I'm not blaming my generation for anything, other than sitting on our butts while watching past Congresses and presidents borrow our payroll taxes to spend on crap. We paid more than any other generation for that program, and we've lived to see it start to go broke just before it's our turn to collect.

Where are the well-paying jobs going to come from? Unless we are willing to create incentives for manufacturing here, and disincentives to taking it elsewhere, there's nothing but low-paid service jobs in most Americans' future.

I have some faith in the American people. I have practically none in the lobbyist-ridden monster that government has morphed into over my lifetime. Please point to a time since WWII when we've really rebounded from anything serious.

Leadership is the difference between the America that could rebound, and the America that is sated with "Dancing with the Stars". FDR had that type of skill, and I had hoped that Barack Obama would, too, but at this point, I'm pretty disenchanted. He was the one who was in effect saying, "Give me something that I can call HCR, and I'll sign it, no matter what!" He's also the one who created by executive order the commission that you're naively expecting will 'do the right thing'. Or, do you expect a lame-duck Congress to vote against whatever crap they've cobbled together?

[eridani]

71. Excuse me, but ALL industries have had huge increases in productivity over those same years

We are producing far more that we can consume. What's the solution to the problem of fewer and fewer people producing more and more stuff? Declare the surplus workers disposable human garbage and gas them, so that the rewards of increased productivity go only to the owning class?

[JDPriestly]

50. I'm 67.

when I was in my mid-50s, a couple o my friends who were a few years older than I was died. Some of them had unhealthy lifestyles. Many in my generation smoked and they were the first to go. Breast cancer was also a common cause of problems.

Then when I was in my early 60s, people a couple of years older than I, again, died. It seemed like a series of painful experiences.

Then a couple of years ago a family member around my age died. You see how it goes.

I see people in their 90s who are thankful for every day of their life. One I know well has always stressed living a very healthy life -- lots of fruits and vegetables, no alcohol, no tobacco, exercise every day.

The baby-boomer generation is not particularly healthy. And most have worked too hard outside their homes to maintain healthy diets or exercise regularly. We shall see, but I don't think that the baby boomers have the physical strength that some of the people in their 80s and 90s had when they were the ages of the baby boomers. Medicine can work more miracles today, but if your core physical strength is weak and neglected, your whole system will suffer and age more quickly.

[KansasVoter]

3. If people making over 106,000 have to keep paying then their benefits should also go up.

[customerserviceguy]

22. And under the current formula

it will happen that way. If we raise the employee wage base only modestly, yet make the employer wage base infinite, we don't have this problem.

[ipaint]

4. It's like they haven't pulled the same scam on Americans before.

1980's-

"A bipartisan commission under Alan Greenspan went to work on the numbers, while the media developed an unprecedented campaign of vilification of the elderly. On magazine covers, in cartoons and columns and on broadcast commentaries innumerable, they were depicted as hogs, vampires, sharks, gorillas and card sharps scooping up the sustenance of the young. While the investment banker Peter G. Peterson led the media legions, Greenspan fabricated a hurricane warning. Multiplying one false assumption by another (for example, he assumed that the C.P.I. would rise nearly three times as fast as it actually did rise, while his private firm was forecasting an even smaller increase), he predicted that Social Security would go bankrupt in 1983.

The scare headlines permitted Congress in early 1983 to enact a bill acclaimed in headlines as a great rescue. In addition to the previously scheduled cut of 20 percent in benefits for new retirees, it clipped six months of cost-of-living adjustment from all then and future beneficiaries, raised payroll taxes further and postponed the retirement age from 65 to 67 in phases to begin in 2002.

...The Social Security crisis of 1983 was one of the boldest hoaxes in our political and journalistic history, so effective that even today few observers are aware of it. Leaving the new rescue package aside, Social Security income and outgo were roughly in balance, as they had been since its inception. Indeed, it ended 1983 with a surplus of $21.8 billion, thanks mainly to the fact that , now that the "crisis" was no longer required, Congress quietly handed over to Social Security some of the billions that the Pentagon had long owed the system.

In short, there had been no Social Security crisis, only a crisis of bad faith and bad reporting. I have not been able to find any public analyses other than my own that challenged the hoax that year; the only ones I have seen since came long afterward in a humorous acknowledgment by Sen. Pat Moynihan (D.–N.Y.), one of the architects of the "rescue," that "there was no real danger" Social Security would go broke."


http://www.fair.org/index.php?page=1382


Pete Peterson's (same asshole as in above article) project aimed at young people advertised on MTV telling the story of piggy old people are sucking young people's life blood bullshit-


The Recent Crisis

We’ve all heard about the recession and how we need some thoughtfully targeted government spending to get back on track.

This spending will have the effect of raising our debt in the short term, but if done responsibly, the payoff will be worth it.

Our Current Debt

New government spending aside, the U.S. is already burdened with a nearly $11 trillion national debt!

This consists of money the government borrows from the public in the form of US Treasury bills and savings bonds, plus money that the government borrows from itself - i.e., money it takes from one pot to spend on another.

Other Obligations

The government has other financial commitments. The biggest by far are its promised payouts in Social Security and Medicare benefits, totaling nearly $43 trillion.

http://www.indebted.com/get-informed/government/

Funny I don't see anything about a massively bloated pentagon or 30 years of unfunded tax cuts to the elite.



"There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again." —President George W. Bush, Nashville, Tenn., Sept. 17, 2002


Are we really going to be a nation of citizens as stupid as Bush. Are folks now going to accept and, in some particularly gullible cases, defend the same bad policy and outright lies that screwed us over 30 years ago?

Same playbook, same phony crisis, same players and ultimately the same heist of taxpayer wealth by the top 1%.

[sabrina 1]

14. Wow, thank you for that article. I have also read that it was

Greenspan who made SS checks taxable. How did they get away with these things? Maybe because there was no Internet, or Jon Stewart back then.

I hope people are more aware now than they were then and less likely to fall for the lies. The reaction to Alan Simpson eg, has been mostly very negative.

What I am afraid of is that the scheme to cut benefits and eventually privatize SS (private savings accounts invested in the Market) is already a done deal. And that is why Dems are not out there screaming about the proposals we've already seen from this Commission.

Just like the HC debacle.

[customerserviceguy]

23. So, if taxes had not been raised, and benefits had not been cut

by the 1983 law (I remember it well, I was an Enrolled Agent at that time) instead of just this last month, how much earlier do you think that the monthly outflows for Social Security would have exceeded the inflows?

By my reckoning, if it had not happened in the remainder of the early 1980's recession, then it surely would have happened in the recession that caused Bill Clinton to defeat Poppy Bush.

[TheFarseer]

5. 5 is not entirely true

I'm not sure which president started combining Social Security money and money from the general fun to make the budget deficit appear smaller. This can be done until 2037 when SS is not longer projected to run a surplus. So in actuality, Social Security *reduces* the budget deficit. At least, this is my understanding of the situation.

[Recursion]

6. Oddly enough, SS adds to the debt when it's in surplus for the year,

and subtracts from the debt when SS itself is in deficit for the year.

Here's what I mean:

Let's say in 2005 social security was supposed to pay out 1 billion dollars to recipients (I'm just totally making up numbers here). But it took in 2 billion dollars from our FICA levies. That makes Social Security in surplus, this year, for 1 billion dollars. So what does it do with that money? It buys treasury bonds. Every dollar of a treasury bond is a dollar of US debt. So the debt just increased by 1 billion dollars. This isn't line-itemed on any particular year's budget, so this is debt that was never part of a budget deficit. The money, which was transferred from SS to the Treasury in exchange for bonds, now just kind of magically appears in the Federal budget as revenue -- without having an offsetting deficit entered on the books this year (you can blame, to different degrees, both LBJ and Reagan for this).

By contrast, this year, let's say 1 billion dollars were paid out but only 500 million dollars were taken in from FICA levies. Now Social Security has to redeem 500 million dollars worth of the bonds. This money has to come from the treasury, and becomes an item in the budget this year. And that 500 million makes the debt decrease by 500 million.

So, every year that SS takes in more than it pays out, the debt goes up and the Federal government gets an infusion of cash into its budget that year. Every year SS pays out more than it takes in, the debt goes down and the Federal government has to pay that amount out of the general budget.

Like it or not, redeeming the bonds in the trust fund will either add to the deficit, require an increase in taxes, or require a cut in spending. It's just math.

[sabrina 1]

8. I think it has been acknowledged that taxes will be have to be

raised mainly on the wealthy and that is why they are pushing for cuts, they do not want to pay more taxes.

But, what if the deficit is dealt with, which is what most economists state needs to be done, without touching SS which is not the reason for the deficit. Even if what you say is true, it is only true because there is a deficit. What if there wasn't?

James Galbraith addressed before the Commission. I don't have a link handy right now but will post it later.

[Recursion]

10. Except through the magic of politcal language, payroll levies are not "taxes"

When we talk about removing the cap, we aren't technically calling for a "tax increase", we're calling for payroll levies to be taken from all income, not just the first 100K of income. This is a levy increase but not a "tax" increase, for reasons lost in political history.

But, yes, we could either levy from all income for social security, in which case SS would not have to redeem the bonds in the trust fund because it would again be taking in more than it paid out, or we could raise taxes to redeem the bonds. In that case, we would time it so that we roughly ran out of trust fund around the time the last Boomer died. Then we could lower taxes again and just build up another trust fund because there would be a lot more Millenials paying in than there would be Xers in retirement. And we'd have to revisit the whole thing again when the Millenials hit 67.

Option 1 seems better on its face, though there are political problems with it (it essentially makes SS a welfare program, which then becomes easier politically to cut).

[sabrina 1]

20. Well then, the language needs to be clearer.

We could and hopefully will since we have a Dem majority and WH, let the Bush tax cuts for the wealthy expire eg.

And profits from all their investments etc, their big bonuses eg, should be taxed as highly as possible. That would be one way of getting back the money they stole. I think it would be very popular to tax the wealthy right now so no political risk for Democrats.

[ProgressiveEconomist]

9. Excellent, crystal-clear post. Alan Greenspan's genius as chair of Reagan's Social Security

Commission was to avoid giving SSA any ability to manage assets other than non-publicly-tradable Treasury Bonds.

Greenspan knew that the FICA payroll tax hikes he engineered would generate trillions of dollars in unified Federal budget "surpluses" thar Republicans could squander on decades of income tax "cuts" for the very wealthy, wars, and "defense" waste. SSA would have no portfolio of publicly tradable T-bonds and cash to manage like a Sovereign Wealth Fund. SSA would just have to wait decades for the FICA cash flow to turn negative, and then depend on Congress to tax or borrow to pay back Baby Boomers.

But Congress has another option when the FICA flow turns negative: cut benefits rather than draw down the "Trust Fund". This option will make Social Security seem healthier and healthier as Boomers are deprived of more and more of the retirement benefits they expect and have more than paid for.

In addition, past Congressional use of regressive FICA revenues for Republican spending and "tax cut" priorities wiill have fulfilled a major goal of Greenspan's--seeing to it that the poor and middle classes paid more and more of the tax burden as the wealthy paid less and less.

What a brilliant Reagan-Greenspan scheme. And millions of Boomers who may be fleeced by it voted for Reagan twice, still regard him as a saint, and never will realize just what their hero did to them.

[Recursion]

12. "avoid giving SSA any ability to manage assets other than non-publicly-tradable Treasury Bonds."

Wow. I'd never thought of it that way, but that makes perfect sense. Greenspan wanted the clout of a SWF at his disposal without its having any independence.

[ProgressiveEconomist]

16. As I understand it, the Greenspan Commission simply kept in place the FICA cash-flow

system that had been set up in the 30s, when the goal was to raise jusit enough in payroll taxes each year to pay out benefits that same year.

27 years later, it seems pretty obvious that a short-term cash flow system was highly inappropriate for an agency that would run long-term surpluses of trillions of dollars. I don't know for sure whether the Greenspan Commission considered this problem explicitly. But IMO someone must have.

[ipaint]

11. Social security has nothing to do with our current bloated deficit.

That honor lies with the elite, the top 1%'ers who have hoarded profits from worker productivity, given themselves massive tax cuts and carried on two large and unnecessary wars in the last 2-3 decades. If people honestly are concerned about the deficit go where the stolen money is, at the top.

"It is ironic — and infuriating — to have a debate in 2010 about Social Security when that program had nothing to do with the transformation of the nation’s fiscal policy from surplus to deficit since 2000. Two wars, Bush tax cuts, and the fiscal consequences of the economic crash of 2008-9 explain the size of the deficit. Why are we even talking about reducing Social Security at this time? It is not because there is a good rationale, but because of the money behind the rationalizers of a smaller government."

http://www.newdeal20.org/2010/06/15/a-brief-history-of-attacks-on-social-security-12412/



Social security is not in crisis. The top 1% doesn't want to pay back what they stole so they've decided to re-use a past scary fable probably because it worked the last time.

70's, 80's, 90's, 2000's and now 2010- same old lies.


A Brief History of Attacks on Social Security
http://www.newdeal20.org/2010/06/15/a-brief-history-of-attacks-on-social-security-12412/

[Recursion]

13. Deficit, no, not yet. Debt, yes, by definition.

It will have a lot of effect on the deficit (or taxes, or other government spending) when it starts redeeming those bonds.

Social security is not in crisis. The top 1% doesn't want to pay back what they stole

I don't know about you, but I call that a crisis.

[sabrina 1]

17. No, it's not a crisis.

Unless we decide once again to bail them out. And let the 'lesser people' and the 'old geezers' pay the debt.

And that is what this fight is going to be about, unless it's already a done deal, behind closed doors and if that is the case, it will be the end of this administration's chances of being reelected for one thing. And maybe the start of a whole new kind of politics where the people finally realize that they have to get involved or get robbed over and over again.

[ipaint]

18. Not if we let the tax cuts on the wealthy expire and add a little extra

for good measure. End both wars and we are pretty much there.

It's not a crisis of worker's social security it's a crisis of the top 1%'ers.

Too bad for them.

Unless of course we are going to tell this list of countries we can't honor our obligations-

http://www.ustreas.gov/tic/mfh.txt


Smoke, mirrors and mushroom clouds. Repeat it often enough and people believe it. Same old same old.

[sabrina 1]

38. Exactly!

Smoke, mirrors and mushroom clouds. Repeat it often enough and people believe it. Same old same old.

It's simple. They ran up the debt with their wars and investments in the Market etc. and they don't want to have to pay their debts. They want to take the money from the American Workers' retirement fund.

If anything, there is enough money in the fund right now to raise SS payments to retirees and those on disabiltiy. It is shameful that they are trying to take that money so they can continue to spend without paying their bills far into the future. The only thing that would be accomplished by cutting benefits is to provide them with more money to spend, and they would do so.

[sabrina 1]

40. I share your frustration that people refuse to accept the fact

that we should not even be talking about SS right now. It's so simple to understand and you have done a great job of making it clear.

If people don't get it it can only be because they are so deeply indoctrinated into tying the SS trust fund to the Federal Government that they simply cannot be programmed, or they don't want to get it for reasons unknown.

[sabrina 1]

48. You are leaving out one important fact.

When SS buys bonds from the treasury, as you yourself said 'it magically appears in the Federal Budget as revenue'.

If the Federal Government decides to use that 'revenue' that is not the fault of SS. Like any other entity, the Fed. Gov. has to be responsible about its debts. This could be fixed by passing a law that the Fed. Gov. cannot get around the law already in place, and use that money for their wars etc.

But regardless, this is the problem, the irresponsibilty of the Fed. Gov. has zero to do with SS. And it is THEIR problem and that is what this Commission ought to be working on.

Cutting American workers benefits will increase the Trust Fund, which even according to your calculations, would increase the debt encouraging the Feds to continue to be irresponsible.

You really make the case for not cutting benefits in fact it would probably be more practical to raise benefits right now. But since the SS system is responsible, that would not be a good idea for the future right now.

[Recursion]

49. Hey, I'm all for raising benefits and lowering the retirement age

I think those would both be hugely stimulative.

But no matter whose fault it is, the Federal government's spending habits will have to change, or we will incur deficits that make the past few years look like child's play.

[customerserviceguy]

63. From the above

Can I conclude that you favor a Balanced Budget Amendment to the Constitution? That's the only way we're going to get, in your words, "a law that the Fed. Gov. cannot get around the law already in place, and use that money for their wars etc."

But, then, that's a right wing idea, now isn't it?

[sabrina 1]

7. Here's some information on that, although I'm not sure if it's

completely accurate either. It claims that it was President Johnson who 'combined' the two funds, but doesn't claim the money from the Trust Fund was used to cover other budgetary expenses. If I'm reading it right:

MYTHS AND MISINFORMATION ABOUT SOCIAL SECURITY- Part 2

Q1. Which political party took Social Security from the independent trust fund and put it into the general fund so that Congress could spend it?

A1: There has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government. The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."

Most likely this question 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 effect on the actual operations of the Trust Fund itself.

However, this is another article which does acknowledge that the Trust Funds, backed by U.S. bonds, can be used by the Government, eg, in times of War. Scroll down to Criticism of the Fund's Validity

Social Security Administration

[customerserviceguy]

19. I'll give you #5, but only conditionally

The way that Social Security surpluses have been borrowed/stolen for the last 40 years enables that sort of creative accounting to continue as long as more is taken in than is spent on retirees. We stopped doing that a month ago, but a few more tax increases and benefit reductions, and it will be happy days for congresscritters looking to either spend more or tax less in the general budget.

As for #1, if we don't get out of this recession soon, we won't have any more money to pile up in IOU's in a dusty drawer at the Social Security Administration. There's no way we're going to hit $4.6 trillion of that Monopoly money in thirteen years, even if there's no more recessions. It just isn't possible, given the demographics of the payouts that will need to be made for baby boomers starting to retire at full benefits in just a bit over four months.

Coming to #2, comparing life expectancy at birth in 1935 and 2010 is a fallacy. If you compare life expectancy at age 65 for people who attained that age in those two years, then you see that today's 65 year old will live about four or five years longer than the great-grandparent who turned 65 in the middle of the Depression, when medical services were relatively hard to come by.

With #3, I do agree that tax increases are needed to solve the problem, but if we increase the wage base, we increase the amount of maximum benefit that a retiree can have per month. Of course, that benefits the well-off, doing nothing for those who will be below the current wage base from now until retirement. If we increased the wage base modestly, but said that the sky's the limit on the employer share, then all of the well-paid folks would only see a modest increase in what they take from the system, but their foolish employers will pay through the nose to overpay them for work that they're probably not worth in the first place.

As to #4, the securities in the Social Security Trust Fund are indeed Treasury securities, but they're a special type of instrument. They're not negotiable on the open market, like a conventional Treasury bill or note, and only Congress can decree when to redeem them. Like you, I'm glad that they aren't invested in the stock market, but they're not too different from the promissory notes and mortgages secured by houses that are worth far less than the nominal value of the notes. Yes, the Federal government has generally paid these back (excepting some time during the Depression) but they do so by borrowing more money to redeem the securities that are presented for payment.

You're right about what your friend's mother told you from the 70's, the only reason SS didn't go broke then is because Jimmy Carter made it his mission to save the system by any means possible, and that was with tax increases and benefit cuts. It's going to happen again, the only thing that remains to be sorted out is if it will be in a fair an equitable way, or will the Rethugs simply write the law to their satisfaction?

[sabrina 1]

24. I don't have time to answer you post in its entirety right now, have

to run for awhile. However, I believe you are wrong about Jimmy Carter being responsible for tax increases and benefit cuts. I just posted some information addressing these claims as to which party or president was responsible for the various 'fixes' of SS.

I will check it out later, but airc, it was Greenspan who proposed and got passed the law taxing SS benefits during the Reagan administration.

Bbl, have to run for now, but you might want to check my link above if you like.

[customerserviceguy]

27. Here's a link from Time Magazine of that era

It's from May of 1977, not long after Jimmy Carter took office.

http://www.time.com/time/magazine/article/0,9171,918946,00.html

Further searching will show you that he managed to get a law passed that caused the wage base to increase rapidly, and it shoved the FICA tax upwards, too. There were benefit cuts, as well.

Admittedly, it was only a temporary fix, and the very next recession necessitated the Greenspan Commission package of tax increases and spending cuts that were approved by a Democratic Congress. It's the way that the government has always dealt with the faulty accounting that went into the assumptions about Social Security.

[girl gone mad]

46. "The way that Social Security surpluses have been borrowed/stolen.."

Nothing was stolen.

This isn't really all that complicated, so I don't know why people struggle so much to accept it.

Our currency is fiat. It would be completely senseless for the government to "store up" or save its own fiat currency in one account while borrowing (especially from foreign investors) to spend on other purposes at the same time. There's just no good reason to do something that dumb, but there are plenty of good reasons to move the surplus onto the general federal budget in exchange for special issue bonds.

[customerserviceguy]

56. If those IOU's never get repaid

because the present and future generations of congresscritters play kick the can, then what's the difference between borrowed and stolen?

[girl gone mad]

72. There is no chance that the government will default on these bonds..

or any other bonds.

Quite literally, the chance of default is 0%.

[sabrina 1]

75. Thank you, some people simply do not want to face that fact for

whatever reason.

[underpants]

25. Top notch post

thanks.

[RC]

26. The original source for the OP is

http://pol.moveon.org/ssmyths/?id=22141-10137622-SIb6ezx&t=1
Top 5 Social Security Myths
http://www.moveon.org/

[sabrina 1]

41. Thank you. It is too late for me to put it in the OP but

I appreciate your posting it here.

[ipaint]

28. The truth.

"Because of population growth, rising life expectancy does not create a Malthusian dilemma. In fact, the ratio of beneficiaries to covered workers is projected to level off after the Baby Boomer retirement.

Similarly, Social Security outlays are projected to level off -- not spiral upward like health care costs.

This isn’t to say that Social Security costs won’t increase, but this increase is manageable—on the order of 1.5% of GDP. And because Social Security is currently running a surplus, the 75-year shortfall is much smaller—around 0.7% of GDP according to the Social Security actuaries, and even less according to the Congressional Budget Office.

The Center on Budget and Policy Priorities points out that this is about the same as the cost of extending the Bush tax cuts for people making over $250,000 a year."

http://www.epi.org/analysis_and_opinion/entry/social_security_is_sustainable/


We are back to the top 1%'ers not wanting to have their taxes raised to pay back what they used for tax cuts and wars in order that the government can make good on it's obligations to all American workers, especially the baby boomers who have paid extra in planning for this.

I'm sorry the wealth at the top are having another panic attack because they have to turn over some of the ill gotten gains of the past 30 years. oh well.

All I can say to the top 1% and their bought and paid for politicians is keep shredding the social contract and rule of law. At some point the tables will turn. It won't be pretty.

[ipaint]

30. "Worthless" iou's

Why do some people describe the "special issue" securities held by the trust funds as worthless IOUs? What is SSA's reaction to this criticism?


As stated above, money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash, some people see the current increase in the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future. Without legislation to restore long-range solvency of the trust funds, redemption of long-term securities prior to maturity would be necessary.

Far from being "worthless IOUs," the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government.

Many options are being considered to restore long-range trust fund solvency. These options are being considered now, over 25 years in advance of the year the funds are likely to be exhausted. It is thus likely that legislation will be enacted to restore long-term solvency, making it unlikely that the trust funds' securities will need to be redeemed on a large scale prior to maturity.



Can the Social Security Trust Funds remain solvent without making changes to the program?


In the annual Trustees Report, projections are made under three alternative sets of economic and demographic assumptions. Under one of these sets (labeled "Low Cost") the trust funds remain solvent for the next 75 years. Under the other two sets (the "Intermediate" and "High Cost"), the trust funds become depleted within the next 30 years. The intermediate assumptions reflect the Trustees' best estimate of future experience.

The Trustees believe that extensive public discussion and analysis of the long-range financing problems of the Social Security program are essential in developing broad support for changes to restore the long-range balance of the program.



Were the assets of the Social Security Trust Funds depleted in the past?


The assets of the larger trust fund (OASI), from which retirement benefits are paid, were nearly depleted in 1982. No beneficiary was shortchanged because the Congress enacted temporary emergency legislation that permitted borrowing from other Federal trust funds and then later enacted legislation to strengthen OASI Trust Fund financing. The borrowed amounts were repaid with interest within 4 years.

http://www.ssa.gov/OACT/ProgData/fundFAQ.html#n2

[customerserviceguy]

57. I'm sure that Bernie Madoff issued some interesting reports as well

I don't trust the Social Security Administration, when it has a clear interest in covering it's own ass.

[sabrina 1]

36. Excellent point made in your first two paragraphs.

It's worth repeating because it completely debunks the 'baby boomer' lie:

"Because of population growth, rising life expectancy does not create a Malthusian dilemma. In fact, the ratio of beneficiaries to covered workers is projected to level off after the Baby Boomer retirement.

Similarly, Social Security outlays are projected to level off -- not spiral upward like health care costs.

[laughingliberal]

73. +1000 nt

[tammywammy]

29. So, according to #1, we should do something to make sure it's paying out 100% in 2037

I'm all for raising the cap.

[Recursion]

31. Raising wages is another good way to do that

And given the choice (if it were somehow either-or, which I don't think it is), I'd prefer doing it through wage increases.

[sabrina 1]

42. Tax the wealthy. Create jobs and make them secure.

Stop invading other people's countries. Close some of the military bases we have all over the world. And definitely end the Bush tax cuts for the wealthy.

Start a real jobs program, spend the money we spend on wars on rebuilding the country's infrastructure before more bridges start collapsing.

Someone suggested putting a teacher's aid in every classroom which would put people to work and train them for future employment. Increase the legalization of immigrants already working here. All these things would increase the number of people paying into the system.

[pnorman]

32. I forgot to bookmark that when it first appeared here on DU.

THANKS!

[HomerRamone]

51. Raising the payroll tax limit will be "off the table"--"we don't have the votes"

Remember the Public Option?

[sabrina 1]

68. Yes, that is what people are afraid of. That the deal is already

done as it was with HC. I hope not, but it is a very good possibility.