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Thread: 5 Myths That Pass For Facts About Social Security

  1. #21
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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by SouthernDemocrat View Post
    Social Security doesn't concern me that much. In the worst case scenario the government will just reduce benefits.

    The real problem is Medicare. You can't just reduce benefits with it because healthcare needs are going to be completely unrelated to benefit levels or economic performance for seniors (how the economy is doing, what Medicare benefit levels are and so on have nothing to do with the number of seniors with heart disease, cancer, diabetes, dementia and so on). Moreover, you can't privatize it because insurers run into the same problem the government is running into - seniors are very, very, very expensive to insure because they are very, very, very high risk. The only solution to the Medicare problem is to significantly reduce provider costs and get them more in line with our peer nations, but no one in either party is talking about that one. They treat health care costs as a problem with insurance premiums and ignore the fact that insurance premiums are high because many providers are billing exorbitant rates for their services. The closest anyone in either party gets to talking about actual healthcare costs are drug prices, but that is only about 10 to 15% over all health care spending.

    Another big looming problem is that the shift from pensions to 401Ks for most people has not really panned out. Most people in their 50s don't have nearly enough money in their 401Ks to fund their future retirement. There is a variety of reasons for that, some related to poor planing by many individuals, but also a lot of things outside of their control.
    I think that will depend on the age demographics of the voting population.
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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by radcen View Post
    I think that will depend on the age demographics of the voting population.
    Right, but anyway you figure it, the looming problems meeting our obligations with Social Security are nothing compared to Medicare.
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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by radcen View Post
    Let's see. #1 is a bold-faced lie. Total money out vs total money in, IOUs, etc., means it has been used to mask the real deficit.

    re #7: Ooooh, 7 years. Convenient cut-off point. That's not very long ago. How about before that?
    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.

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by SouthernDemocrat View Post
    Right, but anyway you figure it, the looming problems meeting our obligations with Social Security are nothing compared to Medicare.
    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.

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by fmw View Post
    .....

    Revenue from FICA taxes goes into the general fund and goes out of the general fund. You can't separate out SS except as an accounting entry.
    That's a myth...

    "...The Social Security Trust Fund has never been "put into the general fund of the government."

    Most likely this question comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no effect on the actual operations of the Trust Fund itself...."

    https://www.ssa.gov/history/InternetMyths2.html

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by JoeTheEconomist View Post
    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.
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    You know, it used to be when you bought a politician, that son of a bitch stayed bought.

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by JoeTheEconomist View Post
    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...ity_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.

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by JoeTheEconomist View Post
    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.
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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by radcen View Post
    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#

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by Moot View Post
    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...ity_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.

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