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Thread: 5 Myths That Pass For Facts About Social Security

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    5 Myths That Pass For Facts About Social Security

    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

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    Re: 5 Myths That Pass For Facts About Social Security

    Fake News is contagious

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    Re: 5 Myths That Pass For Facts About Social Security

    Everything in politics is contextual

    Correct me if I am wrong, but as I understand it the deficit is how much the government overspends? How much more the government is spending than it is taking in.
    People don't think it be like it be, but it do
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    Re: 5 Myths That Pass For Facts About Social Security

    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.

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by Cigar View Post
    Fake News is contagious
    Yes, but the Trustees normally do not participate in Fake News - or our problem in the program is much larger...

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by ForeignRightist View Post
    Everything in politics is contextual

    Correct me if I am wrong, but as I understand it the deficit is how much the government overspends? How much more the government is spending than it is taking in.
    It isn't that you are wrong, but you have to be careful about what is 'taking in' means. Historically, Social Security was moved off-budget in 1990 under the 1983 Social Security Reform Act. The reason for doing so was so that future Congresses would not be tempted to use surpluses in Social Security to offset spending elsewhere in the budget. If you follow the law, the revenue collected for Social Security should not be included in 'taking in'. The expense is separate from the government's budget as well. Social Security is its own beast (if you follow current law).

    While Social Security is supposed to be 'off-budget', CBO produces a budget called the Unified Budget that includes Social Security. That is the budget that you normally see cited in the newspaper. In that budget analysis Social Security is simply a Profit Loss Center for the government. It treats payroll taxes as general revenue, which is absurd and encourages people like CBO's director to say that SS is driving the budget deficits. When someone tells you that Social Security doesn't add to the deficit, it is built on the false assumption that SS is 100% funded by payroll taxes without any general fund subsidies.

    The reality is that Social Security collects about $30 billion in annual subsidies from the government (mostly from the taxation of benefits). From an accounting point of view and current law, that is dollar for dollar deficit spending.

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by longview View Post
    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.
    It may.

    In 1983 when Social Security enacted the taxation of benefits, the threshold was approximately $5,000/mo (inflation adjusted). That change does not help Social Security much because these people are already losing a substantial portion of their benefits.

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    Re: 5 Myths That Pass For Facts About Social Security

    [QUOTE=JoeTheEconomist;1067379540]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.
    The reason is that social security is not counted in government deficit reports.

    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.
    Depends on the economy and revenue collection.

    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.
    If government had a legal requirement to pay SS benefits from FICA taxes collected, it would have been bankrupt long ago. Bankruptcy doesn't apply to government. It can reduce or cancel payments without bankruptcy.

    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.
    It doesn't spend anything. SS payments are made from the general fund. Government spending including SS drives our long term 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.
    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.

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by JoeTheEconomist View Post
    It may.

    In 1983 when Social Security enacted the taxation of benefits, the threshold was approximately $5,000/mo (inflation adjusted). That change does not help Social Security much because these people are already losing a substantial portion of their benefits.
    I had not considered the income tax aspect side. A person making $6000 a month will have a considerable tax liability.
    The roughly $2000 a month in SSI payments could move them from the 15% bracket to the 25% bracket,
    sending much of their $2000 a month back to the Governemnt.

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    Re: 5 Myths That Pass For Facts About Social Security

    Quote Originally Posted by longview View Post
    I had not considered the income tax aspect side. A person making $6000 a month will have a considerable tax liability.
    The roughly $2000 a month in SSI payments could move them from the 15% bracket to the 25% bracket,
    sending much of their $2000 a month back to the Governemnt.
    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.

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