Social Security and the Deficit

[Angry Dragon]

I need someone to explain to me what Social Security has to do with the deficit.
One has to do with payroll deductions and the other has to do with taxes.
I do not see the connetion

[MichiganVote]

1. It has nothing to do with the deficit, teh military, welfare,education spending or any other

government fund.

[SharonAnn]

2. There is no connection. Social Security pays for itself. It has a nearly $2 trillion surplus.

It is not funded out of the General Revenue nor is it funded out of the deficit.

Social Security pays for itself! It has a huge surplus!

Why does Wall Street want to privatize it? So they can get their hands on it and siphon off fees.

It's the last pot of money that there is!

[Yo_Mama]

6. Uh, you're wrong

Right now part of OASDI is funded out of the general fund, because the taxes coming in are less than the benefits and expenses going out.

There is no pool of assets other than the general fund with which to pay Social Security and Medicare.

[madokie]

10. show me a link to that

talking out your ass isn't going to cut it here

[Yo_Mama]

13. Here's your link - you'll be sorry

It's not light reading, and it is a pdf from the US government, Treasury Dept, all official like.
http://fms.treas.gov/mts/mts0910.pdf

That is the link to the Monthly Treasury Statement for September 2010. Not only is that the most recent, but Sept is the end of the fiscal year for the US government, so this is a great one to use. You get the fiscal year totals as well as the monthly income/outgo.

You can see taxes collected and benefits paid.

See page 16 for the payments out.
You see that FY 2010 OAS payments plus expenses were 579.9 billion, and DI was 126.4 billion, so a total of about 721 billion.

On page 6 they list payments in.
You see FY 2010 receipts (ignoring the subtraction for prior year) was 559.4 billion, and DI receipts were almost 95 billion, for a total income of 654.4 billion.

The deficit isn't as bad as it appears, because really the federal government owes their employee portion. They just don't bother to pay it, but they really owe it. To find that number, go to page 17 and look at the "Undistributed Offsetting Receipts", and you'll see that the Federal employer contributions are nearly 15 billion more.

Anyway, that takes us to receipts of about 670 billion, and payments out of about 720 billion.

Then there are taxes on social security benefits, which aren't much, but are supposed to be applied to the account. Still, the recession has dragged down wages and made a lot of people retire earlier, so Social Security/Disability is running at a deficit now and will be for at least a couple more years.

Even if it gets back marginally positive in 2014/2015, it will promptly go negative again and never be positive again for about another 45 years, based on current projections.

The whole Trust Fund thing is an accounting mechanism that has legal validity, but that's all it is. All the money paid in to SSA is paid out or given to the Federal Government each year.

In fact, if tomorrow the US Congress passed a resolution repudiating the Social Security and Medicare Treasury bonds, it would not change one thing about US fiscal balance. What happens now is that when the payments in are less than the payments out (and Medicare has been negative for a while), the SSA and/or CMS takes some of their "special bonds" and goes to the general fund and gets money. And if those bonds did not exist, they would do exactly the same thing.

And the "interest" on those bonds? It is given back to the general fund each year. There are no separate pools of assets used to pay benefits in these programs.

Legally, when the "Trust Funds" run dry, then benefits will be cut. But in fact we are reliant upon borrowing money or raising taxes to pay these benefits when the program receipts do not cover expenses. And since US debt appears to be getting to default levels about 2020 (90-100% of GDP), it appears that either an awful lot of other expenditures must be cut to pay these benefits, or taxes must be raised, or some combination of both. Because sometime between 2018 and 2021, other countries won't buy our debt any more, and at that point we will be like Italy is now - we will have to run a primary budget surplus (income must be higher than outgo less interest payments) or we won't even be able to roll our debt, and if that ever happens benefits will be cut.

[JDPriestly]

17. Baby boomers paid extra into the fund for years in order to insure

that money would be there for them when they retire. Bush transferred a lot of government money to people via the war in Iraq. That was probably one of the reasons for the war. It was a cover for stealing money from the U.S. government and transferring it to friends of the Bush's and the Cheney's like Halliburton.

[Greyhound]

19. This is a record of the transactions and conforms to te accounting procedures followed by Treasury,

it is not a declaration of assets. There are $2.2T in U.S. Treasury bonds held by the SSA. These are exactly the same instruments that Japan, England, Russia, China, India, etc. hold. The fiction of a SS "crisis" is all about one thing, Wall Street wants that $$$, beginning, middle, and end of story.

The construction of the lie is going to get more elaborate as they meet more and more resistance to their looting, so we will have to be more and more watchful.

[Yo_Mama]

35. You said Social Security Doesn't Add To The Deficit

I come from a banking background, and those are assets only as long as we make sure that there is money in the general fund to pay them. Assets to bankers are loans, that is true. And loans go bad all the time. And when they go bad, you ask the question "Am I first in line? Does the creditor have assets I can legally seize in repayment?" When the answer is no, that asset is no longer carried on the book as an asset.
The link I just gave you showed you are wrong.

That is an accounting of the federal incomes/outflows month by month, and since Social Security takes in less than it pays out, it adds to the deficit.

When Social Security needs extra money to pay benefits, it goes to the government and says "give me money" and the government does. That's how it adds to the deficit. There is no other pool of funds from which SSA gets money to pay benefits.

In the past, Social Security has been a source of extra revenue, but no more.

[Bluesbreaker]

38. It's not a social security problem

Social Security does not take in less than it pays out. That won't happen until 2037. It's a fiscal management problem. Because Congress and the White House borrow from the general fund (and SS) to fund wars, corporate welfare, bailouts of too big to fail banks, etc., that doesn't point to a flaw in social security.

Prudent fiscal management (not borrowing from SS) will keep social security solvent. The funds have been paid in by the beneficiaries are sufficient to last another 27 years. Yes, all money in the treasury general fund is fungible, but that is no excuse. We have to insist that Congress and the president manage general fund revenues prudently.

Funds invested in SS at expenditures at the anticipated level will enable the SS trust fund to remain solvent at least until 2037, if they aren't stolen to pay for other expenditures. There are a lot of other programs (e.g. Medicare and Medicaid) and expenditures (Wars!)that threaten to explode the deficit in the near future. This is where the attention should be, not on SS, which is running a surplus.

[madokie]

23. As I thought

You lose...

[JDPriestly]

16. You, too, are not quite accurate, Yo_Mama

The government receives the Social Security payroll deductions and places them in a separate fund managed by a special department and then buys U.S. government bonds with the money in that special fund.

The Social Security money is part of the overall debt that the federal government owes, and this part of it is owed to seniors. It's owed to American seniors in the same way that U.S. bonds that were purchased, say by the Chinese or Saudi Arabian governments or a bank are owed to the respective purchasers.

It's just that some people want the U.S. to default on the debts owed to seniors. That is what the controversy is about. It is about whether the federal government should default on debt to its elderly, to its most helpless and vulnerable citizens. That is what it is about.

A lot of rich people would like the Social Security system to disintegrate. They want the American people to lose faith in their government. That is why Social Security is under attack right now.

[Angry Dragon]

3. Reply to #1 &#2

That is what I thought.
So anyone trying to take out of Social Security
is breaking a contract. It should be crime.

Robbing Peter to pay Paul then??

[Samantha]

9. Of the 11.5 trillion dollars we were in debt when Bush* left office

2.5 Trillion of that 11.5 was the Treasury Notes which secure the surplus which the Government has "borrowed" for its wars, etc. Ben Bernanke said in a recent Senate hearing the act itself could be repealed. My jaw dropped -- even if someone in Government thought that, they would have to be a fool to say it live on television during a Senate hearing.

Then I thought some more and realizing that the percentage of interest the United States pays on its debts goes up the more we owe, if Social Security were literally repealed and disappeared tomorrow, it would save the U.S. Government a lot in interest via lower rates on the remaining debt(not to mention not having to repaying that surplus) because 2.5 trillion dollars of our debt would evaporate.

The true reason though you hear people say Social Security is broke is that those people represent the interests of Corporate America, which has complained as long as I can remember about having to pay the payroll tax, along with health insurance, vacation pay, sick leave, and other expenses on employees. When a company employs you in other than a contract position, and you have benefits, you pay a certain amount in Social Security tax and the company has to match it (the minimum amount required). Currently, I believe the combined rate for Social Security and Medicare is 15%, which is what corporations want eliminated, well, their half.

Social Security is not broken. It was reformed in the early 80s to prepare for the Baby Boomer's retirement; thus, the retirement age was raised, the surplus started to accrue, you get the idea. It is good to go for another few decades at which point it will only be able to pay about 75% of the promised benefits to those retiring at that point. That is why many say it can be fixed for generations to follow by simply raising the cap.

I hope this info helps.

Sam

[Angry Dragon]

12. Samantha ..... Thank You

I have read and heard this all before, but it never hurts to hear it again:hi: :hi:
What I was having trouble understanding is the idiots talking about lowering taxes and
cutting the deficit and figuring by playing with SS would lower taxes and the deficit.
Only if they screw the American people. If it comes out that way I think we should class action anyone
that votes for it and charge them with breach of contract.

[JDPriestly]

18. Human start to deteriorate at a certain point.

When that point is reached differs from person to person.

But about 50% of the population has a fairly serious if not very serious disability by the time they are 65 years old -- diabetes (which brings a lot of serious problems), arthritis (which slows you down and may cause pain and make you irritable), poor eyesight, deafness, a broken hip or bad knees or a bad back, cancer, lung diseases . . . . There are so many variations it is incredible.

While many of us would like to work until 70, and in a good economy would even be employable at last part-time, there is just no way that most of us can get jobs in this lousy labor market. No way. So if we did not have Social Security, we would either die from starvation or have to go on welfare, assuming that welfare would exist.

Bernanke can say what he wants about ending Social Security, but it is not going to happen -- because it would mean death for a lot of people's parents and grandparents. We just have not become that brutal a society. Bernanke may be a very brutal man, but most Americans are not.

And don't tell us seniors that we were supposed to save money. There is no way to get income from money right now. The banks pay virtually no interest. The stock market is a fool's gamble what with the big guys trading with computers and eyeing every profitable stock like vultures their prey. Telling seniors to live from their savings equals telling them to die quicker. Just another version of it. That is because seniors would have to live on their principle since there is virtually no income to be earned on savings or investments -- not on the relatively small amounts that most people are able to save over their lifetimes.

The easiest way for the U.S. government to save money is to start closing some of the 740 bases that the government has overseas -- yes, outside the US we have about 740, probably more military bases. There are only 192 nations in the U.N. That is what Chalmers Johnson states in his book, Dismantling the Empire.

[Enthusiast]

21. Great post.

Like there is some sort of legitimate justification for 740 military bases and our level of military spending.

[JDPriestly]

27. Actually, rereading it, I am embarrassed by the typos and misspellings.

But it is still true as to its content.

It's principal, not principle. I think I was tired when I typed it.

[JDPriestly]

30. Actually, rereading it, I am embarrassed by the typos and misspellings.

But it is still true as to its content.

[Enthusiast]

39. Content is what counts. nt

[Samantha]

36. I believe we will return to circumstances pre-Social Security

described as "America's Shame" when many elderly people were dying of lack of medical care and/or starvation. I believe we have already started down that road.

I wish I could be as optimistic as you and assure myself it is not going to happen, but I do not think the Republicans would care at all (many of them) if it did happen, and some conservative Dems are not too far behind them. I do not know if there is sufficient political will to indeed lash out and protect Social Security as we know it. I have privately thought many times (just my cynicism kicking in here, no links)that the goal is to lower benefits paid by Social Security while raising the cost of Medicare, ending up in a "wipe-out" so to speak of any real disposable income for seniors. In other words, their remaining Social Security benefit would be just enough to cover their health costs (but little or nothing else).

Starve the beast has always been the Republicans' private goal, with the beast being defined as the Federal Government, but more specifically the entitlements paid out by it that many oppose (and the Corporations wish to contribute zero to this, preferring to move those funds into their profit coffers).

I sincerely hope you are right and I am wrong, but nothing surprises me anymore.

Sam

[Enthusiast]

40. An Iran War would effectively

"starve the beast". I think that is exactly what the GOP/fascists have in mind. I mean, we invaded two nations that border Iran already. It's as if we are trying to provoke a military incident-long history of that sort of thing.

[freethought]

4. Social Security is solvent until 2037

Some reasonable tweaks could fix that for the longer term. Medicare is actually a bigger problem.

[Kablooie]

37. That doesn't mean that the right will not try to destroy it.

Facts have no value to Republicanc.

[stevebreeze]

5. In 1983 Reagan and Greenspan initiated changes in SS

it went from strictly pay as you go to pre-paid fir baby boomers. We the people have been OVERPAYING for the past 27 years. This amounts to the 2 trillion$'s in trust fund. All this money is kept in US Treasury bonds. To not pay SS in the amounts promised would be the greatest theft of taxpayer dollars in the history of the US.

[laughingliberal]

7. +1,000,000 nt

[slipslidingaway]

11. Exactly! n/t

[Oilwellian]

14. I remember Reagan's increased payroll taxes as well

They took a huge chunk out of our tight budget at the time.

Bush's tax cuts gave the elites that $2 trillion and now it's time for them to pay it back.

[JDPriestly]

20. Prior to the French Revolution, the French monarchy

failed to pay its debts several times. It meddled in all kinds of foreign adventures including our Revolutionary War (on our side against the British). The French nobility gambled and lived in magnificent style and, of course, did not pay its fair share in taxes.

When the French were starving, the middle class which was succumbing to the economic chaos and high taxes on it revolted, and the starving masses followed the revolt. Thanks to the enlightenment mentality that in part inspired the French revolution, the churches lost much of their power.

There are some parallels between the economy and society in France in the years preceding the French Revolution and our society -- the gambling -- the absurd military adventures -- the high life enjoyed by the aristocrats -- the poverty of the peasants -- and the squeeze on the middle class. I hope that our government, and that we as a people can avoid the horror of anything similar to the French Revolution. It was truly a horror, and, of course, it led to Napoleon.

[countrydad58]

25. Yes! Off with their fucking Heads!

[JDPriestly]

26. I think we want to avoid that. That's why we have a democracy.

So that we can avoid violence.

The American "left" (which is not very far left at all compared to other parts of the world and which used to be the mainstream) with very few exceptions has maintained the values and used the techniques of non-violence, of passive, not active, resistance. We will continue to do so.

I'm concerned, however, by the extreme right. People have the right to own guns, but that does not mean that they should take them to political events in a democratic society. There is something very violent about just carrying a gun into an area crowded with people who are highly likely to disagree about what is to be discussed at the event. Carrying a gun is a means of chilling the speech of others, of intimidating those who disagree with you. Guns are for the firing range, for hunting and for protection of the home and private property, not for carrying to political events or on the streets where there are other people who are not carrying guns.

You will not see people carrying guns or making violent threats at demonstrations involving the Democratic Party or people at gatherings of the so-called "left."

Violent revolution such as we saw in France in the late 18th century will not occur due to activities of the left. But the extreme right is a real danger in this country at this time.

[Enthusiast]

22. Yes, the greatest theft in history. nt

[Romulox]

28. That money's all been spent, and the only way to replace it is with new taxes. nt

[laughingliberal]

31. That money hasn't been spent, at all. They want to use it to pay off the deficit other programs...

created so the rich don't have to ever pay their fair share.

[Romulox]

33. Yes, it really has. There is no vault with trillions of SS money. nt

[laughingliberal]

34. I misspoke. It was loaned to the General Fund. Needs to be paid back. Anything else is fraud & theft

[Sirveri]

8. We need to totally eliminate it. Toss everyone on it off, tough luck for them.

What's really sad is that I actually have heard this before.

[TheWraith]

15. Okay, short answer.

Social Security has it's own special tax, which funds it completely, as well as it's own trust fund that holds all the extra it's collected. As more boomers retire, the expenditures are going to outpace incomes, and if nothing else is done, then eventually the trust fund will be drained dry some time around 2050. Now at that point, we could make up the shortfall by paying out money from the general treasury, which would impact the deficit. More practically though, we can simply raise the "cap" on payroll taxes that fund SS: currently, you only pay Social Security taxes on the first ~$100,000 of income, nothing above that. So someone making $100k pays the same as someone making $500k.

Also, some people advocate "borrowing" from the Social Security trust fund for general spending, to stop the government from borrowing. That's a bad thing because generally it never gets paid back.

[Yupster]

24. Some people "advocate" borrowing from the trust fund

That's a bad idea because it generally never gets paid back.

News Flash.

Every bit of it has already been borrowed by the general budget.

And the budget is in a trillion dollar defecit so how it can ever pay it back is quite a question.

Yet people talk about the trust fund like it's safely sitting under their pillow.

[laughingliberal]

32. It needs to be paid back. Anything else is fraud and theft. nt

[suston96]

29. I posted this on another thread just minutes ago........

Unfortunately, there is only one US Treasury checkbook.

All cash collections, including Social Security and Medicare contributions, go into that US Treasury checkbook.

All cash payouts by the US Treasury for all debts that require payments, including Social Security and Medicare, come from that checkbook.

Again, unfortunately, too many people do not understand that Social Security and Medicare are NOT any part of the annual deficit but just happen to be part of the bookkeeping involving that US Treasury checkbook.

Most of us have checkbooks, so I think this should be pretty clear.

I hope we all keep up this Social Security and Medicare discussion - everyplace, every day.......