Social Security to Run Deficits for Foreseeable Future, CBO Says

[somone]

http://www.businessweek.com/news/2011-01-26/social-security-to-run-deficits-for-foreseeable-future-cbo-says.html

Social Security to Run Deficits for Foreseeable Future, CBO Says
By Brian Faler

Jan. 26 (Bloomberg) -- The U.S. Social Security program will run a deficit this year and will continue spending more on benefits than it receives in revenue for the foreseeable future, according to the Congressional Budget Office.

The nonpartisan agency said today the program will run a $45 billion deficit this year and see a total shortfall of $547 billion over the subsequent 10 years. The calculations exclude interest payments earned on the program’s trust fund...

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Okay. I'm looking at p. 123 of the CBO report

THE BUDGET AND ECONOMIC OUTLOOK: FISCAL YEARS 2011 TO 2021
APPENDIX C
Figure C-1. CBO’s Baseline Projections of Social Security Trust Funds

http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf

Excluding Interest ---> Deficits
Including Interest ---> Surplus every year

[The Magistrate]

1. In Other Words, Sir, It Spends Down Its Assets, And The Report Understates Its Income

[Justitia]

4. Thank you. The original BW report is a bit of a hit & run piece. -eom

[RandomThoughts]

2. I am skeptical of the CBO, and actually agree there could be a problem there.

First they may be writing bills with loop holes the reps don't know about, making the reps irrelevant to legislation.

Second the comment made by a Republican during the sit down meeting about health care that was on the news makes me think they are pyramid people, and may not have best interest of people in mind.

They also have not payed beer and travel money that is due. So they are in error.

[Sal Minella]

3. Time to raise the upper level cut-off on the wealthy who are not

paying in their fair share to the SS system. I'd like to see that cap removed entirely, not just raised. Problem solved.

The rich got their freeging income tax break -- they can dang well afford to pay into the SS system.

Penalizing the poor for the greed of the wealthy has gotten really old really fast.

[customerserviceguy]

16. You'd also have to change the formula

by which Social Security benefits are paid under. Under the current formula, if you jack the taxes, you see a corresponding increase in the maximum benefit.

My solution is to indeed raise the wage base, but introduce a new lowered tier of benefits for any taxes paid on wages above the current cap. I would think that $200K would do for about a decade or so, but I would take the cap off completely on the employer's side. If some megabank wants to pay their CEO a million bucks a year for sitting on his fat ass, they can chip in full employer FICA on that million, and it has no effect on the CEO's eventual Social Security benefit.

[Hannah Bell]

35. there is no "problem" except that the ptb want to kill the program.

[Enthusiast]

42. Thank you!

That is why they enacted a FICA holiday -to justify cuts to social security. And in the words of George Carlin, "They're coming for your social security next. And they're going to get it."

That's why I will not vote for Barack Obama in 2012, because he agreed to FICA cuts. He thinks he can play stupid. It isn't working with me. I will hold him DIRECTLY responsible.

[Hannah Bell]

47. yep, & i just saw an article today talking about how that fica holiday has made deficits so much

worse.

dude, you guys thought it was a great idea less than a month ago -- now you're bemoaning it.

these people are shameless hucksters. they're not even logical. total economic wreckers.

[suston96]

5. Before the same old tired solutions come torrenting in......

Tell Mr. Boehner to introduce a jobs plan - quickly - NOW!

An old friend used to say on TV: Where are the jobs, Mr. Boehner........?

[leftstreet]

6. Hey! Did the CBO ever score Single Payer National Healthcare?

:shrug:

[mmonk]

10. No and we all know the reason why.

[BzaDem]

23. Yes, actually they did, and Kucinich/Conyers purposefully didn't release the score.

http://kucinich.us/index.php?option=com_content&task=view&id=2837&Itemid=1

"The Congressional Budget Office (CBO) has scored the bill scheduled for a vote tomorrow in a manner which is at odds with many credible assumptions, meaning that it will appear to cost way too much even though we know that true single payer saves money since one of every three dollars in the health care system goes to administrative costs caused by the insurance companies. Is this really the climate in which we want a test vote?"

[Enthusiast]

43. We can safely assume

that some sort of European single payer system would save us roughly half of what we are currently paying. Yet under Obama we can't even have a simple public option.

[Warren Stupidity]

7. "The calculations exclude interest payments earned on the program’s trust fund."

Oh, so the report is total bullshit.

[Nuclear Unicorn]

14. Except those interest payments are on bonds sold to the general fund to collateralize t-bills

We would have to first pay off the treasuries, with interest, so as to be able to pay off the bonds and their interest.

In other words, if this was a private corporation people would be going to jail.

[Warren Stupidity]

17. But it isn't and we can just issue more debt.

I fail to see how ss t-bills are any more or less special than all the other t-bills the government has to pay off on a regular basis, other than of course the government only has to pay back ss t-bills when the account goes into deficit.

[Nuclear Unicorn]

25. SS bonds are a debt under another debt

Because SS is a "trust fund" (my sides, they hurt from laughing) they cannot be used for general fund items.

But they can be used to leverage T-bills.

But if the government can't honor its T-bills then it has even less money to repay the SS bonds. Those bonds have to be repaid with real money but that money doesn't exist, hence the selling of T-bills...propped-up by SS bonds.

It's a big accounting scam really.

In 10 years people are going to demand their checks but there will be no there, there. It won't matter who the president is or which party controls congress, it's gone.

[Warren Stupidity]

26. That is all a bunch of mumbo jumbo

SS t-bills are t-bills. The only real difference is that there is no payback of interest or principle until the trust fund current account goes negative, and then they are paid just like all the other t-bills are paid: by issuing more debt or by raising taxes, but only to the extent needed to bring the current account liabilities into balance.

I keep hearing and reading circular complicated explanations that boil down to: "I can't explain the difference but I'm sure we can't pay out on those SS obligations", generally followed by some snark or othert.

We can, and we will pay every dime in the trust fund out to recipients as required, unless an unconstitutional default occurs. Full faith and credit applies to the trust fund t-bills just as much as it does to Warren Buffet's t-bills or China's t-bills.

[Hannah Bell]

36. bullshit.

[Enthusiast]

44. Every piece of the propaganda machine

has been ramped up to favor privatizing social security.

[jwirr]

8. And even if this is true then raise the caps.

[Better Believe It]

9. So after collecting the interest payments how much of a surplus will it run over the next 10 years?

That brief quote from the article is highly misleading.

[Recursion]

21. Fine, though we're the one making those interest payments

The debate over whether Peter or Paul is the one getting robbed is getting old: Social Security represents a multi-trillion dollar liability over the next few decades, and neither the left nor the right can get around that fact.

[Warren Stupidity]

29. as we do with all other government debts.

nobody is robbing anyone as long as the debt obligations in that trust fund are honored. They should be met as we meet all of our other debt obligations: by raising the required revenue through a combination of taxes and new debt. There is nothing particularly complex about this. Just consider the trust fund to be 'Warren Buffet' and pay him what he is owed when he is owed it.

[Recursion]

30. Right...

So we have to either come up with a shitload of money or borrow a shitload of money over the next couple of decades. Awesome.

[Warren Stupidity]

31. It is not a shitload of money each year.

It is 2.4T over like 25 years - on the order of 100B a year. Like what we blow on useless wars every year.

[Recursion]

32. And coming up with the money for the useless wars has been disastrous

So we're talking about continuing the war-level of spending for the next generation or so.

[Warren Stupidity]

34. No it hasn't. Cutting taxes was stupid. Deliberately stupid.

100B out of a budget in the 2T range is not a disaster. Keep feeding the alarmist bullshit though, that is exactly what they want.

[Recursion]

49. Being "alarmist" is the only way we'll ever get taxes back up

to a sane level.

[Enthusiast]

45. So your alternative is?

Privatize it?

[Recursion]

48. God no. Raise taxes.

But we'll never get people behind that unless we acknowledge there actually is something like a crisis here.

[BlueCheese]

41. I looked this up...

$868 billion from 2011 to 2020.

I swear some source probably put the reporter up to this. The annoying this is these days, it could just as easily have been a Republican or Democrat.

[Warren Stupidity]

51. way less than the stupid irresponsible tax cuts

which are not a crisis and which do not require dire remedies.
or the stupid irresponsible war budget, which is not a crisis and does not require dire remedies.

old age pension trust fund payouts on the order of 50-100B/yr are a HUGH CRISIS that demands DIRE REMEDIES. Go figure.

[divine_truine]

11. OMFG! RAISE PAYROLL TAXES A MEASLY 1% & RAISE RETIREMENT BY 1 YEAR...

THOSE SIMPLE CHANGES WOULD INCREASE SS SOLVENCY TO 75 YEARS!...and to those reps/senators sucking wall street lobbyist toes: keep your dirty hands off the SS (& Medicare, Medicaid)! & republicans, STOP SCARING OUR SENIORS!

[Bandit]

12. I know how to fix that.......Tax Cuts....

That fixes everything

[lumberjack_jeff]

13. To have a deficit, you must have borrowing.

Social Security isn't borrowing money from anyone. It's spending its assets.

[customerserviceguy]

15. But how does it spend its assets?

By having the Federal government borrow in the open economy to redeem the specialized Treasury securities that are the bulk of the trust fund. The only other way around that is to generate surpluses, and that's not going to happen for many years, if ever.

Of course, there is simply printing money, and the QE program is chugging along full speed ahead on that.

[lumberjack_jeff]

22. What the federal government does to honor it's debts is not Social Security's problem. n/t

[customerserviceguy]

24. It's ultimately the problem of all of us

Social Security recipients or not. Inflation particularly impacts seniors.

[lumberjack_jeff]

27. Not really.

It's a bigger problem for the people who have all the money.

[customerserviceguy]

28. The folks who have 'all the money'

don't suffer from inflation, they always find ways to profit from it. I'm worried about the folks at the bottom, who either don't have inflation built into their pensions, or have to wait a year for a Social Security COLA. And there are those who have to wait for their state legislatures to act before an increase in the minimum wage is enacted. Those people are the real victims of inflation.

Since 1981, the US has lived in a relatively low inflation economy. Any inflationary spikes have been fairly temporary, and were quickly 'cured' by a recession, like the one we're suffering from now. That means that just about anybody thirty-five and under really hasn't lived through a period of pernicious inflation, like the ones experienced right after WWII, or after the OPEC oil price shocks of the Seventies, or the one that accompanied the Vietnam War in the mid to late 1960's.

If you fit into that category, ask a parent or a grandparent what it was like to have to chase rising prices of food and consumer goods. It wasn't a picnic for those who were on the bottom rungs of the economy.

[Hannah Bell]

38. bullshit

[Hannah Bell]

37. bullshit.

[damntexdem]

18. No, the U.S. Government to run extra deficits because they already spent Trust Fund money.

SS is operating without a deficit because it is dipping into its Trust Fund.

[doc03]

19. So why would we cut the payroll tax by 2% ? n/t

[Freddie Stubbs]

33. To put more money in workers pockets in an attempt to stimulate the economy

[Hannah Bell]

39. bullshit

[Enthusiast]

46. I'll second your bullshit.

[Freddie Stubbs]

52. An average of $695 for each worker to spend is no small chunk of change

[tularetom]

20. SS is the largest holder of US Government Debt

For years the government, both Democratic and republican has borrowed heavily from the Social Security Trust Fund. There would be no SS deficits if those debts were repaid and anyone who has paid into SS ought to be insisting that this money is repaid before anymore is borrowed.

Our social security has funded these obscene tax cuts for billionaires and fattened the wallets of war contractors. And now they want to pay us less so they can give more money to the fat cats.

Anybody in the Tea Party who goes along with this kind of shit has no understanding of what is really going on.

[Hannah Bell]

40. and before any tax cuts to the rich are given.

[Rex]

50. So for YEARS the CBO sent out reports of a crisis during the GWB

misalignment and no one cares!! NOW, however, it seems we are supposed to listen? If they fuck up SS in any way shape or form it will kill off the middle class. The working poor already have enough in their ranks.