Government Spending

How Can You Tell When an Imaginary Trust Fund Disappears?

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Social Security benefit payments will exceed the program's revenue this year, six years earlier than expected, due to the recession's impact on payroll taxes and early retirement. But the crisis is not immediate, The New York Times reports, because the program can still draw on its $2.5 trillion "trust fund," which is not expected to run out until 2037. Whew.

Wait a minute. There's a trust fund? Well, no, not really, the Times concedes in the 14th paragraph:

Although Social Security is often said to have a "trust fund," the term really serves as an accounting device, to track the pay-as-you-go program's revenue and outlays over time. Its so-called balance is, in fact, a history of its vast cash flows: the sum of all of its revenue in the past, minus all of its outlays. The balance is currently about $2.5 trillion because after the early 1980s the program had surplus revenue, year after year.

Now that accumulated revenue will slowly start to shrink, as outlays start to exceed revenue. By law, Social Security cannot pay out more than its balance in any given year.

For accounting purposes, the system's accumulated revenue is placed in Treasury securities.

Translation: The government already has spent all of this money (and then some). All that is left in the "trust fund" is IOUs from one part of the government to another. And guess who has to make good on those IOUs? While there is budgetary significance to this accounting fiction (since Social Security cannot legally continue paying benefits after its notional reserve is officially exhausted), all this talk of a trust fund tends to obscure reality.

For example, the Times says there are "only three choices" when the imaginary trust fund disappears: "raise taxes, lower benefits or bail out the program by tapping general revenue." Note that the first and third choices amount to the same thing: The government takes more of our money. For that matter, the program is already "tapping general revenue" in the sense that taxes must be used to repay the money the government has "borrowed" from Social Security.

Another point you might miss by focusing on the nonexistent trust fund is that Social Security is not a pension. As the Times notes in passing by referring to the program's "pay-as-you-go" structure, it is a system of transfer payments, from young workers to old retirees. Yet the Times claims the tax and benefit changes of the 1980s were driven by the fear that Social Security could be transformed "from a respected, self-sustaining old-age program into welfare." It already is welfare, with the perverse twist that the recipients are more affluent than the people funding their benefits. Proposals to privatize the system aim to change this situation by transforming intergenerational transfers into genuine retirement savings.

Brian Doherty noted the imminence of this year's "tipping point" in Reason last year. In a 2005 column, I welcomed George W. Bush's half-hearted attempt at partial privatization. More on Social Security reform here.

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  1. Good Afternoon reason!

    1. Good afternoon, Suki!

      1. Afternoon Sukster. You seem a bit more chipper.

        1. I got to get my mind off of that stupid new law for a little while.

          Hello to you GM and Almanian!

  2. “Yet the Times claims the tax and benefit changes of the 1980s were driven by the fear that Social Security could be transformed “from a respected, self-sustaining old-age program into welfare.” It already is welfare,…”

    And it always was welfare from the very first nanosecond that it was implemented back in the 1930’s.

  3. Jesus, this is serious! Does the President know?

    1. Shut the fuck up, honky.

      1. Racist!

        1. I’m just talkin’ ’bout Shaft!

          1. Shutchyo mowf…

  4. My daughter recently completed a degree in accounting. She has concluded the SS is a sham and that she will have to work until she dies so that older people can live it up now.

    My heart swells with pride every time she starts bitching about FICA.

    1. Did she vote for Democrats in 2006 after they shut down Bush’s partial privatization attempt? Feel free to make her feel guilty about that.

      1. I believe she abstains from voting.

  5. I will never live to get my money back out. The only shot I have is to get on disability at some point and squeeze them hard until I die.

    Let me opt out. Keep what you’ve already stolen. I’ll chalk it up to the cost of doing business with criminals.

    1. I’m in for the same deal. Keep what you’ve stolen – just don’t take any more. I’ll take care of myself, thanks.

      1. Fuck you, we’re gonna take it all – and then make you work harder so we can take some more.

    2. A friend of mine has a modest 401K, not enough to last a long time after SS collapses. His retirment plan is to spend all his money, then off himself when it’s gone.

      1. He should rob politicians instead. If you’re gonna pull the trigger….

        1. Count me in too on that deal SugarFree.

    3. Wasn’t that the Bush II deal?

    4. One of the saddest parts of my job is explaining to new immigrants filing their first US return, that they can’t get a refund on their FICA withholding. “It’s just… gone” is a damn depressing answer.

      1. Of course, it’s gone – it’s a frigging tax. Why do people always think they’re supposed to get tax refunds?

      2. And then those immigrants probably turn around and vote for Democrats, don’t they?

      3. It was never bush II idea it is the agenda made for more than 2ooo years and to ask me why don’t, rather meet Zionist they set it up

  6. Another point you might miss by focusing on the nonexistent trust fund is that Social Security is not a pension. As the Times notes in passing by referring to the program’s “pay-as-you-go” structure, it is a system of transfer payments, from young workers to old retirees.

    Or, as John Stossel points out, it’s a Ponzi scheme.

    1. It’s only really a ponzi scheme if you believed that it was actually a pension-like thing in the first place. Otherwise it’s just another tax.

  7. Meanwhile, the President is about to give a speech in Iowa City, celebrating the imminent victory of ObamaCare. Again.

    1. He really has not stopped campaigning.

      1. If all he did was campaign, I’d be okay with that. The problem isn’t the campaigning, it’s that he stops campaigning for a second to sign those bills into law.

      2. There he is! Girls are squealing with delight! Now he’s taking off his jacket…It’s mayhem!

      3. It’s all I know. Well…and playin’ the racecard.

    2. Here’s my new take on Obamacare:

      If the total of unfunded liabilities in Medicare + Social Security is about $80 TRILLION, who gives a shit about another $5-$10-$20 trillion for whatever programs they want to force on us? With a hole that deep, there’s no digging out.

      You know, if every single taxpayer in the U.S. paid in $1 million in cash today, there still wouldn’t be enough money to pay all the unfunded liabilities of the federal government.

      As bad as I feel for my nieces and nephews and their children, I’m really glad I won’t be around for the crash — which WILL come.

      1. Yeah,in the grand scheme o’ things,this is small potatoes.

        Not even potatoes,really,more like an after dinner mint.

        “It’s waffer thin.”

        Boom!

  8. It already is welfare, with the perverse twist that the recipients are more affluent than the people funding their benefits.

    That statement is every bit as disingenuous as the Times’s innuendo that there is a trust fund. Today’s recipients are people who forcibly paid FICA taxes for their entire careers with the promise that they would get back a fraction of their “contribution”, for which they should apparently be grateful.

    This is not about class warfare, it is about decades of political cowardice and the feculent thugs in Washington D.C. failing to address one of the biggest destroyers of wealth ever conceived. The recipient’s net worth has nothing to do with anything…until the program is means-tested…which it will be…soon enough.

    1. The problem is, they are getting more than they put in. Read the Stossel article, it takes 5 workers to pay for 1 retiree. I don’t have a source (help anyone?), but a worker’s contributions are used up during retirement long before he dies.

      1. The problem is, they are getting more than they put in.

        That depends on how much they paid and when. The winners are people like my grandmother, who is 92, has been collecting for 27 years, and did not earn that much over her lifetime.

        I am 45 and it is a very simple exercise to show that, had they been prudently invested, the current value of my FICA taxes including my employers matching contributions is already more than I would need to buy a suite of private policies that match the Social Security benefits: life insurance, a burial policy, a disability policy and a fixed annuity. And I have years to go before I retire, during which time the benefits will be lowered, the taxes increased, the age of eligibility increased, and ultimately means testing.

        Right now my best bet is to become disabled, die and leave my wife a widow and my children orphans, and collect my retirement for 30 years, all at the same time. Otherwise I am fucked.

    2. Victims of theft have the moral right to recoup property that is stolen from them. They had no choice in the matter, remember. Forcing them to participate in the scheme was wrong then and it’s wrong now, but now it’s almost too late to do anything about it. A reasonable course of action would be to phase it out over a very long time, so current recipients aren’t screwed and future generations aren’t burdened with it.

      1. Victims of theft have the moral right to recoup property that is stolen from them.

        Perhaps from the person who stole it, but certainly not from other people uninvolved in the theft.

        1. Theft is theft. It was stolen from today’s recipients, and now it is being stolen from you and me. It’s an injustice, certainly, but it would a worse crime to punish people who were taxed for 50 years, possibly against their will, with a promise that they would be able to draw off that account when they are too old to work. One crime does not justify another.

          1. If it is indeed “theft”, then you’re advocating continuing the theft from current workers to pay back victims of previous thefts. In direct contradiction to your statement that one crime doesn’t justify another.

            1. No. I’m saying it’s imperative, for many reasons, for a government to honor its financial obligations. SS recipients aren’t stealing your money (they have no power to tax you). The federal government is stealing it from you (and me) to pay back what they stole from them. To cut off the victims of the original theft would be to commit a double crime. But it isn’t necessary to do that. I’m advocating phasing it out SS over a very long period of time. It took 75 years to get where we are today and it could take another 75 to eliminate it entirely. Over that period of time, current recipients will die out, and future recipients will have contributed increasingly less, with increasingly fewer expectations at the time of their retirements, until that time when SS is no more. It’s the most ethical way to deal with the crisis.

              1. SS recipients aren’t stealing your money (they have no power to tax you). The federal government is stealing it from you (and me) to pay back what they stole from them.

                And also to give themselves and their priorities a nice cut along the way. You make a good point, ed, a distinctive perception.

          2. Just one problem: it was stolen from you and me at a far lower rate than it was stolen from our parents. During their working years, the recepients got their dough spread out from 8-16 workers. Now it’s down to ~3 per recipient, heading quickly to two.

        2. Perhaps from the person who stole it, but certainly not from other people uninvolved in the theft.

          I don’t see it that way, Tulpa. If Adam steals Bob’s car, then sells it to Charlie, it’s still Adam’s car and he has every right to recover it.

          Admittedly, it sucks to be Charlie, since he’s left with no car and has to recover the purchase price from Bob (if he can). But that’s why there are things like due diligence and insurance.

          1. The people the government gave the “stolen” money to are dead and buried. If you want to try and extract it out of them go ahead. Your analogy is however totally inapposite for the course of action ed is suggesting.

          2. But that’s why there are things like due diligence and insurance.

            Right, I failed to do due diligence when I decided to be born in the 1970s instead of the 1950s. If only I’d done my homework, like the Boomers did, I wouldn’t have had to pay into Social Security and get no return.

            1. I just love the way the wealth-re-distributors in government manage to have everyone at each others throats. Certainly helps keep the system in power, doesn’t it?

      2. Victims of theft have the moral right to recoup property that is stolen from them. They had no choice in the matter, remember.

        1. Fucking server squirrels.

          What I was going to say — If someone mugs me, I don’t have the moral right to buy a gun a mug other people until I recoup what the first thief stole.

          SS is a tax and a wealth transfer. What’s done is done. The solution? Make participation voluntary, so long as people who opt out “lose” the “benefits” they have “accumulated”.

          1. so long as people who opt out “lose” the “benefits” they have “accumulated”.

            Why should they lose them? Would you also advocate that the Government default on its bonds, treasuries and other debts? Let the taxpayers pay it back…unless you’d like to let people opt out of all taxes – I’m sure congress would go for that. 😉 I know I would.

            1. Social security was never given the legal status of a contract. Sure, the perception that it is just like an investment contract has developed over time, but that was never legally valid.

              1. I’m sure we’ll eventually hear similar reasoning concerning mandatory health insurance. 🙂

  9. Translation: …

    Thanks, Jacob. I never really understood what was meant by the trust fund.

    I’m reminded of the episode of Arrested Development where Maeby has the idea about taking money out of the cash register but throwing bananas away at the same time…

    1. There’s always money in the banana stand.

      1. NO TOUCHING!

        1. Tobias, you blowhard.

  10. So, are these IOUs counted in the national debt? If so, how much of the debt is a placeholder for previously stolen money?

    1. Yes. I believe something like $6T is debt the government owes itself. Not all of that is SSI.

      1. You’re not even close. The last figures I saw were about $35 Trillion in unfunded liabilities just for Medicare plus another $36 Trillion (+/- a billion or so) for Social Security.

        Granted, these are not technically debt (as in the T Bonds that supposedly are owed to the Social Security system), but they are obligations that will eventually come due and are not funded.

        If you ran a private pension fund with that kind of exposure, you’d be in jail.

        1. It seems we are approaching ludicrously large numbers to describe the amount of debt our moronic government shackled us to. Most Americans can’t even fathom what a Billion dollars even is let alone a Trillion. 35 Trillion? 36 Trillion? Its impossible to grasp the amount of wealth that needs to be generated in order to overcome that burden. My senior years (if I live that long) are going to be dark, dark times. At least when my dumbass grandkids tell me that “Federated American Coalition is the most fair and free bloc of countries in the world,” I’ll laugh in their faces until I die of a heart attack while we all slave away in the salt mines. Frankly, I hope Aliens/Zombies/Terminators destroy us before it comes to that.

  11. “How Can You Tell When an Imaginary Trust Fund Disappears?”

    Top-shelf headline. Kudos.

  12. the Times says there are “only three choices” when the imaginary trust fund disappears: “raise taxes, lower benefits or bail out the program by tapping general revenue.”

    They forgot about the “print more money” option.

    1. Massive inflation doesn’t count as lowering benefits?

      1. No — devaluation of the dollar should not count as lowering benefits (just as it shouldn’t count as lowering taxes).

        1. Well, then. Print away. Can’t foresee any problem with that.

        2. Devaluing dollars IS a tax.

          1. It’s a theft, similar to writing hot checks.

          2. By that standard, when Ford makes more F-150s, they’re stealing from all the people who bought them before. They are after all devaluing the trucks.

            1. You are accurately named, Mr. Gump.

            2. People don’t use F-150s as currency jackass.

        3. Obviously. Even with a flat tax, it would just be leaving them the same. Given our progressive system, devaluing the dollar without adjusting the brackets accordingly effectively raises taxes on low to moderate income earners.

          1. (that’s assuming wages in nominal dollars rise to compensate, of course)

  13. If there is a silver lining to any of this (especially with the addition of the new health-care yoke) it is in the accelerated schedule to the Day of Reckoning, which at this point I look forward to.

    I watch the actuarial evolution of these programs with personal interest. I am 34 years old, which puts me right in the sweet spot of retiring at about the time Socialism Now! (TM) goes tits-up as best I can tell by these numbers.

    I would like the insolvency event to happen much sooner…like say when I am 50. It would give me time (as a still fully able-bodied member of the work force) to pick up the pieces before the disability of mortality begins to creep over me, rather than have a confluence of those two inevitable events in my life. I’m so damn greedy…

    1. I have the same feeling. I’m 22 and I want the system to go bust sooner than later, so I don’t have to keep paying into a fund that I’m not going to get any money from.

  14. Oh, I get it. You libertarians want old people to eat dog food and burn lint to stay warm. And not that fancy canned dogged food either. The dry stuff. How “reasonable” of you.

    1. We believe in separating the grasshoppers from the ants.

    2. I don’t expect old people to burn lint, I expect them to knit it into new clothes. Duh.

    3. Nobody wants old people to have to eat dog food. However, we’re not willing to compromise principals and continue condoning theft even if that may lead to a bad outcome for some people.

      You’re confusing method with outcome. Unfortunately, the people who originally committed this theft are dead and gone, so there’s no way to reasonably recover from them. That’s still no excuse to continue robbing the young to pay for the old.

      1. “principles” not “principals” above.

        Compromising educrats is a good thing, however.

    4. No we want old people to be made into dog food. The fancy stuff, though, so it balances out.

    5. If old people not being forced into dogfood today depends on my wallowing in dog food when I’m 70, I’m feeling a little cheated here. But the longer this mess goes on, the more stark that choice is going to be…and I hate eating dog food.

    6. Dry dog food is too kind for people who deliberately organized and voted to steal from their children. See, we libertarians are cruel just like that.

    7. means test, means test, means test…

      Si Se Means Test!!

  15. Proposals to privatize the system aim to change this situation by transforming intergenerational transfers into genuine retirement savings.

    This would not solve the fundamental problem that Social Security develops when the worker:retiree ratio plunges. If SS had been replaced with a private investment scheme, the Boomers who are now retiring would be cashing in their investments — and there wouldn’t be enough workers buying investments to prevent the price from plummeting.

    A society that does not produce enough children to support its elderly is going to have serious problems no matter what system you come up with.

    1. Oh yeah, and how are those private retirement savings in 401(k) plans doing right now? This is one of those situations where Krugman and the Chads of the world have you guys dead to rights — you think that privatization and markets can solve everything. There are some problems that markets can’t solve.

      1. Well, given that you have stripped out the market incentives to keep working (that you yourself identified in your first post), I do not see how that is true.

        I would also ask that you remember that you could count on immigrants replacing the birth rates, but as societies get more socialist, they become immigrant-unfriendly (and, to an extent, rightfully so), both intentionally and unintentionally (unintentionally in that the perverse incentives in government interference enshrine old whites and exclude young browns, for lack of better terminology).

      2. Oh yeah, and how are those private retirement savings in 401(k) plans doing right now?

        Mine’s doing okay. But yes, 401(k)s are hamstrung by the fact that they only make money when the economy actually produces money, whereas Social Security and other pensions can promise to pay you money that they don’t have and that the country doesn’t have.

        That’s a feature to you, the ability to promise what isn’t there? 401(k)s will also never be able to promise everyone unicorns to ride, whereas Obama and the Congress could pass the Unicorn Entitlement Act to give everyone one in 2040 right now.

        You’re okay with Social Security suddenly cutting benefits by 25% in 2037?

        1. I’m not advocating Social Security by any means. Just pointing out that the problems Social Security is running into aren’t ones that private investment is immune to.

          1. Immune? No. Far more flexible, adaptable and gentler when crashes come? Yes.

          2. Yes, but in the case of private investment, you can see that your 401(k) is lower right now, so you can adjust, whether by saving more, working harder or a more well-paying job, cutting back on expenses, planning to work more, whatever.

            For Social Security, the plan is apparently to cover our ears and pretend like nothing is wrong, then suddenly cut benefits by 25% or raise the retirement age, or force people to contribute more. No asking people whether they’d like to save more, spend less in old age, or work longer. Nope, brittle one size fits all.

            The only difference with the 401(k) is transparency and honesty.

        2. My TSP is doing pretty well. In early Oct ’07, I started getting a hinky feeling, transferred everything from S&P and small caps to Treasuries. A week later, we hit the peak.

      3. Shorter me, Tulpa: who says you have to retire at 65? Maybe work until you are 70 and your 401(k) has bounced back.

        SS has created this great mythology that you have to retire at 65, and what people fail to realize is that 65 was instituted as the “really old age”, because most people in the 1940s were lucky to see it.

        1. People born after 1943 get an 8.0% increase in SS benefits for every year they delay retirement past 65 (or 67 when the age increases in 2027). So yes, there is already an incentive in Social Security for that.

          1. And many respectable sites will advise that if you cannot be assured of living well into your 80’s, then you should start getting your money from the SS as soon as possible.

            By way, I am 53 and I must work to 66 1/2 to get full benefits. They have already started to slide the retirement date.

          2. People born after 1943 get an 8.0% increase in SS benefits for every year they delay retirement past 65 (or 67 when the age increases in 2027). So yes, there is already an incentive in Social Security for that.

            But your income is still based on what you made in your top earning 35 years, so you still pay extra tax for nothing, particularly if you cut back to a part time job.

      4. Weill, my 401K sucks right now. But I am 15+ years away from retirement, so I am heavily loaded in stock. A big chunk of last year’s losses have alread comeback. Assuming the Obama and the Democratically-controlled congress don’t total torpedo the economy, everything will be back to normal well before I retire.

        Now if some 64-year-old had his or her entire 401K in stock last year — well stupid is as stupid does.

        1. Nice, kinnath. You put that much better than I did below.

      5. how are those private retirement savings in 401(k) plans doing right now?

        One of my mutual funds has made about 75% in the last year. Another, more conservative one, has made only about 35%. I didn’t bail on them when they were down, and now they’re doing great. That thing about “how are your investments doing now?” is a year out of date, Tulpa.

      6. Oh yeah, and how are those private retirement savings in 401(k) plans doing right now?

        Mine are fine, thanks. What was the point you were making?

      7. Yes, the profound insight that markets have ups and downs is a valid defense of fundamentally wrong government programs.

      8. SS payouts outsripping FICA taxes is evidence that there are problems governments cannot solve. SS is on track to becoming unsustainable.

    2. If SS had been replaced with a private investment scheme, the Boomers who are now retiring would be cashing in their investments

      Exactly. And they would not be performing any economic activity with it, such as buying boats or retirement properties, putting them in a more liquid investment which can easily be tapped, or spoiling their grandkids. Yep, it would be a big pile of cash under the mattress.

      1. The same could be said of Social Security benefits. So you have no reason to complain that taxpayers will have to bail out SS from general revenue, because all that money is going back into the economy, right?

        Just because the money goes back into the economy doesn’t mean it goes to the places where it does the best work. That’s why government spending is usually not as good as an equivalent amount in tax cuts.

        1. So you have no reason to complain that taxpayers will have to bail out SS from general revenue, because all that money is going back into the economy, right?

          Just because the money goes back into the economy doesn’t mean it goes to the places where it does the best work. That’s why government spending is usually not as good as an equivalent amount in tax cuts.

          For the same reason, Social Security taxing then spending is not as good as private saving. People have incorrect incentives to save and invest.

          1. Most Social Security taxes are immediately paid out. Only a small surplus winds up in the “trust fund”.

            1. Only a small surplus winds up in the “trust fund” being replaced by an IOU and immediately spent.

              And for hundreds of millions of taxpayers, you’re talking real debt.

            2. Most Social Security taxes are immediately paid out.

              Sigh. You miss the point. I’m not talking about the spending end. I’m talking about the deadweight loss on the taxation end, from the people paying it, in addition to the minor loss from the government handling it and shuffling the money around.

              The people spending it, fine, they’re pretty efficient. But the taxation causes deadweight loss in the people paying it that they wouldn’t face if they were saving for themselves.

            3. People don’t get the full value of their additional forced savings. So you pay high taxes now, but each $1 of extra FICA paid doesn’t correspond to an extra $1 of benefits, not for people these days.

              It’s especially bad for people who have already worked fulltime 35 years, because the SSI is calculated based on your 35 years with the most income. At that point you’re paying a lot of Social Security tax for basically no extra income when you retire, so huge deadweight loss.

        2. The same could be said of Social Security benefits.

          Except that 401(k)s are not funded by magical unicorn rainbow fairy dust.

          1. Of course they are. The money you get when you cash in your 401(k) comes from the economy at the time you cash it in. The money you bought those investments with is spent immediately — just like with SS!

            So if the economy blows when you go to retire, you’re screwed either way.

            1. So if the economy blows when you go to retire, you’re screwed either way.

              1) Not if you put your funds into stable assets which you should do as you approach retirement.

              2) If you were not smart enough to do #1, you don’t take all the other retirees with you.

              1. Stable assets as in Treasuries and other government bonds? Yeah, that’s the privatization spirit.

    3. Except many of them would not opt to retire, having anticipated that (or, at least, been told that by smart investment advisors). But, with SS, there is no incentive to keep working.

      Keep in mind that, old as this canard may be, the life expectancy from the 1940s – 1980s of males (the working, and therefore “entitled” group for that period, effectively) was below the age that SS benefits kicked in (65).

      1. Elderly widows of male workers also get Social Security benefits based on how much their husband made.

        1. Elderly widows of male workers also get Social Security benefits based on how much their husband made.

          Based, yes, but there’s a sliding scale with several inflection points. It’s not as transparent as saving the money yourself.

          But sure, the way the program is set up it intentionally muddles the waters between forced savings, basic income, and insurance against “living too long” (past one’s savings.) Right now you’re defending it as a forced savings program, by stressing the “put in more, get out more” part of it.

        2. And that would be welfare not retirement.

        3. SS only works if you trust that the people who administer it can tell what the future will hold. When they set the age at 65, they did not take a high life expectancy into account because they did not know there would be medical advancements and improvements in standard of living. No one dies of polio any more.

          The administrators of the plan have to go to Congress to change the retirement age, reduce benefits, or raise the SS taxes to make it work. But, not only are they slow to react to an ever evolving market (the whole market in it’s entirety) but it is not politically wise for Congressmen to make the necessary adjustments. So everything gets delayed and eventually we’re fucked. This is not market failure, this is the failure of government, plain and simple.

    4. How is it a failure of the market that some Boomers may not have saved or invested adequately for their retirement? You seem to be suggesting they deserve to retire at the lavish levels they desire rather than what they can afford. It isn’t the market’s fault if they want to vacation in Europe but can’t afford it.

    5. There is a risk that private investments can all the way completely to zero in value.

      But only the government “investment” schemes leave you with less than zero. I mean come on, there’s a slight difference here.

  16. Calling that a trust fund is to double entry accounting as Steve Smith is to unsuspecting hikers.

    1. STEVE SMITH WANT HIKERS!!!!!!!! WARTY!!!!
      EPISIARCH!!!!!!!!!!

      STEVE SMITH WANT TO DOUBLE ENTRY!!!!!!!!!!!! STEVE SMASH!!!!!!!!!

  17. A representative from Social Security, a salesperson if you will, came to my company to sell us on the mandatory theft and admitted that if the status quo is maintained, SS will be bankrupt the exact year I expect to start receiving benefits. But she said it is extremely likely Congress will act so that does not happen because it is political suicide to let it go bankrupt. Needless to say, I left there with less confidence in ever seeing a dime of the money they take out of my check than I did when I walked in. With the news of this week that stated we’re 6 years ahead of the doomed schedule plus ObamaCare, I am expecting to be paying a majority of my salary on the SS and Medicare I will never see, by the time 2037 rolls around. And that’s 8 years ahead of my SS retirement date.

    1. Did they defend it by noting that in the case of bankruptcy, they can cut benefits by 25% but leave taxes the same so it will be sustainable?

      1. Her purpose was to explain how it works, who receives benefits, and when. She was very understanding of our tough questions and I feel answered them honestly and truthfully. She gave no false impression that everything would be OK. I think her real reason for visiting our company was to subtly convince everyone to put as much into their 401(k) as possible. I think the SSA knows things are not good and are trying to prepare people without having to rely on our elected officials to save us.

  18. Oh yeah, and how are those private retirement savings in 401(k) plans doing right now?

    One of the very first things I learned about investing is that you reduce the risk:reward ratio as you get closer to retirement. Since I’m on the risky side, my 401(k) has doubled in value the last year. My boss, who is close to retirement, hasn’t done as well. But since his funds are in stable assets, he never lost anything to begin with.

    1. Oh yeah, and how are those private retirement savings in 401(k) plans doing right now?

      If youre entire 401(k) was in a broad market fund, as of today you are back to where you were before the collapse.

      Thanks for asking.

  19. Even when pretending to tell the truth, the NYT lies:

    Now that accumulated revenue will slowly start to shrink, as outlays start to exceed revenue.

    There is no accumulated revenue. That money was all spent by the feds when it was taken in, just on stuff other than SocSec. It. Is. Gone. Not accumulated.

    Essentially, what the feds are doing now is rolling over the bonds held by SocSec into bonds held by actual third parties. They are converting the notional SocSec debt into actual debt.

    So, yes, this increases our actual deficit and national debt.

    1. I’m 32 now. Any chance I’ll be able to retire at 70? I have a 401(k) and cannot count on SS to be there for me, despite paying into it all of my adult life. Or should I just expect to work until the day I day which, if my family history is any measure, will be between 95-100 years old.

      1. I cannot count on SS to be there for me

        This kind of fatalism is dangerous. We must insist that SS (or hopefully some reasonable, reformed, gradually phased-out variant) will be there for us when we are eligible to reclaim it. If we Americans were to let the government off the hook with SS, how could it then be expected to honor any of its other obligations? A potentially cataclysmic precedent would be set. Do you know what would happen if the Fed decided to default on all its paper? The Great Depression would look like Tea Time at the Plaza.

        1. SS is not the same kind of obligation as a bond. The Courts and the government have repeated said so, at least when politicians aren’t lying to get votes or prevent reform.

        2. Maybe. On the other hand, if that’s accompanied by a major loss of economic influence for the Feds, it might be the sort of catastrophe that lasts until a few geniuses that still have both popular trust and economic clout manage to put together a currency that people are willing to use for trade. Maybe it will be gold or silver or depleted uranium, maybe it will be Walbucks or Paypal credits.

      2. I’m 32 now. Any chance I’ll be able to retire at 70?

        If you’re smart (saving a good chunk of what you make and investing it well) and not greedy (not planning on living a lavish lifestyle post-retirement) you should be able to retire well before then.

        Assuming the economy doesn’t totally tank more than once or twice between now and then, of course.

  20. This is why we need to aggressively confront anthropogenic global warming. If something is not done there won’t be enough ice floes to set the elderly adrift on.

    1. Hey saila’ man, can you still row? Never mind – we won’t have any oars or paddles anyway. 😉

  21. I’m 20. I consider the money taken as FICA tax to be gone.

    1. I’m 54 and all the money taken from me via FICA is gone too. Hopefully the government will allow me to get full SS welfare in addition to my military retirement check in eight years.

      But I’m not really confident that will happen. It’s a tax on the very first dollar you earn and for most Americans it’s a tax on the last one and all the ones in between as well. Benefits are not in any way guaranteed as congress can change the law as they see fit.

      1. Means testing is coming. They’ll kick that can down the road as far as they can, but it’s gonna happen in less than 20 years.

    2. I’m 60. I consider the money taken as any tax to be gone, as well as the purchasing power of any they let me keep if I don’t spend it fast enough.

  22. Funny. I remember reading this same god damned discussion in the pages of Reason forty damned years ago. This one will probably accomplish as much as the last one did.

    1. You remember reading internet comments forty years ago?

      1. No. I remember reading printed pages of Reason Magazine forty years ago. I still have many of those old hard copy issues.

  23. Why doesn’t Obama just apply that multiplier effect to FICA revenue?

    I pay $1, he waves the multiplier wand, and the $1 turns into $5. Problem solved!

    1. I pay $1, he waves the multiplier wand, and the $1 turns into $5.

      Whaddaya think those printing presses running 24/7 at Treasury are for?

    2. Obviously because of Republican obstructionism.

  24. I always knew Social Security was a Ponzi scheme. I wish I could have gotten out of it way back when.

    I calculate I have paid in about $150,000 into it over the last forty-four years. If that was invested at 5% there should be just over $1,000,000 in my “account”.

    If that cash was invested at only 2- 1/2% it would pay $25,000 per year indefinitely without touching the principle. My benefit is only $20,000 per year. I have not included the employer matching funds.

    So if I really had an “account” it would be far from broke. What a deal!

  25. Also, could any tell me why this is welfare? It is more like government robbery isn’t it?

  26. The comments section has a noted lack of Chad and Tony posts, and I believe it suffers for it. Who else will whistle past the cemetery, telling us that SocSec and Medicare are solvent for decades to come? Who else who will enlighten us on the magic power of the government to turn one dollar into four?

    *sigh*

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