Question 1: how much does Social Security have in the bank? Do you know?

[MannyGoldstein]

Poll question: Question 1: how much does Social Security have in the bank? Do you know?

To celebrate the coming blitzkrieg against Social Security, I just completed a nuts-and-bolts guide to what's going on: how Social Security works, how its finances look now and in the future, and what's being proposed by Obama and the Republicans. I thought it would be fun to post a few quizz questions on DU to see how much people know about the topic.

First question: Today, how much money does Social Security have in its bank account (the Social Security Trust Fund)?

Click on the answer that you think is correct, then find the actual answer on my new blog post at: http://fdrdemocrats.org/the-common-sense-guide-to-social-security/ (Section 2a)

[shraby]

1. We have all of it that is supposed to be there, in the form of

paper that is backed by the US Government. It's called IOU's but they are good as gold.

[HereSince1628]

2. Aren't they are called Treasury notes?

And didn't we buy them at an especially favorable rate for the government after Reagan?

[shraby]

3. Yup. Backed by the full faith and credit of the government.

[PoliticAverse]

9. No, they're called "Special Issues"...

and they differ from regular Treasury notes in that they cannot be sold to the public
and can be redeemed at any time by the trust funds (instead of just at maturity).

See: http://www.ssa.gov/oact/progdata/specialissues.html

[HereSince1628]

24. Thanks, I thought I had read something about them

not being typical T-bills.

[Possumpoint]

13. Good As Gold?

Only if the taxpayers are willing to be taxed at a higher rate to pay the bill.

[bemildred]

4. Yep, the problem now is they don't want to give it back. nt

[robcon]

5. I think a far more financially valid measure would be assets vs. liabilities.

The trust fund, as stated in that website, increased its assets in 2010: it also increased its liabilities (the actuarial amount need to fulfill its obligations) by more than that in 2010.

In other words, the trust fund is living on the past, and as baby-boomers retire (they're in their sixties) the need is for far more money in the trust fund, and there has not been enough money set aside to pay the amounts owed to those who will retire in the next decade.

[MannyGoldstein]

7. That's covered here:

http://fdrdemocrats.org/the-common-sense-guide-to-social-security/2/

The real question is: "Is Social Security likely to be unable to pay full benefits in the future?"

[Liberal_in_LA]

6. I always heard that SS payments to current retired is paid from incoming

premiums paid by those still working. So I say "Zero"

[robcon]

8. It's the accelerated rate of retirement (baby boomers) that upsets the math.

The ratio between those who who collect Social Security (retirees), and those who contribute to Social Security (workers through FICA) is increasing, as the baby boomers retire this decade.

Current workers will have a greater proportion of people to support with their FICA payments - that's the source of the financial trouble.

[MannyGoldstein]

18. No, that'd been planned for since 1983:

See: http://fdrdemocrats.org/the-common-sense-guide-to-social-security/2/

That's why the Trust Fund was grown so large, to pay for the Boomer bulge. Nothing's happening now that hasn't been planned for.

[bemildred]

10. SSI has been taking in far more than it pays out since the 80s, much more.

And every nickel that every poor person earns by work is taxed to pay for SSI and Medicare, and all that is supposedly being done to cover future needs. Now the weasels want to renege.

[mysuzuki2]

14. SSI is not paid from SS taxes or the SS trust fund

it is financed by general revenues. It is not social security. It is a needs based program for elderly and disabled people administered by SSA.

[MannyGoldstein]

19. From incoming SS payments AND from the the Trust Fund as needed

See: http://fdrdemocrats.org/the-common-sense-guide-to-social-security/2/

[dems_rightnow]

11. No money. Lots of receivables.

[MannyGoldstein]

15. The same as all treasury bills, no? nt

[StarburstClock]

12. Rec'd and thanks for the link

It's very easy to understand.

[Dems to Win]

16. Zero. No bank account at all. They've got a lot of T-bills in a vault.

Back in 1992, I had a long conversation with my congressman about this. I felt it was a bad, deceptive idea for the current workers to pay more into SS than required to pay benefits to current retirees, with the rest put into a 'savings account' consisting of T-bills.

The idea of US taxpayers, as a whole, creating a 'savings account' consisting of T-bills seemed totally bogus to me.

What is a T-bill? A promise that future taxpayers will repay the amount, with interest, from their income tax payments. Thus, we were setting up a situation where future tax payers will pay the SS tax, with proceeds going to current retirees, PLUS a portion of their federal income tax dollars will go to redeem the T-bills for more payments to retirees. I was very skeptical that the taxpayers would be able and willing to bear that cost.

Now, that future has arrived. In order to pay full SS benefits promised, some federal income tax revenue must be used to redeem those T-bills.

Which I am totally fine with. End the three wars, bring all troops home from overseas, raise income tax rates on the rich and the corporations to Kennedy-era levels, end the income cap on SS contributions -- Voila! No budget problems.

But the folks in Washington are not taking these common sense steps, so there appears to be a budget problem with Social Security. As was predicted decades ago.

[MannyGoldstein]

17. But they are T bills, backed by the full faith and credit

of the United States. They have to be paid.

[dems_rightnow]

22. If that had been your question...

... you'd have a great point. But it wasn't, and you don't.

[MannyGoldstein]

26. What's the (substantial) difference?

How would it affect recipients?

[rucky]

20. Somewhere between 2.6 trillion and negative 200 million.

[Igel]

21. It's a nonsensical question.

A bank is a demand deposit. The trust fund is in special-issue government securities.

It's like asking, "How much do you have in the bank?" "I have $5000 in T-bills." The proper response is, "No, I mean in the bank."

People seem to consistently overlook crucial distinctions in order to justify their fallacy.

Point out the distinction and it's a loud Babe-like "LA-LA-LA-LA" and earplugs all the way.

After me, on 3: 1, 2, 3, "LA-LA-LA-LA."

[MannyGoldstein]

25. How are these securities substantially different from a bank account?

They both need to be paid back, no? The entire think is not payable on demand, but is payable in 1-15 years: http://www.ssa.gov/oact/progdata/specialissues.html

[RebelOne]

23. Well, as long as I keep receiving my SS check,

I am not going to worry about it. But by all reports, there is enough in the SS account to last until 2037, and I will be long dead by then.