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Social Security reserves forecast to run dry in 2022

MoSurveyor said:
As I understand it it's all a matter of bean counting, whether to include SS as part of the (general fund) Fed budget or not.
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The General Fund is simply the Treasury's cash management account. Any cash received by the federal government that is not pre-marked to a specific purpose is collected to the General Fund. All proceeds from the sale of US debt securities go there. They cannot be withdrawn and expended until Congress passes authorizing and appropriating legislation to fund the expediture. At that point, Treasury transfers funds to agency operating accounts, and they proceed to spend for authorized purposes. Payroll taxes on the other hand are initially paid to the IRS which credits accounts owned by the Social Security Administration. They are then used either to make SS benefit payments or to buy more Treasury securities. Buying more Treasury securities is what puts cash in the General Fund, just as buying a US Savings Bond for your niece does.

MoSurveyor said:
At some point Nixon decided to include SS as part of the budget, which was a departure from previous admins. Today we could just as easily reverse that process but understand that it would jump the national debt by ~$2.6 trillion (the current SS Trust Fund balance) and increase the deficit ~$93 billion (SS net revenue from 2010).
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About the budget: There are two "off-budget" agencies. Social Security and the US Postal Service. Neither one receives an annual appropriation from Congress to operate. SS relies on payroll taxes, and USPS relies on postage and other fees. Then again, since 1983, SS has been taking in a lot of money. Does it make sense to pretend that it doesn't exist? No. So the budget is always presented on a unified basis (everybody), but then split out into the "off-budget" piece (SS and USPS) and the "on-budget" piece (everybody else). In FY2011, there was a $67.2 billion off-budget surplus, and a $1,366.8 on-budget deficit, so there was a unified deficit of $1,299.6.

Meanwhile, the budget treatment has no effect on the public debt at all. The nearly $2.7 trilllion SS surplus is already a part of the public debt simply because it is invested in Treasury securities. That's all the public debt is -- a measure of Treasury (and some other agency) securities outstanding.
 
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MrVicchio said:
Reality check, SS is a Ponzi Scheme, it's unsustainable, and it's going to implode. Medicare, Medicaide and now Obamacare will drive deficits to levels that make 17 Trillion seem like a pittance.
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Reality Check: None of these claims can be supported by any actual fact.
 
j-mac said:
Is this pure ad hom personal attack supposed to make us think that you are intellectually superior or something? Because it just makes you look arrogant and pathetic.
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Do you understand the difference between a person and a paragraph? The paragraph is stupefyingly ignorant. There -- I said it again for you. As to intellectual superiority, that may depend on whether you equate that with knowledge and understanding.
 
Cardinal Fang said:
[...] The only people who believe that US currency and debt are junk are those whose heads have been filled with junk while they weren't watching.
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Or whose heads have been filled by junk by what they were watching ;) (OP's source as a case in point).
 
sawyerloggingon said:
So after reading exactly what a Ponzi scheme is and why it eventually collapses tell me why ss isn't one and won't collapse.
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Are you under the impression that SS is an investment scheme? Go look up the business model of all insurance companies: Pay current claims out of current premiums. Salt some away as reserves against future needs. Keep the rest as profit. Use actuarial methodologies to maintain the required sustainable relationship between claims and premiums. That's exactly what SS does. Except for the profit part.
 
Samhain said:
That isn't what the original article is indicating. Its stating that in 2022, for the first time, they will actually have to redeem more trust fund bonds than they purchase, which translates into a reduction of the total trust fund balance( 2.7 trillion and change ). [...]
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No, what the original article indicated, and which is a bald faced lie, is: Social Security reserves forecast to run dry in 2022 - Washington Times

The facts are, that under current projections (those used in the article), Social Security will have to start dipping into the trust fund in 2022 (the article even mentions as much), as you said. However, if that was been what the original article "indicated", we wouldn't be subjected to the moronic title of this thread.

Under those projections, the trust fund itself will not run dry until 2036. John Boehner has been telling a similar lie as the Washington Times does in its headline above, proving that when the right wing's mouth is moving, they are lying. I guess it is pathological [shrug].

Another bald faced lie perpetrated by the Washington Times is this gem (same article): "Social Security has taken in less in taxes than it has paid out in benefits since 2010, but the shortfall has been made up as the government has dipped into IOUs left in the trust funds from previous years."

In reality, the shortfall has been more than made up by current interest on the bonds held by the trust fund, not by "dipping into" the bonds themselves. For 2010 and 2011, the amount held in the trust fund has increased. And of course, as everyone should know, when and if the trust fund does run dry, current payroll collections at the time will be able to fund roughly 75% of the benefits without it, for the next 50-odd years. Hardly a bankruptcy scenario.
 
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Cardinal Fang said:
Are you under the impression that SS is an investment scheme? Go look up the business model of all insurance companies: Pay current claims out of current premiums. Salt some away as reserves against future needs. Keep the rest as profit. Use actuarial methodologies to maintain the required sustainable relationship between claims and premiums. That's exactly what SS does. Except for the profit part.
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Which is why Wall Street is salivating to get their hands on it, and Republicans are toadying to privatize it.
 
haymarket said:
Yup - thats it. have been there twice - great food both times. And I did not realize it was a chain. If I remember correctly, we visited the Capitol, went past the Supreme Court, went to the Archives only to find it closed for renovation -and then we hit the restaurant....... although a cab ride may have been involved at some point.
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Yes, there are several Jaleos and other restaurants in the group also. Some people think you can't do quality food under more than one roof. Having had an involvement in the industry since the 1960's, I think that's bunk. Anyway, the Archives are at 7th & Constitution, so a quick three blocks from Jaleo. And if it were a nice day, a stroll from the Court past the Capitol and down Constitution or across The Mall might have seemed like a good idea. I'd have taken a cab though.
 
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j-mac said:
No, I asked if a nations wealth, and status in the world is a static thing?


j-mac
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Why even ask such a question?
 
j-mac said:
I'll tell you as soon as you answer it.
j-mac
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I am not here to play games of semantics. Make your point or do not make your point; it is entirely up to you.
 
j-mac said:
I don't think you have the founders intent correct. Although you are right that they didn't like a system of direct, 100% democracy, They certainly didn't want a judicary that reigned supreme over the congress either. You are advocating the making up rights out of whole cloth that rely on interpetitation of some sort of maliable whim of the day, rather than following the constitution as written. IOW, according to you, why have the Constitution, or congress at all? If all we need are judges that hold power to change law, and or rights on their whim, or as we have seen political reasoning, then why not just abolish our nation as it exists now, for your paradigm?
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The last thing the founders wanted was for their descendants to be imprisoned in the chains of their ancestors. Not believing themselves to be inspired visionaries capable of divining the future, yet hoping to craft a document that would prove to be more durable and of greater long-term use than the crummy decade it took the Articles to fall apart, they wrote in many ways. Where they intended to be specific, their words were specififc. Where they intended to be open, general, and flexible, their words were open, general, and flexible. Attempting to impose latter-day strictures and literal lockdowns of meaning as of the moment the ink dried is a complete abrogation of and disservice to the work done in 1787 and beyond.

No branch was meanwhile meant to dominate another, but each was to serve as a check on the others. The staggered terms at which actors face the public tells us about their assigned roles. The House gets two-years. It is to be the raucous hotbed and cauldron of popular causes. The President gets four years. He must lead but must then face all the people, not just his friends and neighbors. The Senate is the reserved and more deliberative body. They get six years. And the federal judiciary is removed entirely from the public's reach, meaning that concern for the republic and its Constitution will be its quiet and exclusive agenda. It's a clunky and crotchety system, but mainly it gets things right, albeit often only on the second or third try.
 
Cardinal Fang said:
The General Fund is simply the Treasury's cash management account. Any cash received by the federal government that is not pre-marked to a specific purpose is collected to the General Fund. All proceeds from the sale of US debt securities go there. They cannot be withdrawn and expended until Congress passes authorizing and appropriating legislation to fund the expediture. At that point, Treasury transfers funds to agency operating accounts, and they proceed to spend for authorized purposes. Payroll taxes on the other hand are initially paid to the IRS which credits accounts owned by the Social Security Administration. They are then used either to make SS benefit payments or to buy more Treasury securities. Buying more Treasury securities is what puts cash in the General Fund, just as buying a US Savings Bond for your niece does.


About the budget: There are two "off-budget" agencies. Social Security and the US Postal Service. Neither one receives an annual appropriation from Congress to operate. SS relies on payroll taxes, and USPS relies on postage and other fees. Then again, since 1983, SS has been taking in a lot of money. Does it make sense to pretend that it doesn't exist? No. So the budget is always presented on a unified basis (everybody), but then split out into the "off-budget" piece (SS and USPS) and the "on-budget" piece (everybody else). In FY2011, there was a $67.2 billion off-budget surplus, and a $1,366.8 on-budget deficit, so there was a unified deficit of $1,299.6.

Meanwhile, the budget treatment has no effect on the public debt at all. The nearly $2.7 trilllion SS surplus is already a part of the public debt simply because it is invested in Treasury securities. That's all the public debt is -- a measure of Treasury (and some other agency) securities outstanding.
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Thanks for that! :beer: It's a much better explanation than I've been able to find elsewhere.

I never looked at Treasuries as being public debt, though, of course, they most surely are.
(I did know there were other off-book accounts, not just SS, but couldn't remember them.)
 
Kushinator said:
Does anyone object to a portion of S.S. to be diversified into private equity and REIT markets? I have been on the fence with this idea for quite some time. Reason be, the national security risks from investing S.S. funds into equity markets in a time when international capital mobility is at its highest outweigh any direct benefits. Also, such an action would give the federal government way to much power to manipulate. Then there is the entire "voting rights" issue for various company boards.
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The Clinton administration officially looked at diversifying SS investments and came away with a thumbs down for the idea. There have also of course been private analyses done. Two things to consider: First, the market doesn't price risk consistently with the objectives of Social Security, and second, after Treasury securities, there isn't a market that is large enough to have many trillions of dollars come in and then go out again according to an easily predictable schedule.
 
j-mac said:
Are you saying that SS has not changed since 1935?



What? we should re debate the New Deal here? Today? Why don't we just stick to what is going on with SS today.


j-mac
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As to your second point - it was you who seemed to take issue with Social Security and changes in it over the years. I would just as soon accept the changes as reality.

Of course, SS has changed. Any successful program grows and changes as the society around it changes. That is a good thing.
 
Cardinal Fang said:
Yes, there are several Jaleos and other restaurants in the group also. Some people think you can't do quality food under more than one roof. Having had an involvement in the industry since the 1960's, I think that's bunk. Anyway, the Archives are at 7th & Constitution, so a quick three blocks from Jaleo. And if it were a nice day, a stroll from the Court past the Capitol and down Constitution or across The Mall might have seemed like a good idea. I'd have taken a cab though.
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Thanks. We had a terrific time. Last year we took my grandson - who was then nine - as we gave him the choice of Disney World or Washington DC. The little chip off the old block picked DC. He wanted to see the President. We did get to see his helicopter take off from the White House lawn (all 3 of them). it was a wonderful experience. His biggest kick was standing where Martin Luther King delivered his speech at the Washington Monument. He insisted his picture be taken there.

What other DC restaurants would you recommend? We want to go back in the fall.
 
Kushinator said:
Which is why i am against raising the age without means testing (which opens up another fairness debate).
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I would agree. We already raised the age of full retirement in 1983, and there are other means of tinkering with revenues that are a little less like a meat-axe.
 
Cardinal Fang said:
The last thing the founders wanted was for their descendants to be imprisoned in the chains of their ancestors. Not believing themselves to be inspired visionaries capable of divining the future, yet hoping to craft a document that would prove to be more durable and of greater long-term use than the crummy decade it took the Articles to fall apart, they wrote in many ways. Where they intended to be specific, their words were specififc. Where they intended to be open, general, and flexible, their words were open, general, and flexible. Attempting to impose latter-day strictures and literal lockdowns of meaning as of the moment the ink dried is a complete abrogation of and disservice to the work done in 1787 and beyond.

No branch was meanwhile meant to dominate another, but each was to serve as a check on the others. The staggered terms at which actors face the public tells us about their assigned roles. The House gets two-years. It is to be the raucous hotbed and cauldron of popular causes. The President gets four years. He must lead but must then face all the people, not just his friends and neighbors. The Senate is the reserved and more deliberative body. They get six years. And the federal judiciary is removed entirely from the public's reach, meaning that concern for the republic and its Constitution will be its quiet and exclusive agenda. It's a clunky and crotchety system, but mainly it gets things right, albeit often only on the second or third try.
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However, there is a process to change that document, and it isn't through the courts. If you want to change it, amend it.


j-mac
 
j-mac said:
"The Piggies"? What kind of F'd up crap is that to start out a reply to someone? I asked a legitimate question of how much of MY OWN hard earned money I should be allowed to keep, and you call me a pig?
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Yes, and I explained why. You are trying to claim as your own "hard-earned money" amounts that have nothing to do with how hard you work or what you produce.

j-mac said:
The employer is bound to pay a portion based on my employment with that company, and is not my employment to provide a service?
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What you do or do not do is irrelevant. A payment obligation results to your employer from the mere fact of your employment.

j-mac said:
Are they not made in my name?
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No, the taxes just go swimming off into the big pot. They do not go into some account with your name on it. What goes into your account is that you were employed in a covered position at a particular point in time and how much your wages were at that time. Those are what will be used to calcualte your eventual benefit.

j-mac said:
I think if private citizens do this to a business, it is called organized crime....
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Perhaps so, as private citizens are not taxing authorities. Remember that the next time you are tempted to claim that governments should be run just like households.

j-mac said:
Or, the business I work for would have the ability sans those taxes to actually raise my pay, just like some do when employees opt not to take the company offered health plans....Mine does that.
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You prove by showing up every morning that you are willing to work in exchange for your net pay. Once the company no longer has any obligation to send a penny off to SSA, what incentive does it have to give you anything? Especially when competitors start passing those savings on by slashing prices in an attempt to hijack market share.
 
Cardinal Fang said:
Social Security was a pay-as-you-go system. No significant interest or capital gains. Current payroll taxes paid for current beneficiary payments. The two were reset periodically to assure that they would remain in general balance. Once the then far-off blip of the baby boomers was recognized however, that system wouldn't work anymore. That's when the revisions of 1983 created an exceess on the revenue side that would be saved up to use as a cushion when those boomer retirements finally hit. Once that particular crisis is past, the Trust Funds will go right back to zero, which is where they started.


All of this is wrong. As any trustee would, the SSTF trustees have invested the cash they don't need yet for decades. And on the other side of the table of course, ALL borrowers use the proceeds of bond sales for their own purposes. Meanwhile, the FY1999 and FY2000 budgets were in surplus even if the sizable SS surpluses were not counted.

And there is of course no collapse of SS at all that is staring us in the face. Right-wing whackos have preached this as a way of discrediting a system that they have always hated simply because Democrats have been getting credit for it at the polls for decades, just as they will now get credit for HCR.


The exact same thing happens every day in the private sector. Nobody goes to jail. Learn to be the master of your own imagination.
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It is embarrassing when you find out that something that you have been told and believed and used as a basis of argument is totally false.

After you smacked me in the face with this, I started digging to get evidence to refute your allegations. Sadly, everything that I found substantiated your position.

I stand corrected. It is always a good day when you learn something, even if you make an ass of yourself along the way.
 
Karl said:
In reality, the shortfall has been more than made up by current interest on the bonds held by the trust fund, not by "dipping into" the bonds themselves. For 2010 and 2011, the amount held in the trust fund has increased.
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Yes, it has, and depending on what sources are used, the budgetary flows that cause that increase may or may not include amounts charged to the General Fund in making up for amounts otherwise lost to the system through the 2% payroll tax holiday. This only makes it easier for the right-wing to do more of its dishonest reporting.

Karl said:
And of course, as everyone should know, when and if the trust fund does run dry, current payroll collections at the time will be able to fund roughly 75% of the benefits without it, for the next 50-odd years. Hardly a bankruptcy scenario.
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Yes, under the Trustees' assumptions, that 75% level will exist pretty much in perpetuity. And what's also rarely reported is that due to the way benefits are calculated, that 75% of scheduled benefits then would ultimately be worth more than what 100% of scheduled benefits is worth today. Not exactly what I would call a collapse.
 
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