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Social Security now in permanent deficits - 1/26/2011 1:32:29 PM

Nosathro

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Now according to Congressional Budget Office, Social Security in now in running a deficit that is not likely to go away.

http://news.yahoo.com/s/ap/20110126/ap_on_re_us/us_social_security

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RE: Social Security now in permanent deficits - 1/26/2011 2:00:23 PM

KenDckey

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How about we start with Congress giving the money back that it "borrowed?"

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RE: Social Security now in permanent deficits - 1/26/2011 2:05:05 PM

Musicmystery

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quote:

ORIGINAL: KenDckey

How about we start with Congress giving the money back that it "borrowed?"

This.

SS itself works fine.

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RE: Social Security now in permanent deficits - 1/26/2011 2:59:01 PM

InvisibleBlack

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quote:

ORIGINAL: KenDckey

How about we start with Congress giving the money back that it "borrowed?"

That wouldn't really reverse the "deficit" - the fact that Social Security is now bringing in less money than it pays out, it would just reduce the outstanding debt. A bigger issue is that if the "general fund" can no longer borrow against Social Security, the Federal government's deficits are going to be higher than expected, and if you want the government to actually start paying back Social Security, it means that government expenses are going to be larger than expected.

There's also an issue that the Social Security Trust Fund has significantly overestimated the population growth in the United States for the past few years which has come to light with the 2010 census, meaning that the estimates for Social Security revenues are all overstated.

I expect some time in the next four or five years the government will be forced to address Social Security (as it did in the 80s), which is why suddenly both parties are willing to start talking about it.

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RE: Social Security now in permanent deficits - 1/26/2011 3:37:15 PM

MrRodgers

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quote:

ORIGINAL: InvisibleBlack

quote:

ORIGINAL: KenDckey

How about we start with Congress giving the money back that it "borrowed?"

That wouldn't really reverse the "deficit" - the fact that Social Security is now bringing in less money than it pays out, it would just reduce the outstanding debt. A bigger issue is that if the "general fund" can no longer borrow against Social Security, the Federal government's deficits are going to be higher than expected, and if you want the government to actually start paying back Social Security, it means that government expenses are going to be larger than expected.

There's also an issue that the Social Security Trust Fund has significantly overestimated the population growth in the United States for the past few years which has come to light with the 2010 census, meaning that the estimates for Social Security revenues are all overstated.

I expect some time in the next four or five years the government will be forced to address Social Security (as it did in the 80s), which is why suddenly both parties are willing to start talking about it.

Not all that significant if only because we should unify the budget and revenue but there is no real 'trust fund' as such. It is really only an accounting distinction as there exists no separate 'Soc. Sec. account.' Receipts to the govt. has the distinction of being soc. sec. withholding, otherwise known as 'payroll taxes.'

What we really have is about an estimated $2 trillion of soc. sec. surplus (since the 1983 'reform' not 'addressing' at all) that was squandered and is now that much money in the form of special IOU's from the treasury. Guess who fills the treasury with money.

Obviously that money was spent and is now gone and reform was a lie. So be very suspicious of any new and improved soc. sec. reform.

< Message edited by MrRodgers -- 1/26/2011 3:39:22 PM >

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RE: Social Security now in permanent deficits - 1/26/2011 5:18:48 PM

InvisibleBlack

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quote:

ORIGINAL: MrRodgers

Not all that significant if only because we should unify the budget and revenue but there is no real 'trust fund' as such.

I would argue exactly the opposite - retirement "savings" should be arranged in such a way that they can never be subsumed into the general fund. There are various ways to do this ranging from entirely privatizing social security to creating individually managed accounts to simply investing them in T-bills or whatever but I don't see continuing to let Congress dip their fingers in the till whenever they feel like it is going to do anything to stop the chicanery.

quote:

It is really only an accounting distinction...

A lot of things with very real impacts have been created by very minor 'accounting distinctions'.

quote:

Obviously that money was spent and is now gone and reform was a lie. So be very suspicious of any new and improved soc. sec. reform.

Actually, the last social security "reform", done by Congress putting into place the recommendations of the bipartisan Greenspan Commission in 1983, was enacted to keep Social Security solvent. It both raised taxes and reduced benefits. I expect the next reform will do the same. It's not like there's much choice.

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RE: Social Security now in permanent deficits - 1/26/2011 5:59:17 PM

MrRodgers

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quote:

ORIGINAL: InvisibleBlack

quote:

ORIGINAL: MrRodgers

Not all that significant if only because we should unify the budget and revenue but there is no real 'trust fund' as such.

I would argue exactly the opposite - retirement "savings" should be arranged in such a way that they can never be subsumed into the general fund. There are various ways to do this ranging from entirely privatizing social security to creating individually managed accounts to simply investing them in T-bills or whatever but I don't see continuing to let Congress dip their fingers in the till whenever they feel like it is going to do anything to stop the chicanery.

quote:

It is really only an accounting distinction...

A lot of things with very real impacts have been created by very minor 'accounting distinctions'.

quote:

Obviously that money was spent and is now gone and reform was a lie. So be very suspicious of any new and improved soc. sec. reform.

Actually, the last social security "reform", done by Congress putting into place the recommendations of the bipartisan Greenspan Commission in 1983, was enacted to keep Social Security solvent. It both raised taxes and reduced benefits. I expect the next reform will do the same. It's not like there's much choice.

You are talking a speculative pension requirement vs a govt. guaranteed pension obligation. It is obvious by this post that until now or about this time SS paid for itself with payroll deductions. A govt. pension has no business either being specualtively invested or lent to the treasury as it has been. The corruption is in a congress that never saw a dime it didn't want to spend.

The soc. sec accounting distinction I refer to is just that...on the govt. books. There is no separate fund...so no 'trust fund.'

The soc. sec. reform did nothing for its current account as of 1983. Soc. sec. was at the time, solvent but heading into trouble. The only immediate effect of 'reform' at the time was a 30% increase not in federal tax but only in the payroll tax our most regressive of all withholding. That increase immediately sent an additional $50 billion to the feds.

Through a creation of their own making, congress created a special govt. 'bond,' These are unmarketable bonds created solely for the purpose of recording principal and interest within the borrowing of that $50 Bill overpayment...by the fed. treas. It is that over payment that makes up the $2 trillion borrowed by the treasury. That is why that money isn't there or soc. sec. reform...would have had it flush.

It's as if for the last 27 years, soc. sec had been invested in wall street and govt. took the profits...spent it and gave us new bond debt in its place. So, the next 'reform' could raise payroll taxes again and any over payment will be squandered...again !!

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RE: Social Security now in permanent deficits - 1/26/2011 6:00:14 PM

Real0ne

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unfortunately inflation makes all things worthless.

As inflation increases (that is the value of the dollar decreases which can be proven by rising prices---*same thing*) the money that is in the account no longer buys what it could before they devalued the dollar.

So what was enough can in time never be enough and everything in the whole economy must constantly adjust after they left the stability of the gold standard.

Moral of this story that everyone will need to pay more all the time until hyperinflation or serious corrections take place.

I already posted in another thread a chart showing how well the fed is controlling the money with straight up inflation. No need to have a chart or the fed.

As always ALL problems evolve around the "crooked" "usury" monetary system, fix that and all this will fall into place.

aside from that I believe the SS is a rotating pooling account and I did not see (in my quick rread several years ago) anywhere in the ss act that it is a trust in the sense that someone can sue them for a breach if they dissolved it tomorrow.

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RE: Social Security now in permanent deficits - 1/26/2011 7:50:07 PM

InvisibleBlack

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quote:

ORIGINAL: MrRodgers
You are talking a speculative pension requirement vs a govt. guaranteed pension obligation.

Technically, nothing other than its existence is "guaranteed". You are not guaranteed any amount, nor that you'll even make money, nor do you have any right to any stream of income. It's not really a "guaranteed pension". There are no contractual obligations. It's just an entitlement of unknown value.

quote:

It is obvious by this post that until now or about this time SS paid for itself with payroll deductions.

Actually, the SSTF projections in 1980 indicated the fund would run out of money in 1983. This is what spurred the sudden bipartisan effort to "bail out" social security. A combination of falling real wages, rising inflation and massive unemployment in the late 70s had pretty much blown Social Security out of the water.

quote:

A govt. pension has no business either being specualtively invested or lent to the treasury as it has been. The corruption is in a congress that never saw a dime it didn't want to spend.

I believe that technically it's not a "government pension" but "retirement insurance" - but that's a quibble. I agreee with you that the corruption is in Congress' inability to stop pilfering it. Where I think we disagree is that you believe some rule or law can be enacted to stop this whereas I feel that, in the long run, nothing will prevent the government from latching onto a huge pool of money in its hands except taking it out of its hands.

quote:

The soc. sec accounting distinction I refer to is just that...on the govt. books. There is no separate fund...so no 'trust fund.'

I agree.

quote:

The soc. sec. reform did nothing for its current account as of 1983. Soc. sec. was at the time, solvent but heading into trouble. The only immediate effect of 'reform' at the time was a 30% increase not in federal tax but only in the payroll tax our most regressive of all withholding. That increase immediately sent an additional $50 billion to the feds.

I disagree. Social Security was on the rocks, which is why after twenty or thirty years of stalling, both parties suddenly acted fast. The major change was allowing social security benefits to be taxed for the first time in history. This had the amazing effect of both reducing the payout and increasing revenues. Dark genius. This single change resulted in the huge surpluses Social Security showed for the next ten or twenty years. Unfotunately, those surpluses were squandered as well.

I believe it was the 1983 amendments that also took the social security trust fund off-budget, so it showed as a revenue source but not as a debt obligation and exempted social security from any budget cuts.

quote:

It's as if for the last 27 years, soc. sec had been invested in wall street and govt. took the profits...spent it and gave us new bond debt in its place. So, the next 'reform' could raise payroll taxes again and any over payment will be squandered...again !!

I would argue it's more like for the last thirty years you've been contributing to an annuity only to find out when the due date rolls around that the banker has been using your money for his own personal projects, but that he promises you he'll have your money for you just as soon as he reorganizes his bank and hires a new accounting firm.

I agree with you that the next reform will only make any 'benefit' you or I will ever receive from social security much lower than it already is.

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