Social Security: Has anythig been discussed in DU

[Sebass1271]

about what is about to happen with this system? What the hell is going on and where have the money gone? The news today is social security will not be there at the time my hsuband and I retire and my question is, i have been working since i was 15 years old, where has my money gone and why i will not be able to collect my money when I retire?

[sweettater]

1. Baby Boomers

are receiving SS now. More money being paid out than money coming in.

[TahitiNut]

4. No "baby boomer" is yet collecting full Social Security retirement benefits.

That won't happen until 2012 at the earliest.

[sweettater]

28. alright, maybe not full

benefits but I am a baby boomer and I opted to receive benefits at 62. Either way it is a definite drain on the social security system.

[notadmblnd]

5. maybe the US should consider taxing offshore employees?

when no one is working, no one pays into the system.

[area51]

26. Exactly.

Rightwingers keep saying that it's "unimportant" that offshoring/inshoring is the norm, but these people don't pay into the system.

[Fresh_Start]

7. Baby boomers paid more into social security than any other

generation and they will be the first generation to be screwed with less out than they paid in.

[sinkingfeeling]

9. Wrong. There will be a surplus of $18.8 billion in 2009 and $18.3 billion in '10.

Plus Social Security is to collect $238 billion in bond interest in those years in addition to its tax collections.

[lumberjack_jeff]

20. Baby boomers consented in 1983 to pay more than necessary...

... so they wouldn't be a burden on their kids.

There is now $2 trillion "in the bank" for that purpose.

[Romulox]

21. There is no "bank" where SS surplus resides. It's been spent. All of it.

:hi:

[lumberjack_jeff]

24. Bullshit.

It has been "spent" in the same sense that the money your bank loaned you to buy your house was. Whether it has been spent is irrelevant, the obligation for repayment is real.

Workers invested in US debt just like China did. China expects the US to honor the terms of those actual, physical bonds. Workers should demand no less.

[Romulox]

27. "Whether it has been spent is irrelevant..."

Hard to discuss the matter with someone for whom facts are "irrelevant". :shrug:

"the obligation for repayment is real."

Actually, no it's not. The law can be changed tomorrow. You have no vested right to Social Security.

[lumberjack_jeff]

37. The Social Security Administration has a vested right to the bonds it purchased.

The money isn't gone, it's in DC, printed on physical bonds and backed by the same "full faith and credit" that backs our currency.

The trust fund is as real as the two dimes in my pocket.

Don't move the goal posts, certainly congress and the SSA trustees have the authority to change the taxes or the benefits... but no one in government has the authority to reneg on our debt.

"Facts", when they don't pertain to the topic, are irrelevant. Certainly government spent the money it borrowed. That is irrelevant to the fact that government repays its debts, even their debt to me.

[Romulox]

38. You're confusing DEBT with MONEY.

"The money isn't gone, it's in DC, printed on physical bonds and backed by the same "full faith and credit" that backs our currency."

A promissory note isn't money. It's a promise to pay money. To say that "the money isn't gone, it's in DC, printed on physical bonds" betrays a basic misunderstanding about what a bond is. To the issuer (the American taxpayer) a bond is a promise to pay money.

"backed by the same "full faith and credit" that backs our currency."

Nope. Congress could eliminate my SS benefit tomorrow. I'd have no legal recourse.

"Don't move the goal posts, certainly congress and the SSA trustees have the authority to change the taxes or the benefits... but no one in government has the authority to reneg on our debt."

You're simply mistaken. You do not have a property right in SS monies until the check is in your hands. The Congress could write off the entire SS debt tomorrow, if it wished. You and I would have no recourse.

"That is irrelevant to the fact that government repays its debts, even their debt to me."

The government doesn't have a debt to you. It has an underfunded, fully rescindable promise.

[lumberjack_jeff]

39. Money IS debt

http://www.youtube.com/watch?v=vVkFb26u9g8

You're creating a straw man. I'm not biting. Your premise is that because congress could "reform" social security, the trust fund is an accounting fiction. The former doesn't imply the latter.

At worst, some future congress could rework the social security benefit structure such that Social Security would have no need of the money that the general fund owes it.

Absent that reform, which workers should oppose with all their might, the federal government is obliged to honor its debts.

[Romulox]

40. You're arguing a point nobody has made.

My only point is that the so-called "trust fund" is an obligation to the American taxpayer, not an asset.

"Absent that reform, which workers should oppose with all their might, the federal government is obliged to honor its debts."

Errr, "workers" are the ones being taxed to pay these benefits. And the federal government may be "obliged" to pay these debts, but it is not legally obligated to do so--again, you have no contractual or property right to receive SS benefits.

PS No idea why you are so hostile about this. I'm discussing the basic facts of the matter, and you're reading motivations into my attempt to discuss these facts that simply aren't there. :hi:

[lumberjack_jeff]

41. I'm frustrated because of the defeatism implicit in this argument.

The underlying assumption is that the debt the federal government has to the Social Security system (and by extension, workers) is a different type of obligation, not backed by the same force of law as the debt owed to overseas investors.

That trust fund is not a worthless IOU. It is an asset in exactly the same way a t-bill and a dollar bill are. Their only intrinsic value is the faith and credit of the government backing them.

"Taxpayers" are not one thing. If the subset of taxpayers who pay primarily SSI taxes (workers) refuse to allow the government to re-do the benefits formula, "government" (a different subset of taxpayers) will redeem those bonds, thus repaying that debt.

That is the way it was intended, it is the way it was sold to the american worker and it is the way it should play out.

I refuse to panic because investors, wealthy inheritors, high income workers and corporations don't like the idea that their free ride at my expense is about to come to an end.

[TahitiNut]

35. Newsflash: Even a "bank" 'spends' its deposits. It's not a mayonnaise jar.

Just as a bank lends out deposits, so has the Social Security Trust Fund loaned reserves to the Federal Government. T-Bills are still the most secure. When t-bills default then EVERYTHING goes to Hell in a handbasket.

[Romulox]

36. Right. But a bank and a depositor are TWO DISTINCT ENTITIES

In the case of SS, both the payor and the payee are the American people; there is no third party (such as the bank, in your analogy,) from whom to collect this "debt". Instead, the only parties obligated to "pay back" the Social Security "trust fund" are the American taxpayer--the self-same workers for whom we are told the benefit will run out (in "only" 30 years! :wtf: )

Do you see how this is a starkly different situation than the one that exists between a bank and a depositor? If not, why not make yourself rich? Just write: "I owe me one zillion-trillion bucks!" Does having this IOU make you rich? No? Why? Because the payor and payee of the note are the same entity! :hi:

"T-Bills are still the most secure."

There are no T-Bills in the so-called "trust fund".

[RaleighNCDUer]

22. Wrong. Most baby boomers are still working, and are in fact at the

height of their earning capability, which means they are paying more into the system than ever before.

The boomer generation began in 1945. Retirement at 67. The leading edge of the boomer retirement is in 2012. The bulge in the snake's belly was 1956. They hit retirement in 2023. With the average lifespan being 77, the boomers will already be dying off by the time the maximum numbers hit retirement - after 2023 the early boomers will be dying at about the same rate as the late boomers are retiring, so it will be a wash.

"It's not going to be there" is nothing short of a lie.

[sweettater]

2. Baby Boomers

are receiving SS now. More money being paid out than money coming in.

[county worker]

10. Wrong! I will be 63 tomorrow. I can't retire on full benefits until I am 66 which is in 2012.

I am one of the first baby boomers. I could retire on lower benefits sooner but that isn't happening very much. It isn't baby boomers as much as the fact that there is no trust fund. The last I heard was that the money is there until 2041 and could be there forever if the cap was raised. The current problem is caused by the layoffs but that will turn around in the future.


But you can dump on us boomers if you want we have strong backs.

[Sebass1271]

12. i remember al gore saying social security and "lock box"

was social security funds used for something else besides pvoding funds for retirees? iam afraid it was but i dont have info on this..

[county worker]

23. Social security money is borrowed by the government for other things.

The trust fund is a bunch of IOUs. If the IOUs are not paid back the money is not there.

[sinkingfeeling]

25. They're not IOUs but US Treasury bonds. If our government defaults on those, we have no country.

[county worker]

31. US Treasury Bonds = IOUs

[sinkingfeeling]

34. Then I guess you'd better learn Chinese, since they will be pretty pissed about that.

[lumberjack_jeff]

42. And your savings account statement is something other than an IOU? n/t

[bkkyosemite]

19. Born in 1946 I am one of the first of the Boomers. If you decided to take SS at 62 than yes a Boomer

can be recieving SS now but if you wait until you turn 66 than you can recieve your full % of SS. I just turned 63.

[sinkingfeeling]

3. Sign up for this newsletter.

http://www.cepr.net/

CEPR STATEMENT ON SOCIAL SECURITY BOARD OF TRUSTEES REPORT

Social Security Projections: Downturn Does Not Affect Long-Run Picture



For Immediate Release: May 12, 2009
Contact: Alan Barber, 202-293-5380 x115

The 2009 Social Security Trustees Report shows a considerably worse short-run picture and slightly worse long-run picture than the 2008 report. In the short-run, the annual surplus of taxes over benefits is projected to be just $18.8 billion in 2009 and $18.3 billion in 2010. This compares with projected surpluses of taxes over benefits from the 2008 report of $87.1 billion for 2009 and $82.7 billion for 2010. (It is important to note that the Trust Fund is projected to collect $238 billion in interest on government bonds in these years, in addition to its tax revenue.)

It is not surprising that Social Security's annual financial picture deteriorates in a downturn. This is entirely predictable and in fact desirable. Social Security's tax revenues fall as workers lose their jobs.

Almost two-thirds of the reduced surplus this year is due to an unusually large cost-of-living increase for 2009. The latest adjustment accounts for last year's rise, but not the fall in oil prices. Though continuing benefits are automatically adjusted for inflation, this year Social Security will be paying a 6.9 percent larger real benefit to retirees, disabled workers and their families.

In this way the program provides income security to households and acts as an important stabilizing force in the economy. Social Security would be a much less effective program if its annual finances did not deteriorate when the economy went into a slump.

This short-term falloff in revenue has a relatively limited effect on the program's finances as indicated by the limited movement in the projected date of the Trust Fund's depletion (from 2041 to 2037) and the modest increase in the projected size of the 75-year shortfall (from 1.70 percent of payroll to 2.00 percent of payroll). The longer-term financial health of the program will be dependent on a series of factors about which we can only guess at this point.

First, we do not know whether the economy will sustain the accelerated rate of productivity growth from 1995-2005 period. The average annual rate of economy-wide productivity growth averaged 2.3 percent over this decade, far above the 1.7 percent growth rate assumed in the 2009 trustees report. If the economy can sustain this rate of productivity growth in the years following the recovery, then more than 30 percent of the projected shortfall would be eliminated.

The second key factor about which we have little knowledge at this point is the wage distribution. The upward redistribution of wage income in the years following the 1983 reforms substantially worsened the projected shortfall. In 1983, 90 percent of wage income fell under the Social Security cap. However, this had fallen to just 83 percent by the beginning of this decade.

It is possible that the events of the last two years will at least partially reverse this upward redistribution of income, most obviously by cutting salaries for the most highly paid workers in the financial industry. If the upward redistribution of the last quarter century were fully reversed, it would eliminate approximately one-third of the projected shortfall.

A third key factor will be the trend in health care costs. The trustees assume that there will be a growth in the gap between hourly compensation and wages of 0.2 percentage points a year. This is due to the projection that health care cost growth will continue to outstrip the rate of economic growth by a large margin. However, if health care reform succeeds in constraining costs to grow at the same rate as the economy (except for aging), then the gap between the rate of compensation growth and the rate of wage growth can be largely eliminated. This would reduce the size of the projected shortfall by approximately 10 percent.

In short, as a result of the economic collapse there is even more uncertainty than usual around the long-term projections. This is a good reason to put off for the moment any plans to substantially alter the program. Of course, it would be incredibly mean-spirited to propose cuts to those who are either retired or nearing retirement, since they have been the primary victims of the economic collapse.

Retirees and near retirees have lost more than $10 trillion in housing and stock wealth in the last two years. It would be incredibly malicious policy to amplify the impact of these losses by cutting Social Security benefits, especially since people in these age cohorts already paid for these benefits through their Social Security taxes.

[county worker]

6. I don't think you can believe what they are saying. One on side there are those who want to see it

go away or be privatized and on the other side there are those who say there is really know problem. Both sides are putting out propaganda I think.

[MercutioATC]

8. You're not retiring for 30 years?

SS isn't projected to experience a shortfall till 2041...and then it'll just result in a reduction in benefits, not insolvency.


...and THAT'S id we do absolutely nothing before then.

[Sebass1271]

11. well, i am 39 years old now, but i have been working since i was

15.

[MercutioATC]

14. Don't worry, it'll be there.

We probably have to make some adjustments to guarantee full benefits beyond 2041, though,

[Phoebe Loosinhouse]

13. There is a simple fix for Social Security that Obama has already suggested

Raise or eliminate the caps altogether. Done.

(I'm referring to the fact that SS is only taken out of wages up to a set amount - I think it's 65K, but I could be wrong. Raising the cap just means taking Social Security out of the first 100k for example, or taking it out of all wages with no limits)

[mmonk]

15. It is going to the military industrial complex and multi-national

corporations. Our lives are meant to serve these entities. That is our purpose.

[Hepburn]

16. Wonder if Booooooosh raided the fund to pay for Iraq?

Oh, he wouldn't have done that, right?

:sarcasm:

[lumberjack_jeff]

17. That is not what "the news today" is saying.

What they are saying is that the $2 trillion trust fund (physical bonds bearing the words "backed by the full faith and credit of the United States of America") will begin being used sometime next decade.

That $2 trillion won't run out until 2045 at the earliest.

You can't trust the talking heads. They're simply trying to generate panic.

[Warpy]

18. My dad told me in his late 80s that he'd heard the same song over and over

since he was a lad in his 20s and Social Security was passed, that he'd pay through the nose all his life and the program would magically disappear before he got old enough to collect.

He was a right winger who said they were completely full of shit, that it was wishful thinking on the Republicans' part, that they'd always despised the program for being both popular and successful.

Social security is an insurance program, not an investment program. When you approach it that way, it makes a lot more sense.

The only reform it needs is to take it out of the general fund and make it pay as you go, since we know Congress will rob every extra dime we give them.

That brings me to the crisis in social security: Congress won't be able to rob it if all the boomers refuse to die and all of us are retired at the same time. Right now they're robbing 40% of what we put in and that's masking the real catastrophe caused by Reagan and Bush tax cuts. When they can't rob it any more, they'll have to do the politically unpopular thing and raise taxes. That's the crisis, the only one.

So when somebody tells you that you won't be able to collect your social security check, sneer at them, "Don't you know the difference between insurance and investment?" and walk away. You're talking to a fool.

[Cleita]

30. Your dad is right because I've been hearing the same song all my life since

the early sixties and it's not true. It's scare tactics from the right who want to privatized SS, which has already proved not to work in other countries like Great Britain and Chile.

[hfojvt]

32. but they did make some changes in the mid 1980s to "save" it

among other things
1) raised the tax rate
2) brought federal employees into it
3) raised the cap and made for future automatic increases in it
4) massively raised the rate for the self-employed by making them provide the employer match portion

then in the 1990s they removed the cap for the medicare portion

[Cleita]

29. Thom Hartmann is discussing it now. He says it's bull pucky. All they have

to do is raise the cap and it will be solvent forever, or if they don't have the will to make millionaires and billionaires pay their fair share, raise it 1% and it will be solvent for the next 75 years.

[DU GrovelBot]

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