DU reality check: Social Security does NOT add to the deficit.

[nashville_brook]

Myth: Social Security adds to the deficit

Reality: It's not just wrong -- it's impossible! By law, Social Security funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.


Myth: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.3 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it'll still be able to pay out 75% of scheduled benefits--and again, that's without any changes. The program started preparing for the Baby Boomers retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.

Myth: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than did 70 years ago.3 What's more, what gains there have been are distributed very unevenly--since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market--which would have been disastrous--but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.







Sources:

1."To Deficit Hawks: We the People Know Best on Social Security" New Deal 2.0, June 14, 2010
http://www.newdeal20.org/2010/06/14/to-defict-hawks-we-the-people-know-best-on-social-security-12290/

2. "The Straight Facts on Social Security" Economic Opportunity Institute, September 2009
http://www.eoionline.org/retirement_security/fact_sheets/StraightFactsSocialSecurity-Sep09.pdf

3. "Social Security and the Age of Retirement"Center for Economic and Policy Research, June 2010
http://www.cepr.net/index.php/publications/reports/social-security-and-the-age-of-retirement/

4. "More on raising the retirement age" Ezra Klein, Washington Post, July 8, 2010
http://voices.washingtonpost.com/ezra-klein/2010/07/more_on_raising_the_retirement.html

5. "Social Security is sustainable" Economic and Policy Institute, May 27, 2010
http://www.epi.org/analysis_and_opinion/entry/social_security_is_sustainable/

6. "Maximum wage contribution and the amount for a credit in 2010." Social Security Administration, April 23, 2010
http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/240

7. "Trust Fund FAQs" Social Security Administration, February 18, 2010
http://www.ssa.gov/OACT/ProgData/fundFAQ.html

8. "To Deficit Hawks: We the People Know Best on Social Security" New Deal 2.0, June 14, 2010
http://www.newdeal20.org/2010/06/14/to-defict-hawks-we-the-people-know-best-on-social-security-12290/

[BrklynLiberal]

1. The repuke/teabaggers NEVER, EVER let facts interfere in their "truths".

Their bizarro world is one in which they can make up truth and "facts" as they go along...

[nashville_brook]

2. this myth is not wholly-owned by the RW.

[xchrom]

4. +1

[BrklynLiberal]

6. sadly, true.

[nashville_brook]

12. hence, the unrecs.

[BrklynLiberal]

18. again...sadly, true.

:thumbsup: :hi:

[glitch]

7. The RW is not limited to the Republican Party. nt

[Starry Messenger]

8. truefax.

+1

[Recursion]

3. But that 4.3 trillion dollar surplus *is* debt

It doesn't add to the debt, but its surplus is held as debt, so spending its surplus will require raising new revenues (unlikely) or adding to the debt.

It has the effect of adding to the debt because we didn't listen to Al Gore and put the surplus in a lockbox. Instead, we gave it to the rich as tax cuts. We literally took your and my FICA levies and gave them to Paris Hilton.

[glitch]

9. "We literally took your and my FICA levies and gave them to Paris Hilton." ouch

And she isn't even the worst beneficiary of our generosity.

Think the Bushes and Cheneys.

[truedelphi]

5. Also, in no way is it an "entitlement."

It is something we have been mandated to pay into, with the assurance that we will be compensated for our monies placed in the hands of the Federal government.

I never wanted to do it - it would have helped me expand my business when I was working full time. if I had the leeway to spend 15+ % a year on advertising, rather than Social Security, I could have done much better.

But that option was not allowed me.

Now when it is only a few years away, it seems like getting my money returned to me will not be possible.

[bluethruandthru]

10. I consider it an Entitlement..because we're "entitled" to it.

It's not government charity. We've specifically paid into it.

[truedelphi]

17. yep, I concede that point -

but you have to admit, when the RW Talking Heads spin it, "entitlement" comes out as "dole offering"

[nashville_brook]

11. the word "entitlement" has been turned on its head -- it never meant "dole"

but, your point is well taken.

[eridani]

13. It fucking well IS an entitlement. We paid in, so we are entitled to payout

An analogy between Social Security and private life insurance

Both are contracts that insure you against possible bad outcomes.

In the case of life insurance, you get it to provide extra money for dependents in the event of your premature death. Now what happens if you pay the policy in full, have not died, and your dependents become self supporting? You get to cash it in, that's what. The insurance company can't say "Well, you are still alive and have lots of other assets besides this policy, so we'll just keep your money."

Social Security is mandatory public insurance against the possibility that whatever you have planned for income in your old age might not work out the way you hope. You are entitled to a payout because you have paid in. The government should not be allowed to say "Well, your savings weren't depleted by personal tragedy of some sort, you chose a more frugal working life to have a more comfortable retirement,and/or your other investments gained instead of losing a lot in bad markets, so we're taking your Social Security money."

Whether you are lucky or unlucky, if you worked you paid in. Therefore people with more assets in retirement are just as entitled to a payout as those with fewer. In any event, higher income people get much less paid out proportional to what they paid in than lower income people. IF they are required to do that, then they certainly should not have their payout eliminated.

[truedelphi]

19. I was referring to the sense that the RW has spun the issue.

I got to talking to some young Republican coffee shop barristas - and they didn't know anyone had ever paid anything INTO Social Security. (I guess they never look closely at their wage statements each pay check.

"You paid into the Social Security fund?"

They had been told that it was "entitlement" so much so that they thought it was something older people were getting for free.

That is the spin I was trying to address. (I am not disagreeing at all with what you are posting - jsut htat I was trying to address the "spin.")

[eridani]

29. Sorry--I'll read more carefully next time n/t

[Statistical]

33. " Both are contracts that insure you against possible bad outcomes."

Not true.

While SS is similar to insurance you have no contract. Tomorrow Congress could end all SS payment forever and simply keep collecting the FICA tax as another revenue stream. Of course this would require Congress passing legislation and President signing it so such an extreme change is unlikely however if it happened you would have no legal recourse. If an insurance company tried to change terms of your contract after the fact you would.

Sadly any benefits paid today or tomorrow or 30 years from now are at the whim of Congress. Not just the current Congress but every Congress from now till the day you die.

So while the analogy holds true in the general sense it breaks down when you use the specific word "contract". I would feel much more secure if SS actually was a contracted benefit and I could sue the federal govt for violating that contract. I can and thus no protection exists.

[eridani]

34. True in a legal sense

However, SS is separate from the rest of the budget. We pay in, we are entitled to payout.

[lumberjack_jeff]

23. It is insurance. Participants who retire or become disabled are ABSOLUTELY ENTITLED to benefits.

The fact that it's mandatory is a very good thing. Every 30 year old thinks they could spend it better.

And if we can prevent those who think as you do from getting their way, you will get a benefit too.

[truedelphi]

24. I was trying to address the "spin" that is getting used -

The RW uses the word entitlements to mean "dole" and "freebies" and "policies from bleeding heart liberals given to everyone under the sun."

Social Security is not free.

I understand your explanation, and also have had three other people say what you said.

[mmonk]

14. I tried to put many of those points out there as well.

http://journals.democraticunderground.com/mmonk/85

Problem is, people have come to accept some of the myths. If benefits are cut or private retirement accounts substituted, I'll have to reconsider party affiliation to independent.

[nashville_brook]

15. pushing back on the lies is a full time job it seems.

[LWolf]

16. Is it really DU that needs the reality check?

Please send this to each member of the Cat Food Commission.

[nashville_brook]

21. just saw this meme peddled one too many times in the last few days.

and you are correct. the catfood comm needs a reality check, but they're only concerned with their rich cohorts. it's not like facts, or anything would change their mind(s).

[LWolf]

22. You'd think DU would know better.

:(

[nashville_brook]

26. DU is like anyplace else...the cat's likely to drag in all kinds of critters.

[hughee99]

20. If money from the social security trust fund is invested in government securities

and the money the government receives for these securities is put into the general fund and spent, then the government is responsible for paying back this investment at a future date with money it no longer has. When the times comes to pay it back, they will have to get the money from elsewhere (spending cuts, additional revenues via taxation or the issuing of new bonds to pay off the old, or potentially even debt). I'm not suggesting that SS money will necessarily result in deficit spending at some point in the future, but it is a possibility.

The social security trust fund IS full of IOU's. They're from a very reliable lender (the US government), and they're called Treasury Bonds, which make them sound better, but they're still IOU's.

[NoNothing]

25. LALALALALALA I CAN'T HEAR YOU

[laughingliberal]

27. K & R nt

[DirkGently]

28. Excellent. Timely, well-sourced debunking.

[nashville_brook]

31. thank you. sucks that a debunking is necessary.

[Hannah Bell]

30. kr

[nashville_brook]

32. morning kickee