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Social Security To Go Bust By 2030: CBO

Slyfox696 said:
The way we've always done it? You do realize (in simple terms, at least) we pay back the IOUs every month, right?
Uhh, no. That doesn't make sense at all. We borrow from the Trust Fund in order to protect it from falling victim to inflation. When it comes time to pay benefits, we pay back the Trust Fund (with interest, through payroll taxes) what we borrowed so we can then make payments.

Here's some basic info.

Trust Fund Data
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congress spends surplus monies from SS in order to expand and fund other parts of government.
 
Visbek said:
Here ya go. Put in your choices, and see if it makes SS solvent for the next 75 years. Based on what you're saying, I don't think your plan does enough, but there are plenty of additional options.

The Reformer: An Interactive Tool to Fix Social Security
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Here is the CRFB's disclosure : " In most cases, the effects of policy choices are estimated based on the 2012 Social Security Trustees Report; however, baseline metrics are based on the 2013 Social Security Trustees Report, given that the Social Security Administration typically needs additional time to update estimates of reform options in light of new projections." So it is about a trillion dollars out of date on the solvency shortfall, likely closer to 2 trillion once the 2014 Report comes out. In terms of eliminating the cap, CRFB says it's 77% of the solvency shortfall. CBO two days ago projected that it was 45%. So it is a useful tool give or take 30%.
 
mtm1963 said:
congress spends surplus monies from SS in order to expand and fund other parts of government.
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Congress spends surplus monies of private pensions in the same way. Yes the government borrows money. Yes the government will repay it with interest. What is the point of what Congress does with borrowed money whether it is from SS, private pensions, or China.
 
Winchester said:
Right by borrow more. Any day of reckoning in your future?
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No. Just no. I get the feeling you don't understand how Social Security works. I'll give you the quick and dirty version.

1. Employees pay payroll taxes.
2. Payroll taxes are sent to the government who then send them out to Social Security beneficiaries. In simple terms, it has NOTHING to do with a Trust Fund (it does, but to keep it simple, it doesn't).
3. Overpayments of today's employees, meaning money from payroll taxes left over after paying benefits goes into the Trust Fund.
3a. Again, please note, for all practical purposes, we are NOT paying beneficiaries from the Trust Fund (even though we are, but for our simple explanation, it's easier to explain this way).
4. The money in the Trust Fund is simply OVERPAYMENTS of payroll taxes. This money, if left sitting in a cash envelope, would fall victim to inflation. Thus, in order to preserve the money and to be able to pay out the benefits necessary, the government borrows against the Trust Fund.

This really isn't hard to understand. We're borrowing money from ourselves, with the promise to pay ourselves back with the same purchasing value as when we borrowed it.
mtm1963 said:
congress spends surplus monies from SS in order to...fund other parts of government.
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Yes, that's WHAT they do with it. WHY they borrow the money is to preserve the integrity of the fund, to keep it consistent with inflation.

I'm sorry you don't understand the basics of Social Security. I don't blame you, it's not easy to understand. I don't understand the technicalities of it either. But I do understand the general concepts behind it. And that's why I'm trying to educate you, to get you to do the same.
 
JoeTheEconomist said:
Congress spends surplus monies of private pensions in the same way. Yes the government borrows money. Yes the government will repay it with interest. What is the point of what Congress does with borrowed money whether it is from SS, private pensions, or China.
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it adds to the national debt. we pay interest on that debt.
 
mtm1963 said:
it adds to the national debt.
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So? So what if it technically adds to the national debt, it doesn't change the fact it's debt we owe ourselves and debt which we have almost always been able to pay off easily. It's like taking from your car fund to pay your grocery bill. You'll still have money to put in the car fund when it's time to buy a new car, but right now you need to eat.
we pay interest on that debt.
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As we should. If I had put a $5 bill in a coffee can and buried it in the backyard 40 years ago, would it still be just as valuable today as it was when I buried it? Of course not. That's why you don't just let money sit.
 
Slyfox696 said:
No. Just no. I get the feeling you don't understand how Social Security works. I'll give you the quick and dirty version.

1. Employees pay payroll taxes.
2. Payroll taxes are sent to the government who then send them out to Social Security beneficiaries. In simple terms, it has NOTHING to do with a Trust Fund (it does, but to keep it simple, it doesn't).
3. Overpayments of today's employees, meaning money from payroll taxes left over after paying benefits goes into the Trust Fund.
3a. Again, please note, for all practical purposes, we are NOT paying beneficiaries from the Trust Fund (even though we are, but for our simple explanation, it's easier to explain this way).
4. The money in the Trust Fund is simply OVERPAYMENTS of payroll taxes. This money, if left sitting in a cash envelope, would fall victim to inflation. Thus, in order to preserve the money and to be able to pay out the benefits necessary, the government borrows against the Trust Fund.

This really isn't hard to understand. We're borrowing money from ourselves, with the promise to pay ourselves back with the same purchasing value as when we borrowed it.

Yes, that's WHAT they do with it. WHY they borrow the money is to preserve the integrity of the fund, to keep it consistent with inflation.

I'm sorry you don't understand the basics of Social Security. I don't blame you, it's not easy to understand. I don't understand the technicalities of it either. But I do understand the general concepts behind it. And that's why I'm trying to educate you, to get you to do the same.
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the SS tax was to fund SS only. get it!! it's surpluses are NOT there to fund other government programs as congress has done but to fund future benefits. get it!!
 
Visbek said:
Visbek said:
Good grief. Let's try this again.

When we look at life expectancy changes AFTER reaching adulthood, aka 21 years of age:

• People are living longer than in the recent past.
• People are living more years beyond age 65 than in the past.
• As a percentage of the population, more people are living beyond 65 than in the past.
• People are retiring earlier than in the recent past.
• People are working fewer years than in the past.
• The age of eligibility has barely budged, in fact it was reduced slightly
• Women have increasingly entered the labor force since the 1970s. While this means more contributions, it also means higher payouts -- especially since women's adult longevity has increased more than men's.

Separately, birth rates have fallen, so we have fewer contributors as a percentage of the population.

Result? You have fewer contributors trying to support more recipients, at the same per-capita benefits.

It would be mistaken to say that the increased adult longevity is the only factor. But it's equally mistaken to say that it has no effect whatsoever.



I addressed that extensively in my post. Please try to actually read what I write next time.



And which "rise in costs" do you mean? Surely you can't mean COLA, since the payroll taxes have also kept pace with inflation, until a few years ago. Could it be that SS costs are rising because... more people are collecting Social Security for more years?
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It would be mistaken to say that the increased adult longevity is the only factor. But it's equally mistaken to say that it has no effect whatsoever.



I addressed that extensively in my post. Please try to actually read what I write next time.



And which "rise in costs" do you mean? Surely you can't mean COLA, since the payroll taxes have also kept pace with inflation, until a few years ago. Could it be that SS costs are rising because... more people are collecting Social Security for more years?
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In 1940, the cost of Social Security was 2% of the first $3,000. Today the retirement portion of Social Security is %10.6 of the first $117,000. If you inflation adjust the $3,000 you will find that it is roughly 1/2 of what it is today. I read your charts, one of which stopped in 1995 which is out of date. The other started in 1950, and it is unclear what data is presented. It says that an average person worked 54 years in 1900. I am guessing that the life expectancy of someone born in 1900 was about 50 years.

Visbek said:
Good grief.

It would be mistaken to say that the increased adult longevity is the only factor. But it's equally mistaken to say that it has no effect whatsoever.

I addressed that extensively in my post. Please try to actually read what I write next time.
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There is a certain amount of irony in your words. If you had read the article you would have found out that I said we have no idea what the impact of longer-life expectancy is because most people are looking at the wrong data points.
 
Slyfox696 said:
So? So what if it technically adds to the national debt, it doesn't change the fact it's debt we owe ourselves and debt which we have almost always been able to pay off easily. It's like taking from your car fund to pay your grocery bill. You'll still have money to put in the car fund when it's time to buy a new car, but right now you need to eat.
As we should. If I had put a $5 bill in a coffee can and buried it in the backyard 40 years ago, would it still be just as valuable today as it was when I buried it? Of course not. That's why you don't just let money sit.
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how is it that we rationalize the idea of our government borrowing from itself?

can you borrow from yourself?
 
mtm1963 said:
the SS tax was to fund SS only.
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And it does. Like I said.

get it!!
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Yes, I've always gotten it. What you don't seem to understand is how Social Security works or how inflation cripples money which is not invested.

it's surpluses are NOT there to fund other government programs as congress has done but to fund future benefits. get it!!
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Have you never heard of inflation? Have you never heard the phrase "a dollar doesn't go as far as it used to"? Are you completely incapable of understanding the Trust Fund is made up ONLY of overpayments into Social Security and it's not (realistically speaking) where the money comes from to pay benefits?

Do you not understand any of this, despite me explaining it to you multiple times?
mtm1963 said:
how is it that we rationalize the idea of our government borrowing from itself?
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Because it's a standard practice in any budget?

can you borrow from yourself?
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Uhh, did I not just give you an example of how a person borrows from oneself? People borrow from themselves all the time.
 
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mtm1963 said:
the SS tax was to fund SS only. get it!! it's surpluses are NOT there to fund other government programs as congress has done but to fund future benefits. get it!!
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Here is what I get. You believe that surpluses have funded other government programs. The SSA says that it is an urban legend, spread on the internet. Everything that you are saying about SS is the same as your private pension.
 
Slyfox696 said:
And it does. Like I said.

Yes, I've always gotten it. What you don't seem to understand is how Social Security works or how inflation cripples money which is not invested.

Have you never heard of inflation? Have you never heard the phrase "a dollar doesn't go as far as it used to"? Are you completely incapable of understanding the Trust Fund is made up ONLY of overpayments into Social Security and it's not (realistically speaking) where the money comes from to pay benefits?

Do you not understand any of this, despite me explaining it to you multiple times?
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congress spent the SS surpluses.
 
mtm1963 said:
congress spent the SS surpluses.
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With the promise they would pay them back with interest. And we always do. And if we hadn't spent the money, it would simply sit in a coffee can falling victim to inflation.

I don't know why you are having such a hard time understanding this.
 
Slyfox696 said:
With the promise they would pay them back with interest. And we always do. And if we hadn't spent the money, it would simply sit in a coffee can falling victim to inflation.

I don't know why you are having such a hard time understanding this.
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do you not understand this adds to the national debt?
 
mtm1963 said:
do you not understand this adds to the national debt?
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Do you not understand that it has no real harmful effect on the debt?

I'll use an example. Let's say you make $100 every week. You put half of the money into a grocery fund and the other half into a car fund. You give birth to a child and suddenly your grocery bill goes up. Now your grocery bill is $75 a month, but you still want to contribute $50 to your car fund. So you write yourself an IOU to pay back the $25 you still owe to the car fund.

This adds to the debt you have. Is this debt you owe to yourself something which worries you? Of course not. So your "national debt" argument is a waste of our time.
 
Slyfox696 said:
Do you not understand that it has no real harmful effect on the debt?

I'll use an example. Let's say you make $100 every week. You put half of the money into a grocery fund and the other half into a car fund. You give birth to a child and suddenly your grocery bill goes up. Now your grocery bill is $75 a month, but you still want to contribute $50 to your car fund. So you write yourself an IOU to pay back the $25 you still owe to the car fund.

This adds to the debt you have. Is this debt you owe to yourself something which worries you? Of course not. So your "national debt" argument is a waste of our time.
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every year the government pays interest on that debt to the tune of 100's of billions of dollars.

an individual can NOT borrow money like the US government can. get real. false analogy!!
 
mtm1963 said:
every year the government pays interest on that debt to the tune of 100's of billions of dollars.
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:lol:

But they don't pay the same interest on all the money, nor are they paid the same way. Your entire premise is overly simple to the point of being false.

an individual can NOT borrow money like the US government can. get real. false analogy!!
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It's not a false analogy. It's an overly simple one, because the fact of the matter is you don't seem to understand hardly anything about Social Security. I tried to give you a simple example of how it works. I'm sorry if you still don't understand.
 
Slyfox696 said:
:lol:

But they don't pay the same interest on all the money, nor are they paid the same way. Your entire premise is overly simple to the point of being false.

It's not a false analogy. It's an overly simple one, because the fact of the matter is you don't seem to understand hardly anything about Social Security. I tried to give you a simple example of how it works. I'm sorry if you still don't understand.
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i understand congress spent the SS surpluses. i understand congress has NOT paid back those borrowed SS monies. i understand this contributes to the national debt.

these points seem to go over your understanding.
 
JoeTheEconomist said:
There is a point where the discussion leaves the tracks. It is what Moynihan said. You can have your own opinions but not your own facts. Social Security taxes do not cover benefits. The revenue that you are quoting includes interest on the Trust Fund that you say doesn't exist. It started running deficits in 2010, generally speaking I say that it has not produced any revenue to borrow since 2009. That means it produced some excess cash to borrow in 2009, but not in 2010.

"When SS no longer has a surplus, it will contribute to deficits and debt even more than we already have."

This is factually not true. When SS no longer has a Trust Fund (surplus if you will), benefits are automatically cut. This is why people have a discussion about the size of the benefit cuts in 2033.
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If it included the interest, that doesn't matter. It is still in surplus as of 2013. Past predictions that I recall has it needed to cash in some of those bonds starting in 2017.

Did you look at the link I provided?

Where is your official site to show I'm wrong?

If I use OMB table 2-1 compared to table 4-1, 2013 shows even more of a surplus.

Link please.
 
mtm1963 said:
table 1 page two in the PDF file.

SS surpluses went toward reducing the yearly budget deficits.

http://www.cbo.gov/sites/default/fi...ts/43904-Historical Budget Data-corrected.pdf
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Social Security has been off-budget since 1990. The deficit is the on-budget column, which is what is the reported deficit. So your chart shows that Social Security isn't counted as part of the deficit. It also includes a column for debt held by the public. So what is the significance of the report again?
 
jonny5 said:
You lost me at mandatory pay increase.
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All the pay increase does is place the employers share of the FICA where the employee sees then pays for it. The only complication is the extra federal and state income taxes it would make a person liable for without tweaking the system there as well.
 
JoeTheEconomist said:
Here is the CRFB's disclosure....
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Good gravy. Are you really convinced the only person on the planet with the most absolutely precise figures? :roll:

It's not a policy planning tool. It's designed to give a general concept of what's involved in making SS solvent. Relatively simple tweaks like chained CPI, for example, will help but won't fix everything.

You also missed the bit about how it's updated annually.
 
mtm1963 said:
i understand congress spent the SS surpluses. i understand congress has NOT paid back those borrowed SS monies.
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The Trust Fund is, by law, held as Treasury securities. Those securities have been paid back, with interest. The interest rate is around 2%, which means it's keeping pace with inflation.

If the Trust Fund didn't keep pace with inflation, the value of the fund would deteriorate. Somehow, that doesn't seem like a preferable option.
 
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