The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration. It's time to start cashing them in. For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year. Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more. Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors.
Let’s do some simple arithmetic. If the Social Security Trust Fund has $2.5 trillion in government bonds – at the current interest rate of 4.5% it receives around $112 billion in interest income. So if benefits exceed payroll contributions by only $29 billion, wouldn’t the Trust Fund assets grow by $83 billion? Of course, Mr. Ohlemacher seems to be of the belief that these Trust Fund assets are supposed to cover those General Fund deficits. Ahem!
I'm just wondering. Is there anything in the law that would relate to the "crime" of journalistic deceit and/or deception? Does the first amendment cover the publication of information in the form of news which has the alternative goal of misleading the public? What happened to the concept of journalistic integrity or ethics? Or, have they always been a myth?
ReplyDeleteSocial Security ran cash deficits in every year but four from 1957 to 1982. And if it was ever back in long term actuarial balance would run cash deficits every year. That is a feature and not a bug, the Trust Funds are not investment vehicles, they are reserve funds.
ReplyDeleteWhen Social Security is in perfect balance a portion of earned interest sufficient to keep the Trust Fund ratio above 100 is retained, the rest is used to pay a small portion of benefits. That part of the interest will always show as a cash transfer from Treasury to Social Security. Meaning that cash surpluses are an anomaly.
Bruce,
ReplyDeleteNow stop it. All these facts about Social Security funding, the in flows, the out flows, the Trust Fund and all its interest income, etc. will do nothing but confuse the media experts and their cohorts in the Congress. You're always filling up otherwise valuable space with details and reasonable analysis. Stop it already. You're not doing your professional future any good with such a reactionary view of information dissemination. Get with the program man. Make a better life for yourself.
In business accounting debt is balanced by assets. When speaking of the social security debt they speak of government spending as if it was just a loss. Somehow no one seems to count the bridges, railroads, educated populace, defended country as assets worth having. I will grant you that you can't sell them to someone else, so it is impossible to put a $ figure on the government financed assets this country holds, but just the federal highway system should be worth a trillion or two by itself. And one thinks of the added efficiency these things add to everyone else's business, I think much of it is money well spent.
ReplyDeleteThe Social Security trust fund represents all the money that the Republicans stole from the wage earners to allow those income tax cuts for the rich. We were told in the 80's that if the FICA tax was increased then we would have enough money saved up to take care of the baby boom problem. Most of us realized that it was a scam to transfer tax obligations from the non working rich to the working people. But we were also told that the rich people would be spending that money they saved on new factories and such that would provide jobs and opportunities for the wage earners in the future. The ole "supply side", "trickle down" soft shoe.
ReplyDeleteWell the Republicans did the tax cuts at our expense and the rich built factories in Mexico and China. Its past time to get our money back. Can any of you point to a time in the history of this country when very high tax rates on people with ordinary income in excess of a million dollars and/or 10 million dollars (in today's money) has ever had an adverse effect on the economy.
And another thing!
ReplyDeleteA quarterly stimulus financed by the sum of an import duty of 5% on all goods coming from outside the NAFTA zone and a hefty tax on carbon fuels would be a very good deficit neutral economic stimulus.
Any takers?
In the mid 80s, Reagan and Greenspan increased Social Security taxes to create a surplus that would be available to help "finance" increased outflows when the boomers retired. Starting about 2015-2017 (the date varies due to the impact of the current recession reducing current Soc. Sec. taxes), expected and planned for excess of payments will exceed Soc. Sec. taxes and Trust Fund interest earnings. That is, Soc. Sec. finances are working exactly as planned. What's all the fuss?
ReplyDeleteThe fuss is that there is now, and has been for a long while, an effort afoot to obscure the point that Anonymouos states, above. Suddenly "experts" have woken up to the fact that the Trust Fund assets were not solely intended as a cash cow for the purpose of tax relief. Now the obligation of the Treasury to follow through on the original intent of the Trust Fund assets is being portrayed as an unbearable expense/burden on the economy. That's the fuss, that there are a cadre of deceivers in responsible clothing who want the fruits of people's labor to flow only up hill. There is no trickle down. Never has been and never was intended to be.
ReplyDeleteHi pgl.
ReplyDeleteCould you e-mail me at angrybearblog@gmail.com
Best,
Dan
More fear mongering!
ReplyDeleteIt would be good to get back to having the SS trust fund behaving more like the optimistic projection than the pessimistic one. However, the current annoying, but not fatal, situation of the system is probably the least of our problems in this still very nasty recession.
ReplyDelete