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5 Myths That Pass For Facts About Social Security

Do you realize that there is more than one "deficit"? So there isn't a real and a non-real deficit. If you want the real deficit, you would likely use the one required by law which excludes the revenue and expense of Social Security.
I am fully aware that the government uses "smoke and mirrors" to spin what they want us to think, and budgeting & deficits is no different. I prefer to not fall for such cheap parlor tricks and use the standard that most people use in their own lives... "total money in vs total money out". THAT's the proper way to gauge a deficit.

You are free to continue your attempt at fostering the deception, of course, but I won't be a party to it.
 
In the discussion of Social Security, the meaning of the same word changes from sentence to sentence. This is how you find that SS is a driver of our long-term deficits, and yet does not add a penny to our deficit. You need to know what the word "deficit" means. Most of these myths come from people who think that the words have the same meaning as in the English language.


1. Social Security has not added one penny to the deficit.


You tell me which "deficit" you are talking about, and I can tell you how much SS adds to it.

Congress borrowing from Social Security adds to the 'public/national debt'...not the budget deficit...

"...Excess funds are used by the government for non-Social Security purposes, creating the obligations to the Social Security Administration and thus program recipients. However, Congress could cut these obligations by altering the law. Trust Fund obligations are considered "intra-governmental" debt, a component of the "public" or "national" debt. As of June 2015, the intragovernmental debt was $5.1 trillion of the $18.2 trillion national debt.[6]

https://en.wikipedia.org/wiki/Social_Security_Trust_Fund


2. Social Security can pay every penny of benefit to every eligible American for 17 years.

The Trustees say that SS has a coin flips chance of paying scheduled benefits in 2034. People are generally converting a wild-ass guess into some kind of promise.

It's true...if nothing changes then SS can only pay full benefits until 2034. After that, the money SS pays out will exceed it's incoming revenue and they'll only be able to cover 79% of benefits and it goes down 1% each year after that. The trust fund won't be totally exhausted until 2080(?)...if congress does nothing. But whether congress will do anything or not is anyone's guess.

3. Social Security is going/is not going bankrupt.

When someone uses the word bankrupt in a discussion about Social Security, it is click bait. Whether it is pro or con, the writer is trying to get shares.

I don't think the government will ever go bankrupt...because it can always raise taxes and borrow. So the SS trust fund can't really go bankrupt either because it can redeem it's US government securities which are backed by the full faith and credit of the US government....which congress would then have to raise taxes and borrow to pay.


5. The government has raided the Trust Funds to pay for other programs.

The program has not generated a penny of free cashflow to "raid" in 7 years.
It's true. Congress has borrowed and owes over $5.1 trillion to the SS trust fund...plus interest. But currently, SS is running a surplus until 2019 because of an increase in tax revenue and interest bearing securities over the last few years. Also, I don't think SS has a "cash flow" because a) it's not a business and b) by law the surplus from SS tax revenues has to be invested in Treasury bonds.
 
I would check your estimates. Medicare is today, and for the forseeable future is a smaller expense than Social Security. The reason for the size of the gaps isn't on the expense side. If you flip the financing of Social Security with that of Medicare you find that SS is the driver of our financial gaps.

Total Medicare and Medicaid (seniors account for a lot of Medicaid spending) outlays 2015 was 1158 Billion compared to SS at 905 billion. As inflation rates for the healthcare sector far exceeds the rest of the economy, the problem will only get worse.
 
I am fully aware that the government uses "smoke and mirrors" to spin what they want us to think, and budgeting & deficits is no different. I prefer to not fall for such cheap parlor tricks and use the standard that most people use in their own lives... "total money in vs total money out". THAT's the proper way to gauge a deficit.

You are free to continue your attempt at fostering the deception, of course, but I won't be a party to it.

I apologize. I dropped off, and did not get a notice of your reply. You have of course chosen the measure that does not conform to the law. The SSA provides a statement of actuarial opinion. They have a compelling argument. Their accounting standards are consistent with current law where as the one you are choosing doesn't.

https://www.ssa.gov/oact/TR/2017/Z_trActOpn.html#
 
Congress borrowing from Social Security adds to the 'public/national debt'...not the budget deficit...

"...Excess funds are used by the government for non-Social Security purposes, creating the obligations to the Social Security Administration and thus program recipients. However, Congress could cut these obligations by altering the law. Trust Fund obligations are considered "intra-governmental" debt, a component of the "public" or "national" debt. As of June 2015, the intragovernmental debt was $5.1 trillion of the $18.2 trillion national debt.[6]

https://en.wikipedia.org/wiki/Social_Security_Trust_Fund




It's true...if nothing changes then SS can only pay full benefits until 2034. After that, the money SS pays out will exceed it's incoming revenue and they'll only be able to cover 79% of benefits and it goes down 1% each year after that. The trust fund won't be totally exhausted until 2080(?)...if congress does nothing. But whether congress will do anything or not is anyone's guess.



I don't think the government will ever go bankrupt...because it can always raise taxes and borrow. So the SS trust fund can't really go bankrupt either because it can redeem it's US government securities which are backed by the full faith and credit of the US government....which congress would then have to raise taxes and borrow to pay.


It's true. Congress has borrowed and owes over $5.1 trillion to the SS trust fund...plus interest. But currently, SS is running a surplus until 2019 because of an increase in tax revenue and interest bearing securities over the last few years. Also, I don't think SS has a "cash flow" because a) it's not a business and b) by law the surplus from SS tax revenues has to be invested in Treasury bonds.

I apologize that I was unaware that you had replied.

1) Social Security receives general fund subsidies that add dollar for dollar to the deficit. Let me know if you want the page number from the Trustees Report.

2) it is not true. The Trustees aren't forecasting how long Social Security "will" last. These forecasts take a single economy (out of an infinite set of possibilities) and project how Social Security would perform. These are fairly optimistic assumptions, and the trustees say it is about a 50% chance. That is a long way from "will".

3) payroll taxes - expenses = operational cash flow. That is the only sum of money that Social Security can borrow from. It has had a negative operating cash flow since 2010. Interest is self-financed, meaning that the program prints the money that is used to pay the interest.
 
I fully expect the Government to start means testing Social Security at some point.
it will start small, like if someone has any type of income above $6000 a month,
then their SSI payment will drop to zero, with a sliding scale above $3000 a month.

Then refund all their contributions to the retirement system if they are denied their benefit.
 
The guy who makes $6,000 a month will have 85% of his benefits subject to tax. At that threshold you are typically looking at 25 percent tax rates because the tax is applied at the marginal tax rate. The average benefit is $1,300 per month, so the system will clawback about $4,000 in total. It is a hefty tax. At $2,000/mo it is about $6,000 going back.

And if the person has been earning that much and his SS contributions are at the max his benefit will be about $2500 a month.
 
Then refund all their contributions to the retirement system if they are denied their benefit.

Refund them from where? The system is primarily pay as you go.... Even at 2.8 trillion, you have about $0.08 of solution for every $1 of problem.
 
And if the person has been earning that much and his SS contributions are at the max his benefit will be about $2500 a month.

If the guy was earning $6K per month in real-terms, he likely hasn't paid the max in decades.
 
How SS works is that it's deducted from your paycheck and placed in the general fund. When you retire the federal government sends you a check originating from the general fund. The general fund is the total tax receipts collected during the year. It always runs a deficit. So either more money is borrowed (T-Bills) or money can be electronically printed.

For may decades more money was collected into the general fund from the SS tax than had to be sent out in checks. This "surplus" was spent on other things. For the past several years it was about break even, but now the government must send out more in monthly checks than it collects on payroll SS taxes. This is known as a deficit. The checks must go out, though, so this means even more borrowing and/or money creation. This adds to the deficit/debt.

How long the federal government can go on borrowing/printing is anyone's guess. However, our debt is about 100% of GDP; Japan has a national debt of over 200% of GDP. So we can probably go on for a few more decades yet. And actually, the amounts we are going to need in the future are astronomical. But on the bright side; we are the world's reserve currency. Besides, where they (bond investors) gonna go? Every other country is in the same boat or worse.
 
However, our debt is about 100% of GDP; Japan has a national debt of over 200% of GDP. So we can probably go on for a few more decades yet. And actually, the amounts we are going to need in the future are astronomical. But on the bright side; we are the world's reserve currency. Besides, where they (bond investors) gonna go? Every other country is in the same boat or worse.

The difference is, Japan isn't setting about trying to unplug Grandma's heat and take away her Medicare so "the rich men can enjoy their money", or any of the other fanciful Ayn Randian delights that are almost unique to the American conservative.

MommySezRichNeedOurFoodStamps.jpg

And, in the end, most if not all of these issues arise almost exclusively from the Right's penchant for
(A) "creating wealth" by leveraging the national credit card
(B) putting WARS on the national credit card
(C) paying for the resulting debt by destroying social programs that help the less fortunate
(D) projecting their irresponsibility on NORMAL people who think it's a good idea to TAX people in order to pay for programs,
(E) continually dream up new and exciting ways to cripple WORKING programs by gradually chipping away at their funding, then screaming about how those programs don't work ("Break the plow then blame the farmer)
(F) projecting further on rational thinking people and blaming them, and finally,
(G) funding alternative studies using research paid for by groups that want to advance the above agendas further in order to create a revisionist view of reality.

We've gone from an economy where an average single wage earner could support a family, house them, educate them, get their health care and even save a little for the future by simply working an ordinary forty hour week to being a banana republic where TWO wage earners working 60 or even eighty hours a week can't make ends meet and are one paycheck from the street.
The decline curve is a 100% reflection of other curves, like Laffer Curves and other voodoo economics that represent trickle down, for nearly a half century.
Someday it's going to work, so we're told, if we just cut some more taxes, just cut some more social programs. SOME DAY, those rich people will finally have eaten so much that they will vomit out all that trickle down wealth to the average joe. Wealth trickles down, despite every evidence to the contrary, so we're told.

You'd think if the little guy were to get his hands on some small amount of money, he'd SPEND it GUARANTEED, and it would end up in the rich people's pockets almost overnight anyway, but at least for a moment the little guy would have something to show for it.
Nope nope, the little guy is supposed to stick around and wait for that big payoff...any day now...it's going to trickle down.
No amount of modern day Hoovervilles seem able to expose this royal scam anymore. The lies have been pumped up SO LARGE that they block out the sun, so they must be the truth. After all, no matter where you look or listen, it's all you can see or hear these days.

Even though almost forty years has passed and it still hasn't paid off yet.

813px-Anti-capitalism_color.jpg
 
Checckerboard Strangler; We've gone from an economy where an average single wage earner could support a family, house them, educate them, get their health care and even save a little for the future by simply working an ordinary forty hour week to being a banana republic where TWO wage earners working 60 or even eighty hours a week can't make ends meet and are one paycheck from the street.

I would agree that times are tougher. Coming out of WWll we were the big dog, the last man standing, so to speak. The world depended on American productivity, and that enabled companies to agree to fat contracts and great pensions. Their main goal was to keep the line moving because they could sell everything they made, no matter how poor the quality. That advantage is gone.
The rich weren't the problem then and they are not the problem now. Today American workers compete with very low paid workers in a global economy. While millions of peasants have been pulled out of poverty in the Third World due to the global economy it has resulted in stagnated wage growth in this country, and in most developed countries. And there is no incentive to share profits with workers because it is so easy to move businesses overseas. What makes it so easy? Not what you probably think. It isn't because foreign countries have lower taxes, or lax worker and environmental laws; those are incentives, but not the main reason. Why companies are so willing to move is those foreign countries now have great supply chains; so whatever your company needs is readily available, right there, right now. The problem companies have when trying to re-locate back here is a poor or non-existing supply chain. Just try to make TV's or most other electronics here; it's difficult. And we no longer have people experienced at making these things.

The other development that effects the middle class is heavy taxation. Not just federal; but state, local (property/ cars/RV's/boats/etc.), and all the fees that are charged for every little thing. Sales tax at 10.25% in my local area. Today , if the wife makes a little less than her husband, which is still usually the case, her entire salary will go to pay the family overall/cumulative tax bill. So she has to work. And then the family has to pay for child care, another car, the insurance and up-keep, and labor saving devices so she can still keep the home going while she works. Yep, women got liberated all right. Now they have to work full time and keep house full time. While someone else raises the kids, or they raise themselves.

You're right; the rich have done better. What did you expect in a global economy? The most important thing in a global economy is capital. Labor is a commodity. Capital for building out, for marketing, to take advantage of our (relatively) new global communication network and cheap shipping, both of which helped make globalism possible. But capital is the key. It is the life blood of the global economy. It moves things. It makes all things possible. And guess who has capital? Yep, rich people. That's why the stock market is setting records; the returns on capital are genuine and impressive in this global economy.

But something else is also happening. Rich people are getting richer but their ranks are also growing at a nice clip. People who were formerly middle class are becoming rich, because they invest wisely. The ranks of millionaires is growing. It's getting pretty crowded at the top. There is also another trend developing. Last month the employment report showed around 225K new jobs added to the economy, but critics complained they were mostly low paying jobs. Too bad those critics don't understand employment. Those new jobs added were mostly low pay for a good reason; skilled workers already have jobs. So the hiring is only in the low skill areas. Most all of the skilled workers laid off during the Great Recession of 2008 are back in good jobs, or out of the workforce. According to Mike Rowe, and the government, we now have 6 million good, skilled jobs going un-filled due to a lack of workers skilled in those areas. Look at the projections for retirements in the construction trades; law enforcement, teaching, medical, etc.; we won't be able to fill the vacancies.

BTW; I hope you don't talk to young people about this stuff. I guarantee they don't want to hear they have no future; especially when it isn't true. It isn't the rich, white people, or anyone else keeping a person down. Making poor choices keeps a person down.
 
I fully expect the Government to start means testing Social Security at some point.
it will start small, like if someone has any type of income above $6000 a month,
then their SSI payment will drop to zero, with a sliding scale above $3000 a month.

Right now if you earned 3k a month you would get zero SSI payments.
 
Right now if you earned 3k a month you would get zero SSI payments.
Under the right circumstances. age type of income, ect.
For a person over 70 with a pension or an annuity, I am not sure, do you have a citation.
 
Im thinking that you are mistaking Supplemental Security Income (SSI) for something else.

https://www.ssa.gov/ssi/text-income-ussi.htm

I do not think so, from your own link there is a long list of,
"WHAT INCOME DOES NOT COUNT FOR SSI?",
including this vague statement,
interest or dividends earned on countable resources or resources excluded under other Federal laws;
.
It could be possible for a person to make lots of the right kind of income, without it affecting their ssi payments.
I think as the income vs outlay of social security gets worse, they will open up all income to the means testing.
 
In the discussion of Social Security, the meaning of the same word changes from sentence to sentence. This is how you find that SS is a driver of our long-term deficits, and yet does not add a penny to our deficit. You need to know what the word "deficit" means. Most of these myths come from people who think that the words have the same meaning as in the English language.


1. Social Security has not added one penny to the deficit.


You tell me which "deficit" you are talking about, and I can tell you how much SS adds to it.

2. Social Security can pay every penny of benefit to every eligible American for 17 years.

The Trustees say that SS has a coin flips chance of paying scheduled benefits in 2034. People are generally converting a wild-ass guess into some kind of promise.

3. Social Security is going/is not going bankrupt.

When someone uses the word bankrupt in a discussion about Social Security, it is click bait. Whether it is pro or con, the writer is trying to get shares.

4. Social Security is a driver of our long term debt.

The problem in Social Security is the amount of money that it will not spend. Not spending money is not the cause or really even a contributor to our debt.

5. The government has raided the Trust Funds to pay for other programs.

The program has not generated a penny of free cashflow to "raid" in 7 years.

If you wish to find source material or a longer description,
5 Myths About Social Security Often Accepted as Facts

Did George W. Bush 'borrow' from Social Security to fund the war in Iraq and tax cuts? | PolitiFact

There goes your conservative source.
 
I do not think so, from your own link there is a long list of,
"WHAT INCOME DOES NOT COUNT FOR SSI?",
including this vague statement,
.
It could be possible for a person to make lots of the right kind of income, without it affecting their ssi payments.
I think as the income vs outlay of social security gets worse, they will open up all income to the means testing.

Ive dealt with SSI their income cap is indeed a cap.
 
Ive dealt with SSI their income cap is indeed a cap.
Only for what is classified as countable income.
A person could have some types of income that are not counted,
which is what your own link said, they had an entire section called,
WHAT INCOME DOES NOT COUNT FOR SSI?".
 
Doesn't the OP post this same thread wvery few months? I swear I've read this B4.

No, but you aren't alone. People generally are so disinterested in the subject of Social Security that they tend to lump all of the opposing views into a single critique. In this case, you are apt to agree with some of the myths, and disagree with others. It is more likely that you have seen common themes.

I recently put a piece in MarketWatch about how far SS has drifted from the public conscientiousness. Tax reform presents a serious problem for Social Security, and no one not even the critics of the GOP's tax plan covered the problem. What coverage you get is distilled ideology, rather than thoughtful analysis of the impact on the program. Neither CBO nor SSA weighed in the impact, because no one asked.
 
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