Stop the D.C. attack on the $2.2 trillion Social Security

[Maat]

Americans should be paying attention to this plea, and jumping on board the train to fight for our country's social services.

*****quote*****
Stop the D.C. attack on the $2.2 trillion Social Security Old Age, Disability and Survivors INSURANCE Trust Fund

By: karenjj2 Friday December 31, 2010 12:02 pm

“I feel that this is the wrong approach re the DC attack on Social Security; more sad stories are not going to sway the DC lords & ladies.

The public needs to be educated as to the FACTS about the $2.2 trillion Social Security Old Age, Disability and Survivors Insurance Trust Fund. This Insurance Trust Fund has always been separate from the federal budget, administered separately, and has absolutely nothing to do with the federal deficit. All Americans are entitled to the benefits of this INSURANCE that they have fully paid for during their working lives.

...

Reject and repeal the December 2010 Social Security premium reduction.

link to source:
http://my.firedoglake.com/karenjj2/2010/12/31/stop-the-d-c-attack-on-the-2-2-trillion-social-security-old-age-disability-and-survivors-insurance-trust-fund/
*****endquote*****

[MannyGoldstein]

1. Untrue!!! There's no attack on the $2.2 trillion OASDI fund!!!`

There's an attack on the $2.6 trillion OASDI fund. FDL understated it by 400 billion.

And we need to stop the motherfuckers who are going after it just to preserve tax cuts for the rich.

[Maat]

2. Exactly! (n/t)

[neverforget]

3. The problem solvers will be here in a few telling us how dire SS funds

are but with no explanation of how they would fix it.

[Recursion]

4. The fix is simple (but not easy): raise income and capital gains taxes

Alternately, place FICA levies on unearned income.

If SSA pays out more than it takes in, we have to pay money out of general revenues to redeem those bonds. If we don't raise taxes (or cut discretionary spending) by an equal amount, that will increase the deficit (but not the debt).

[MannyGoldstein]

5. Actually, the fix is easier - do nothing

There's no crisis. Unless yearly GDP growth drops suddenly and sharply to well below where it is now, Social Security can pay full benefits as far as the eye can see.

[sabrina 1]

9. Yes, that is the most important point. THERE IS NO CRISIS.

Not with SS anyhow. But, they have borrowed from the surplus for their wars and other hobbies and don't want to pay it back. I sincerely hope that the minority party, Democrats, are going to be as effective at stopping any attempt to touch SS, as we were told the minority party, Republicans, were at supposedly stopping such massively popular issues from being passed into law as the Public Option eg.

Republicans were credited with tremendous power while in the minority, if that really was the case, then we can look forward to the Democrats being equally effective in the minority.

[Recursion]

10. Suppose I owe $5000 on my credit card

That's money agreed on to be paid. So no problem, right? You seem to be ignoring the trouble of actually coming up with the money.

More to the point: we're owed 2.6 trillion by people who do not want to pay it back. You don't see this as a crisis?

[sabrina 1]

12. No, I certainly do not. The question is, why are you falling for this

lie?

Your analogy fails because you compare someone with no money and no way to get it, to a government that HAS the money and plenty of ways to get it.

What you are saying is that U.S. Govt. Treasury Bonds are worthless. Do you realize what that would mean for this county, if true?

And why do you think that rather than say 'okay, we can't pay back the money we borrowed' they are lying by claiming that SS had something to do with the deficit. They are trying to make the American people believe that the Federal Budget and the SS Fund are one and the same, when nothing could be further from the truth?

The reason they are not officially saying (although they are using proxies to tell the lies for them) that they cannot pay back the money borrowed from SS, is because THAT WOULD BE A LIE, an official lie. A lie that would be instantly dealt with, publicly.

If you borrowed $5,000 dollars and had lots of luxurious assets, eg, jewelry that you don't need, or hobbies that you spend a lot of money on, then, if you are an honest person, you cut back on the luxuries and you pay your debt.

This government has the means to repay the money, there are so many ways that it's impossible to understand why democrats at least, are not up in arms and ready to fight to make this happen. Then pass laws that prevent them from ever again touching that fund. Their credit is bad.

When you have to force someone to pay back a loan, especially when they can afford, you don't lend them money again. But this lie that U.S. Treasury Bonds are worthless, who is claiming that? The U.S. Government has paid in full the interest on those bonds into the SS fund this year as they always do. Where is this coming from? I have not heard a single public official make this claim. This comes from rightwing think tanks from my experience. But if it's true, then we need to hear it officially. Until then, it is a lie. And I sure hope it is because the American people are not this government's only creditors.

[Recursion]

13. I must have written that badly

What you are saying is that U.S. Govt. Treasury Bonds are worthless.

No, I'm not. I'm saying the government is ultimately in charge of both sides of the transaction of redeeming the bonds in the various trust funds, and may choose not to if they don't want to come up with the money.

[sabrina 1]

15. Well, that isn't possible, unless they want to get all their other

creditors very, very nervous. Those bonds are backed by the full and credit of the U.S. Government. They must be paid. What they ARE trying to do is to keep as much money in the fund, (raising the retirement age) as they can so that they can continue to borrow from it. Eventually they will try to privatize SS, but they know they cannot get that done right now. So, they will cut benefits, which will do absolutely nothing for the deficit. They also do not want to give up the 'hobbies' they have that makes borrowing necessary, such as the forever wars and tax cuts for the wealthy.

I have not seen the kind of fighting back on this that there should be from Democrats right now. We are going to be told that 'we didn't have the votes to override the Republicans' or whatever excuse they come up with this time.

This issue should have been part of the campaign. Democrats should have forced it onto the agenda, the so-called deficit commission 'recommendations' so that the people could see what they were up to BEFORE the election and WHO was calling for a cut in SS. But instead, they moved it forward until after the election allowing those who are for cuts to get off the hook. I wish I knew who made that decision.

[Recursion]

16. How?

How would it make other creditors nervous if the Government decided it wasn't going to try to redeem those bonds? You're acting like the government is only deciding one side of this rather than both.

[sabrina 1]

17. The Federal Govt. has nothing to do with the SS fund. They are two

totally separate entities, budget-wise. What do you mean the Fed Govt represents SS? The SS fund is owned by the American people. The money was invested in Treasury Bonds, like many other funds. If, as you are claiming, the Govt can default, which it never has btw, on those bonds in the case of the American people, then it can do the same thing to all of its other creditors.

We, the people who own that fun we are Fed. Govt. creditors, we lent them money, they owe it. I have not heard any official from the U.S. Government state that they will not pay it back. Because they cannot default on that loan.

I HAVE heard lots of rightwing tank talking points making that claim, with zero back-up. But that's just hyperbole.

Anyone can default on a debt. So to keep saying 'the Government doesn't have to pay it'? What does that mean? The government doesn't have to pay China or anyone else either. None of us HAVE to pay our debts, but most of us do. Why? Because when people and/or governments default on debts there are consequences.

And that is why you are not hearing this from government officials. If you can show me a quote from a credible government source stating that the 'Government doesn't have to pay its debt to the SS Trust fund', I'd like to see it.

[Recursion]

18. Nobody is saying the Federal government would, should, or could default on the bonds

People are saying the Federal Government can and might direct the trustees not to attempt to redeem the bonds.

[sabrina 1]

20. That would be illegal. So I hope if they do, it will be raised

in Congress and stopped immediately. The Federal Government has zero right to influence the SS Trustees especially on how they manage the people's money.

[Recursion]

21. The OASI trustees are specifically legally empowered to redeem those bonds

Which means that empowerment can be taken away. I don't see how their going to Congress would help since it's Congress that would have to do that.

SSA is part of the government.

[sabrina 1]

22. There are laws governing the SS fund. Congress may try to

remove the obligation to repay the debt that way, but they are obligated by the laws governing the SS fund as they stand right now. The only way to change that is to write new legislation for SS. And that would be a fight no one in Congress in their right mind would want to get into. That would cause such an uproar it would most likely lose a lot of them their jobs.

Otoh, come to think of it, let them try. That would be one way to get weed out the worst of them.

[Recursion]

23. You're still not getting the distinction, I think

Congress may try to remove the obligation to repay the debt that way

No. That's not a way for Congress to remove the obligation to repay the debt. As you point out, Congress is not capable of doing that except by instructing the Treasury to default, which is basically unthinkable for us and the rest of the world.

However, Congress is perfectly capable of instructing the OASI trustees to not attempt to redeem any bonds. If there's a President that goes along with it, it might not even require legislation. There are several possibilities (SSA could be allowed to auction the bonds publicly, for instance), none of them are particularly palatable. But the danger is not a default, it's an order not to attempt to redeem.

[sabrina 1]

25. To even think of doing such a thing would be to default on

a creditor. That is not going to happen. Not one single official even from the Republican party, has ever stated that there is even a chance of the government defaulting on those bonds. They will not say it because for Government to do that would mean disaster for this country and all trust in U.S. bonds would erode around the world.

What they are doing is allowing proxies to scare people into thinking it's possible so that people will go along with the lie that SS has something to do with the deficit and therefore benefits need to be cut.

They owe the money and they must pay it. That is not hard to do. The Govt. has plenty of means of paying it off. They could have started by allowing the Bush tax cuts to expire.

What they really want is to keep money going into and STAYING in the fund, so THEY can continue to borrow from it, for their wars or bail out their buddies the next time they get in trouble, and most of all, they do not want taxes raised on the wealthy.

And that is why the decision to extend those taxes was a very sign regarding what their intentions for SS are.

Any democrat who takes any excuses for cutting SS benefits, should no longer call themselves a democrat. There simply are no excuses. The SS fund DOES HAVE a huge surplus. To say otherwise is to say this government cannot be trusted by debtors, which is who only people on the internet are saying, NOT elected officials.

[Recursion]

27. Exactly. Nobody wants to default, so that's why there would be an order not to redeem

Which would mean no default.

[sabrina 1]

35. Not to redeem ever? That IS defaulting.

I'd love to see them try to do this. I am willing to bet that it will never happen, it will just be talked about (those rightwing think tanks are very good at sending out scary talking points so that the legislators don't have to risk their credibility). I've seen this nonsense for so long now, that again, I do not know why it is even being given the least bit of credibility on a democratic board.

But, since you raised it, let's suppose they tried. What do you think would be the result of such an insane idea?

[Sirveri]

6. We could also raise the cap to capture more income.

In 1980 payroll taxes captured 90% of income, it's down to 86% now and will reach 83% in 2017 at present rates. Once the cap is adjusted upwards you index cap changes to changes in the top 5% of wage earners pay and then the problem will never happen again.

[sabrina 1]

11. They will tell us that the 'surplus is a myth' and that Treasury Bonds

have suddenly become useless.

But not useless to China or any of the Government's other creditors. Just those belonging to the American people. They government, they say, will default on their debt to the American people. We are supposed to beieve that and accept it, and then we are supposed to roll over and let them cut benefits by raising the retirement age and keep giving more money to the rich in the form of tax breaks etc. So they never have to repay the debt they owe the American people.

What I think is that it is a done deal. The same thing that happened with the secret deals that went down in the Health Care bill. All that's left to do is have this president sell it to the American people, probably in the State of the Union Address.

I know this, if this administration caves on SS, they will lose the next election. But I'm afraid it's been done already and they already calculated the lost votes, but hope to make them up by spending billions on 'new voters'.

[Recursion]

14. No, obviously not to China

But not useless to China or any of the Government's other creditors.

Exactly. Not to other creditors. The trust funds are ultimately monies the government owes itself; it stands at both ends of the redemption. That makes a huge difference.

[Foo Fighter]

7. The problem isn't with SS. The problem is that the message that SS is broke

has been spread far and wide for a long time now. And anytime I hear someone that says they'll never get SS. I make it a point to point out the facts to them. Once it's explained how SS is set up and that it has absolutely nothing to do with the deficit, they GET it.

Unfortunately, the media has been pushing this meme for a long time. So many people have bought into it that it will be an uphill battle to convince them all that they've been lied to all along.

[jtown1123]

19. It's still promising that a simple explanation can help pple understand.

At the end of the day, more than 70% of Americans support protecting Social Security because, hey, they've paid into it.

[Recursion]

24. Social Security will be a drain on general revenues in coming years

It will require additional taxes or additional borrowing to meet our current obligations. What's worse, this will come on top of the fact that SSA will no longer be sending its surpluses to the general revenue. A program that was a source of revenue now becomes a revenue sink.

Whether we call it "broke" is neither here nor there as far as that fact goes: it's going to be taking money from the rest of us over the next several decades. I'm all for that. But there's no sense pretending it's not true.

[sabrina 1]

26. What utter nonsense. Every reputable economist in the country

is familiar with this and has debunked it totally. The only way SS will have problems will be if people start believing this rightwing garbage. SS will not be close to broke, if nothing at all is done, for the next 75 years without doing a thing, and longer if, (and it will), the economy improves. It can meet its full obligations to beneficiaries for the next 25 years, longer once the economy improves. And it can meet 75% of its obligations after that. Without doing a thing. Taxing the wealthy and raising the cap, creating jobs, will make SS solvent well into the next century.

And any politician that says otherwise is lying and is not a Democrat.

People should not be spreading these rightwing lies on a democratic board. If we want to read this nonsense we know where to find it.

SS should not be a part of the discussion about the deficit. If they think we are fooled by the lies, they are mistaken. It has nothing to do with the deficit and using the deficit to go after SS has been totally transparent from the start. Who did they think they were kidding?

[Recursion]

28. The nonsense is your pretending that we don't have to pay that money back

Those bonds are money we owe.

[sabrina 1]

36. 'We' pay it back by ending these illegal wars, by taxing the wealthy

by lifting the cap for SS taxable income. By cutting the military budget, that alone should pay back everything the government owes the American people.

See, all those things would force those who benefited most from borrowing from the SS fund, to pay it back. So, those of us who did not benefit can just keep doing what we've been doing, and those who profited from the loans, if that's who you mean by 'we', they get to pay back the money they borrowed. You surely don't think we the ordinary people should have to pay back a loan we did not approve of, do you?

If the administration even attempts to use this circular, illogical argument, it won't work and if this president goes along with any of it, including attempting to present this kind of ridiculous defense for cutting SS, he will lost enough democrats in 2012 to help get a Republican elected. And for that I for one, will never forgive the leadership of this party.

[Ghost in the Machine]

29. Where did you come up with that load of bullshit? Please stop spreading rightwing propadanda here

Your statement is a complete and utter falsehood.

See this thread for more information:

"Social Security taxes are paid into the Social Security Trust Fund maintained by the U.S. Treasury (technically, the "Federal Old-Age and Survivors Insurance Trust Fund", as established by 42 U.S.C. § 401(a)). Current year expenses are paid from current Social Security tax revenues. When revenues exceed expenditures, as they have in most years, the excess is invested in special series, non-marketable U.S. Government bonds, thus the Social Security Trust Fund indirectly finances the federal government's general purpose deficit spending. In 2007, the cumulative excess of Social Security taxes and interest received over benefits paid out stood at $2.2 trillion.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x117537

[Recursion]

30. Who has to pay back those bonds?

We do. The People of the US. We have to pay them back. That means the money has to come out of the general revenue.

[Ghost in the Machine]

31. Backpedaling and moving the goalposts with you doesn't make you right, either..

Here's what you said:

"Social Security will be a drain on general revenues in coming years
It will require additional taxes or additional borrowing to meet our current obligations. What's worse, this will come on top of the fact that SSA will no longer be sending its surpluses to the general revenue. A program that was a source of revenue now becomes a revenue sink"

You were wrong, spreading misinformation. Current year expenses are paid from current Social Security tax revenues. Period. Any excess is is invested in special series, non-marketable U.S. Government bonds. Period. Social Security will NOT be a drain on general revenues because it is paid out of *current* year revenues. Period.

Now, if the Government has used these bonds as collateral, borrowed against them, that's their problem. They have to pay back money they borrowed to finance something else, like their wars. This in NO WAY affects Social Security or it's liquidity, unless they hit a rare year where payouts exceed revenues. They are *supposed* to have a $2.2 TRILLION dollar surplus. That should be more than enough to carry them through a couple of bad years.

Again, I ask... where's the money??? What have the government thieves done with it?

[Recursion]

32. What I said was 100% true

Me: Social Security will be a drain on general revenues in coming years
It will require additional taxes or additional borrowing to meet our current obligations.

This is 100% true.

You: Now, if the Government has used these bonds as collateral, borrowed against them, that's their problem. They have to pay back money they borrowed to finance something else, like their wars

This is infuriating. First you say the government doesn't have to pay this amount, now you're saying it does. Which is it? (Hint: the answer is, we do have to pay back the SSA.)

Current year expenses are paid from current Social Security tax revenues. Period. Any excess is is invested in special series, non-marketable U.S. Government bonds. Period. Social Security will NOT be a drain on general revenues because it is paid out of *current* year revenues. Period.

Wrong. When receipts for a given year meet or exceed expenses, SS pays out of current year revenues.

In the near future, receipts are projected to fall below expenses (*tax* receipts already fall below expenses, but interest income, which itself contributes to the Federal deficit, incidentally takes it above for I think the next 3 years). When that happens, the bonds purchased with surplus receipts over the past few decades will be redeemed, and there is simply no way around the fact that those redemptions will come out of the general revenue.

[Ghost in the Machine]

33. Keep deluding yourself, sunshine... what you said was false

"This is infuriating. First you say the government doesn't have to pay this amount, now you're saying it does. Which is it? (Hint: the answer is, we do have to pay back the SSA.)"

I imagine it is infuriating to find out you are wrong.

Let's try this again:

You: Social Security will be a drain on general revenues in coming years
It will require additional taxes or additional borrowing to meet our current obligations.

Me: No it won't, current year benefits are paid out of current year revenues. There is a $2.2 trillion dollar surplus of revenue from past years.

Are you following me so far??

Social Security will not be the reason for draining anything. The government borrowed against the treasury bonds that the excess revenue was invested into for, let's say, funding a war. Are you still with me? Good! Now, since the government has to pay back what it owed, no matter what, it is NOT, NOT, NOT! Social Security that is draining the general fund, it's paying back for the WAR that will be draining the general fund. They would have to pay the money back, no matter *where* they borrowed it from. Why you can't understand this is beyond me...

Your argument is illogical. It would be like you borrowing money from me, you blowing the money on booze instead of groceries, then you blaming me for you being hungry because you have to pay me back. I don't even know if that analogy quite covers it because your argument is really just too dumb for words...

Social Security isn't the culprit here... it's running fine and producing a surplus (profit) after it meets all its obligations.

[Recursion]

34. Where we disagree

he government borrowed against the treasury bonds that the excess revenue was invested into for, let's say, funding a war. Are you still with me? Good! Now, since the government has to pay back what it owed, no matter what, it is NOT, NOT, NOT! Social Security that is draining the general fund, it's paying back for the WAR that will be draining the general fund.

:eyes:

Sure, ok.

We agree that as a factual matter the money for redeeming those bonds comes from the general fund. You point out that as a moral matter it's not Social Security's "fault" that we didn't just stick that cash under a mattress, which is I suppose true, and completely meaningless to a society that now has to come up with 2.6 trillion dollars.

[Ghost in the Machine]

37. No, where we disagree is with your patently false assertion that

"Social Security will be a drain on general revenues in coming years", because it's pure bullshit, for reasons you have already been given more than once, by more than just one person. Your choice to ignore facts doesn't change the facts.

[inna]

38. Insult to injury: ironically, thanks to Obama's another little-known poison pill

(payroll tax "holiday"), SS will actually become a "drain on general revenues", for the first time in history.

Another accomplishment of a "Democratic" president; the Rethugs have been trying to do that for years.

[bvar22]

8. The REAL "fix":

Bring GOOD JOBS back to America.
THEN, liberalize immigration to fill those jobs with tax paying citizens
earning a decent standard of living.