Social Security

Social Security On Track to Go Broke, Says CBO

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It's no surprise, given the long years of discussion we've had over the financial illogic of the United States' entitlement programs, but Social Security is on track to pay out a lot less than people expect as its costs soar. The latest analysis comes from the Congressional Budget Office (CBO), which points out that Social Security outlays started to exceed tax revenues for the program in 2010. "As more members of the baby-boom generation retire, outlays will increase relative to the size of the economy, whereas tax revenues will remain at an almost constant share of the economy. As a result, the gap will grow larger in the 2020s…"

The so called "trust fund" (really, just a federal line item) will let the federal government keep its promises in terms of both Disability Insurance (DI) and Old-Age and Survivors Insurance (OASI) for a while, but the day of reckoning is getting awfully close, in terms of entitlements just crowding everything else out of the budget.

CBO projects that under current law, the DI trust fund will be exhausted in fiscal year 2017, and the OASI trust fund will be exhausted in 2032. If a trust fund's balance fell to zero and current revenues were insufficient to cover the benefits specified in law, the Social Security Administration would no longer have legal authority to pay full benefits when they were due. In 1994, legislation redirected revenues from the OASI trust fund to prevent the imminent exhaustion of the DI trust fund. In part because of that experience, it is a common analytical convention to consider the DI and OASI trust funds as combined. Thus, CBO projects, if some future legislation shifted resources from the OASI trust fund to the DI trust fund, the combined OASDI trust funds would be exhausted in 2030.

Which is to say, the system is still consuming an ever greater take of the federal budget, and costing far more than we can afford.

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  1. Where’s our lefty chorus to sing that old “just needs a tweek!” refrain? And then a rousing rendition of “FDR’s the wonderfulest prez EVAH!”

    1. Tony will be along shortly to remind you that any change is stealing from the pooooooor!!!!!

      1. And by the poor, he means the old, regardless of income or assets.

    2. I thought people tweeking got jailed? How’s that gonna fix it?

      Stupid lefties…

    3. Though it shames me to admit it, the lefty chorus has a bit of a point, if by tweaks they mean, “raise taxes on one side (FICA) and cut benefits on the other side (OASDI).”

      I mean, that’s how everyone balances their books: increase revenue and cut expenditures.

      1. The problem with the raise taxes side is that federal revenues are already up against their historical cap as a % of GDP.

        Raising taxes won’t raise more revenue. You might shift tax revenue from the general fund to the SocSec fund, but that doesn’t solve the combined deficit that they run.

        1. that doesn’t solve the combined deficit that they run.

          How so?

          1. You’re just shifting debt from one pile to the other, because your revenue is capped at current levels (with growth locked to GDP growth).

            Note: following number made up.

            You take in a trillion a year, now. SocSec taxes are $100BB of that. You raise SocSec taxes by $10BB. Total tax revenue remains a trillion a year, because we see historically that fed tax revenues, regardless of the particulars, never exceed a certain percentage of GDP. So now you have shifted $10BB from general revenue to SocSec.

            Great! SocSec is no longer running a deficit, but you’ve increased the general fund deficit by $10BB.

        2. The combined deficit isn’t the problem they are trying to fix. They are shortsited.

          1. What problem?

            /BO

        3. The problem with cutting benefits suddenly in 2030 is that it’s a sudden 20% cut. Cutting benefits slowly by restraining the rate of growth would allow people to adjust better, but many of the same “it’s just a tweak” people argue against that.

          We’re also now past the point where increase fertility could rescue it by that date. Possibly immigration, though that only pushes off the problem into the future, since the program is still not actuarially balanced.

          Note that private accounts would not have given people better returns, only forced people to face reality– the program loses money because it pays out too much; that’s incompatible with the idea that people could have made more money with private accounts. (People get a good guaranteed return; the risk free investment rate would not be higher than the increase in Social Security, both linked to overall economic growth.)

      2. “Though it shames me to admit it, the lefty chorus has a bit of a point, if by tweaks they mean, “raise taxes on one side (FICA) and cut benefits on the other side (OASDI).””

        Or you simply push the retirement age higher.

    4. Speaking of FDR, the only way that he got Social Security legislation enacted was outright bribery.

      North Carolina Congressman Robert Doughton was the Chairman of the powerfull House Ways and Means committee.

      Doughton was opposed to the Social Security legislation and he had enough influence in the House to block it.

      FDR bribed Doughton into changing his position and supporting the legislation by changing the route of the Blue Ridge Parkway (a WPA project) so that it would go through North Carolina instead of Tennessee.

      1. And threatened to stack SCOTUS.

        Lied directly to the American people about desires and plans to enter WWII.

        Which could be argued was a necessity, but he also believed, arrogantly, the at he alone, in failing health, was better suited to run a third term, while hiding his health issues, than was anyone else available.

        So grand was his via if himself, he knew that everything would be better than any alternative, even if he’s operating at 50%.

        Neither Washington not Lincoln needed a this term, but FDR….

        Greatest President Ever!

  2. People insist on believing in a reverse Stein’s law: Whatever cannot go on forever will do so anyway. Also, an acquaintance of a certain age told me that there’s no need to worry because Social[ist in]Security will do okay throughout his lifetime, as though nothing else counted.

    1. Very public employee union like…
      “I’ll get mine, f’ the rest of ya!”

      1. I believe the Brit’s use:
        “I’m awright, Jack!”

          1. I’m sorry the rest of you are getting shafted. They forced me into the program.

    2. In the really long run, I’ll be dead and it will be your problem then, huh?

  3. Fuckin’ lazy millenials need to step up and pay their “fair share”.

    1. Can’t we just take some of the gold coins out of Scrooge McDuck’s bathtub?

      1. Scrooge McDuck has already PAID INTO THE SYSTEM.

  4. No wai! I was told there’s a lock box. A LOCK BOX!

  5. Social Security benefits will be reduced in 2031 and the program will end on Jan. 1 2037.

    Happy?

    1. No, because that implies the taxes for it will still be going on.

      1. only for another 23 years. Jeez. do you want grandma to eat dogfood?

        1. My grandparents are all gone, and my parents have never planned on actually receiving SS benefits. Go ahead, cut the program.

  6. I have always wondered what happens as revenues fall short and they have to go to the trust fund. Previously, social security revenues became t-bills right? So what that meant is every dollar going into the fund actually went to the government to spend (as a loan).

    But now, the revenues do not create a surplus, so the trust fund needs the government to PAY IN for every dollar taken out of the trust fund. Doesn’t that mean our government is going to have to start paying into the trust fund in order for money to be paid out? To me that means now not only our FICA taxes but soon our regular taxes will be increasingly diverted to Social Security, right?

    1. The ‘Trust Fund’ is a fiction. Social Security is just a tax that gets spent by the government just like any other general revenue.

    2. I believe there’s a couple of options:

      (1) Shift general tax revenue to SocSec by redeeming some of those extra-special T-bills in the SocSec account.

      (2) Print more money, and use that.

      1. Devalue the dollar to the point that the deficit disappears.

        Of course, your SS benefit of $1700 becomes as valuable as Zimbabwe Dollars or Weimar Marks.

        That will fix both SS fund and the general fund, so winning?

    3. To me that means now not only our FICA taxes but soon our regular taxes will be increasingly diverted to Social Security, right?

      Yes, correct if you look at it that way. Prior to 2010 FICA taxes were diverted to the general fund (by that view, which is a legitimate accounting way to look at it).

    4. The “trust fund” is the opposite of a fund. It’s an IOU.

  7. The single best reform that is politically possible right now would be to force the CBO (and possibly the government generally) to use GAAP. It would be a game changer. You could definitely sneak it into a spending bill.

    1. I don’t think it’s politically possible; the U.S. government is structurally incapable of following GAAP, and it would take drastic alterations to the structure of most of its departments. The legislative transformation and personnel changes required are daunting.

      1. There was a lot of whining about GASB 34, but it happened. GASB could be amended to force recognition of these obligations, even if going full GAAP isn’t workable.

    2. That would be like sneaking a skunk into the monthly Sniff Tester’s meeting.

      Politicians have a sixth sense when it comes to line items that would affect the elderly vote.

      1. Considering almost all of them are seniors themselves, this makes sense.

  8. But AARP is all behind “reasonable reforms.” Which, in their case, means taking the earnings cap off SS tax, but not increasing the benefits for those who are forced to pay more but “don’t need it”
    (As judged by Top. Men.)

    1. And by “taking the earnings cap off” the AARP means gradually, so it doesn’t affect anyone over 55.

  9. What people often don’t consider is that the state of the Trust Fund is kind of irrelevant; the cash flow to and from the general treasury is the big issue.

    The Social Security trust fund is in the form of treasury bonds that are not sellable to the general public. This means that whenever the SSI taps into their ‘trust fund’ to get money out of it, they need to ‘sell’ the bond back to the U.S. govt. That ‘sale’ causes money to go from the general treasury account into the SSI account.

    Thus whenever the SSI is bringing in less money than it is spending, the shortfall is coming out of the general treasury, ie from taxes and borrowing by the US govt.

    Since the borrowing is being paid for by (a) people purchasing bonds that must be serviced and eventually retired, and (b) the FED and other central banks purchasing the bonds via currency creation, it means that the SSI’s shortfalls require higher taxes, or greater monetary expansion (the invisible tax on savings).

    At the point the trust fund gets ‘exhausted’ is kind of meaningless – the slope of the daily transfers from the general treasury account to pay recipients won’t suffer a sudden discontinuity. The rate money transfers the day after the exhaustion will follow the trend of the days before the exhaustion.

    1. Minor quibble: it’s SSA, not SSI.

  10. Your bank account has been robbed, but the drunken sailors who robbed you left an IOU.

    Somehow, that’s not very comforting. Good thing I never planned on getting SS anyway.

    1. Did anyone born after the fifties, except a few deluded government-worshipers, ever plan on getting SS?

      1. I realize that I just contradicted myself. The truth is that people whom I know who were born after the fifties don’t plan on getting SS. Yes, I do sometimes think I live in a bubble.

      2. Oh yes. Many still do, in fact many think you can start collecting early (disability) and there is nothing wrong with that, and that it will last forever because…well, because the government promised!

    2. When people remind me of the trust fund, I remind them of the scene near the end of Dumb and Dumber, where they say the money is all right here in the briefcase. They open it up and it’s a bunch of IOUs on various slips of paper. The bad guys are…disappointed.

      It happens that I will turn 70 in 2032. Good thing my retirement planning is based on a SS income of zero.

      1. Good thing my retirement planning is based on a SS income of zero.

        Anybody who doesn’t use that as their baseline assumption is a fool.

        1. I think most kids these days assume this. I certainly heard it from every kid I knew when growing up in the 80s. Nevertheless, when a huge proportion of your check goes to FICA each pay period, it is difficult to internalize the message that “This money is being taken to pay people today who are going to use it up before I get to the same age.”

          What really pisses me off is that the government does everything it can to make sure that middle-class working stiffs cannot easily save for retirement. 401k caps on contributions are fucking obscene. Just god damn obscene.

          I will be taxed $15,000 in social security taxes next year which I will never see. Meanwhile, I can only stash away $18,000 in a 401k. So nearly half my “long term savings” (counting SS) is just taken from me. Over half if you were to include Medicare.

          If they ever move to Means Testing SS/Medicare, they damn well better lift the cap on 401ks as well.

          1. They used it up before you got one year older, let alone retirement age.

      2. Good thing my retirement planning is based on a SS income of zero.

        You’re being ridiculous.
        There are plenty of practical, relatively painless and quite popular solutions to keep SS fully funded.

        Increase Social Security taxes. Workers currently pay 6.2 percent of their earnings into the Social Security system up to $113,700 in 2013. If that tax rate was gradually increased to 7.2 percent by 2036 it would eliminate just over half (53 percent) of Social Security’s deficit. And if workers and employers each paid 7.6 percent, it would eliminate the financing gap. Some 69 percent of Americans support raising their own Social Security taxes by 1 percent, according to a recent National Academy of Social Insurance (NASI) and Mathew Greenwald and Associates online survey of 2,000 Americans ages 21 and older.

        Means-test. Another potential Social Security change is to reduce or eliminate Social Security benefits for people who have retirement incomes above a certain threshold. For example, if benefits were phased out for retirees with non-Social Security income between $55,000 and $110,000, the deficit would be reduced by 20 percent. NASI found that 31 percent of Americans say they would like to means-test Social Security eligibility.

        1. And the most obvious and easiest solution:

          Lift the payroll tax cap. Workers currently pay Social Security taxes on up to $113,700 of earned income in 2013. Individuals who earn more than this threshold don’t pay Social Security taxes on that income. If this tax cap was gradually eliminated between 2013 and 2022 it would reduce the deficit by 71 percent. And if the tax cap were increased over 5 years to include 90 percent of all earnings (currently about 84 percent of earnings are covered) it would reduce the financing gap by 30 percent. This change would affect the 5 percent of workers whose earnings exceed the cap, and they would receive somewhat higher benefits when they retire. Lifting the payroll tax cap is a popular idea, with 68 percent of Americans supporting the complete elimination of the cap, NASI found.

          1. All three of those sound painful to me. So I’ll have to pay more in for the next 40 years (through the increased rate and removal of the cap) and then won’t be able to get any back if I’m responsible in saving. Fuck off.

          2. Removing the payroll tax cap is a fantastically bad idea. Do those numbers take into account all of the wealthy people who would make active efforts to avoid those taxes?

          3. So 68 percent want to rob 5 percent. Isn’t Democracy wonderful?

          4. And an even easier solution: Let everyone who wants out opt out now, and stop paying in. Future obligations would drop significantly.

            1. And an even easier solution

              I have an easy solution where no one will be left out.

              There are reasons for optimism, in other words, if employment and wage growth can be brought back to historical levels, instead of assuming more recent growth rates that are result of 5 recessions since 1980, which in turn were the result of experiments with so-called supply-side economics that emphasized lower tax rates for investors and and reduced government spending. This ‘experiment’ resulted in tremendous economic upheavals and $trillions in productive output lost.

              Social Security Trustees own Alternative I, the “lower cost” estimate, would in fact never run out of funds. Hence the need to focus on what creates economic growth. It’s really a no-brainer. More jobs that pay a living wage for starters, which means more collective bargaining power and the strengthening of labor laws that have been weakened over the past 30 years.

              1. lower tax rates for investors and reduced government spending.

                Get the fuck out of here with that bullshit. Eisenhower’s last budget was about $750 billion a year, inflation-adjusted, and half of that went to Defense. Even when accounting for population increases and inflation, we still spend more now per capita then we did when the country’s population was half of what it is now–and defense accounts for less than half of what we were spending on it in the 50s and 60s. SS and Medicare now take up about 40% of federal spending all by themselves.

                Furthermore, revenues as a percentage of GDP have gone above 19% only 11 times since 1948–and seven of those have happened since 1980, including the 1980-82 recession.

                If you’re going to parrot an argument, use one that has basic facts in order rather than progyldyte fantasias.

          5. Lift the payroll tax cap.

            Still ultimately a short-term solution, because SS checks are paid out as a percentage of what you entered into the system. The cap is there to ensure that people who nominally shouldn’t need SS as badly (because if you’re consistently making over six figures you’re presumably responsible with money) are still providing contributions without burdening SS later on with onerous payouts once they reach eligiblity.

            SS already has a means-tested function built into it in the form of a cap. You can’t take out more than what you’d be paid on $113,700 in income. Remove the cap, and you’re still going to come up short in the end once those calls are made by the top 10%.

            Lifting or increasing the cap and taxes is also a tacit admission that the compound effects of inflation exist, and only by raising those things can we keep SS solvent.

        2. Some 69 percent of Americans support raising their own Social Security taxes by 1 percent,

          I hope the question was better worded than the article you’re quoting. Raising the OASDI tax rate from 6.2% to 7.2% is a lot more than “raising their own Social Security taxes by 1 percent.” It’s “raising their own Social Security taxes by 16 percent.”

          Another potential Social Security change is to reduce or eliminate Social Security benefits for people who have retirement incomes above a certain threshold

          That’s an incredibly retarded way to means test. Social Security essentially has access to lifetime income. If you’re going to means test, means test based on lifetime income, not how much money people managed to save. Otherwise you’re saying “people who made a lot of money, but blew it all on fast cars and fancy jewelry get full Social Security, whereas people who saved their money, even if they were lower middle class their whole life, get less.”

          1. People often confuse “one percentage point” with “one percent”. In this case the distortion is intentional, to sugarcoat the massive proposed rate hike.

        3. So, take more money away from us and our employers and gradually change to a lie about this being “old age insurance” or whatever Rooseveltian nonsense was first spouted about Soc Sec?

        4. 31% is a minority in case you suck at math. Here’s an idea. Let people opt out so they can use that 6.2% plus their employer contribution (if added to their salary or given as a separate benefit) for investing purposes. The buoyancy to the economy would raise all ships and those that prefer to continue paying into SS would benefit as well.

          And if the concern is that private investments have a greater risk potential and therefore could end in people losing their savings and not being eligible for the safety net of SS, the government could require (not my preference but without it, this would never pass) a portion of all earned private investment savings to be of a secure variety. It would still greatly exceed the returns on FICA.

          1. Lift the payroll tax cap.

            Redundant and still meaningless. Based on the false assumption that it matters what a tax is labeled.

        5. Increase Social Security taxes.

          Meaningless. Based on the false assumption that it matters what a tax is labeled.

          Means-test.

          Tell me again how changing SocSec so I won’t get anything due to means-testing makes my assumption that I won’t get anything from SocSec ridiculous?

          1. Tell me again how changing SocSec so I won’t get anything due to means-testing makes my assumption that I won’t get anything from SocSec ridiculous?

            You would not get much later because of how much you were given now.

            The effect has been to ease the taxes of the wealthy, while burdening the vast majority of workers. Considering how highly ownership of stocks is concentrated, the benefit of those lower corporate taxes went overwhelmingly to the top 1 percent and, especially, the top 1 percent of the top 1 percent. Considering that the Social Security tax is capped, most of the burden of the increased payroll tax went to the bottom 90 percent.

            1. Considering that the Social Security tax is capped, most of the burden of the increased payroll tax went to the bottom 90 percen

              Coincidentally, that’s the same group that gets the ‘benefit’ from the shitty annuity that social security passes itself off as.

        6. “Increase Social Security Taxes.”

          Fuck you, I’m already paying too much.

          1. I’m already paying too much.

            If you’re not in the top 10% then I agree with you.

            In my view, building the Social Security surplus has had two major effects.

            One effect was to finance tax cuts for those at the top, whose highest tax rate fell during the Reagan years from 70 percent to 28 percent, and for corporations, whose rate fell from 50 percent of profits to 35 percent. Those with less subsidized those with more.

            The other effect was a huge increase in consumer debt, as Americans saddled with higher Social Security taxes took out loans to cover other needs. Stagnant wages played a role, but the $2.7 trillion Social Security surplus is also a factor in a $1.5 trillion increase in consumer debt since 1984.

            It is no wonder consumers have gone into debt. Paying a tax in advance is expensive. Indeed, the first lesson in tax planning is that a tax deferred for 30 years is effectively a tax avoided, provided the money is invested wisely. The reverse is also true. A dollar of tax paid in 1984 cost $2.20 in today’s dollars, and that’s before counting the interest that could have been earned.

            1. I’m already paying too much.

              There are alternatives.

              That tax hike could be smaller or even avoided if, three, we reignited the growth in wages. Median wages have fallen in 2010 back to the level of 1999. And, four, it would help just as much if we created millions more jobs, which since 2000 have grown at only a fifth the rate of population increases.

              1. You know what had me making more money?

                The Bush Tax cuts. You know, the ones that predominantly went to poor and middle class people.

                Maybe we should try that again.

            2. One effect was to finance tax cuts for those at the top, whose highest tax rate fell during the Reagan years from 70 percent to 28 percent, and for corporations, whose rate fell from 50 percent of profits to 35 percent. Those with less subsidized those with more.

              Oh God. These people can’t be this moronic. Maybe they know they are writing for an audience of morons so they don’t need to be accurate.

              Very few people paid the high marginal rates. Why? Because there are always ways to shelter income. Want to attract top talent, but can’t afford the $300,000 required to pay them an extra $100,000 in pocket? Buy a country club membership and then allow your executives to take advantage of it! Buy a jet, and allow them to use it for travel! Provide them with company owned mansions that you maintain for them free of charge!

              The shelters are incredibly inefficient (you get far more bang for your buck just giving people money and then letting them spend it as they desire), but the higher the losses imposed by the tax system, the more economic sense they make.

              1. Exactly, and those shelters would explode if you lifted the payroll tax cap.

              2. Oh God. These people can’t be this moronic. Maybe they know they are writing for an audience of morons so they don’t need to be accurate.

                I bet you win a lot of arguments around here just by insulting people. It seems to be most people’s go-to move

                There has been very little research, other than historical, on the ingredients of robust growth. But history does show that the continued transfer of wealth away from the consuming public to the wealthiest, while keeping corporate and high income tax rates as low as possible, hurts overall economic growth.

                How? By the outright suppression of collective bargaining of wage and salary earners, either via such corporation backed groups as ALEC, the American Legislative Exchange Council, or Republican majorities in the right to work states that inhibit union organizing efforts, for starters. And those Republican majorities are due in part to blatant voter suppression laws in those states, again supported by the likes of ALEC.

                1. Diagnosis and solution.

                  FTA:

                  Economists such as Thomas Piketty and Emmanuel Saez have shown that this has been going on for decades–since the 1970s, really, when high income tax brackets began to be lowered under the rationale that it would boost economic growth. But alas, the opposite has happened. We need another New Deal, in other words, to bring back the middle and lower class earning potential, real jobs paying wages real wages, in other words. Then we won’t have to worry about social security, worry less about Medicare, and stop the impoverishment of the majority of Americans who actually produce the wealth that should guarantee a comfortable retirement.

                  1. Hahahahahahahaha.

                    Did that article seriously reference Piketty?

                2. Blast, if you hate people telling you that the articles you are linking to and quoting articles are moronic, the solution is to stop linking to and quoting moronic articles.

                  You’ll note that I explain *why* the articles are moronic; you should pay attention, if you want to avoid the disaster that occurred when your policy ideas were the official ones of the US govt.

                  And on that cheery note, I’m off! Enjoy your weekend gents!

      3. I think zero might be optimistic, Spartacus.

  11. Yep, so many people have been taking advantage of the disability scam in the last few years since the bubble popped (many of the people who have permanently dropped out of the workforce) that the fund is going broke even faster than what they had initially thought.

  12. I looked at the paycheck that said $4961 , I accept …that…my neighbours mother woz like they say actually making money part-time on there computar. . there dads buddy haz done this for under twelve months and just cleared the loans on their house and purchased a brand new Nissan GT-R: .
    try this site and free register ——— http://www.jobsfish.com

    1. Did he pay his Social Security tax on that?

  13. What really sucks is the likelihood that I will get nothing from Social Security despite 20+ years putting into it. I think it pretty much a given that they will move to a Means Tested form of paying, in addition to removing the Cap for “donations”. So basically, I am going to have my FICA taxes go up and then (because I contribute a lot towards retirement) I will get none of that money when I retire.

    The only solace I can take from that is by drastically reducing the people who will get SS checks, in about 20 years it will no longer be seen as a general Entitlement for everyone, but rather a form of Welfare. And we do have a track record of reforming welfare in recent history. So there is always hope that people will see their taxes going to lots of people who were essentially irresponsible with their money during their working years, and sympathy for those people will start to wane.

  14. Which is to say, the system is still consuming an ever greater take of the federal budget, and costing far more than we can afford.

    Why not liquidate the trust fund and invest in higher yield government bonds.

    1. OK, now I see this is a parody/spoof…

    2. How do you liquidate an IOU? Invest what? Empty promises?

  15. This can’t be true! I’m often informed by liberals how “social security is just like a lockbox” so every penny I’ve been forced to contribute is right there in the box magically immune from inflation.

    Whenever I tell them there’s nothing in the box and that my money has already been spent on benefits for others they look at me like I’m cray-cray.

    1. If you use cray-cray or know people that use it, shoot yourself and/or them. It has to be the most annoying thing people say. The fewer people alive, the more solvent SS becomes!

      1. Yeah, I thought Cray-Cray was a supercomputer chess matchup the first time I heard it.

  16. Why don’t you whining complainers do what I’m doing? I invest in lottery tickets. And because I have never won it before, my odds are only getting better every day!

    1. Actually, your odds are staying the same every day. Which is still an improvement over Social Security.

    2. On the plus side, you won’t have to worry about a means test.

  17. So why all the talk about Social Security “going broke?

    Which federal program took in more than it spent last year, added $95 billion to its surplus and lifted 20 million Americans of all ages out of poverty?

    Why, Social Security, of course, which ended 2011 with a $2.7 trillion surplus.

    That surplus is almost twice the $1.4 trillion collected in personal and corporate income taxes last year. And it is projected to go on growing until 2021, the year the youngest Baby Boomers turn 67 and qualify for full old-age benefits.

    1. Focusing on SS is just a distraction from our real problems

      FTA:

      Under current tax rules, the Social Security shortfall for the next 75 years is $8.6 trillion.

      But there is a much bigger problem that needs our attention. If we continue national security spending at current levels, with no future increases, the total cost would be $63 trillion, based on the figures in President Barack Obama’s latest budget. Unlike spending on Social Security, much of the national security spending goes overseas. And that makes us worse off.

      1. So Johnston also believes in the idiotic myth that “buying local” is the way to prosperity? Good to know. He can be ignored completely.

      2. Unlike spending on Social Security, much of the national security spending goes overseas. And that makes us worse off.

        Okay, this is risible!

        Most defense spending is corporate welfare here in the U.S. of A. The M1 Abrams congress is shoving at an unwanting army are manufactured in Ohio. The F-22 is built all over the country. The Navy shipyards are all on U.S. soil (except for one in Japan IIRC). Most DOD staff work in the U.S. Most soldiers and their dependents live on U.S. soil.

        Even deployed soldiers that spend their pay overseas spend it on military bases to US companies or exchanges that are operated by the military.

        Even if this money was spent overseas (it’s not, but let’s pretend the writer wasn’t lying out of his ass for a moment), it wouldn’t be a problem, the money would flow back into the U.S. in the form of either purchases of goods or services, or as investment. The notion that spending money overseas impoverishes us is one of the more persistent fallacies peddled by the mercantilists.

        By all means, cut ‘defense’ spending, but the mercantilist argument that it represents spending that benefits foreigners and impoverishes us is a dumb way to justify it.

    2. Of course, it takes 10%+ of the poor’s income; prevents them from saving properly for their retirement, and provides a shittier return than the shittiest annuity you one could buy with 10% of their income.

      Reading people crowing about social security’s benefits reminds me of the MiniPlenty propaganda about the chocolate ration in 1984.

      1. It’s an inter-generational transfer from poorer, younger, working Americans to older, richer, leisure class Americans. Now, why is it popular again?

    3. An entire column based on a lie. Amazing.

      http://www.washingtonpost.com/….._blog.html

      http://www.factcheck.org/2011/…..s-red-ink/

      What Johnston says won’t happen until 2021 actually happened in 2010. It’s not even necessary to read the rest of the column.

      1. An entire column based on a lie

        Hogwash. From your WP link:

        In exchange, Social Security received interest-bearing Treasury securities, which now total more than $2.7 trillion.

        That’s 2.7 trillion in assets after all overlays. Mr. Johnston is correct when he says:

        Why, Social Security, of course, which ended 2011 with a $2.7 trillion surplus.

        1. But those are not real assets, dude.

          1. But those are not real assets, dude.

            From the same WP link:

            As we have repeatedly explained, the bonds held by Social Security are backed by the full faith and credit of the U.S. government. The bonds are a real asset to Social Security…

            1. The Social Security Administration is part of the federal government.

              It is not some independent third party.

              An IOU in the hands of it’s maker is not an “asset”.

              The “special class of Treasury bonds that are held by the “trust fund” are exactly that – IOU’s that the federal government has written to itself that it is trying to pass off as an asset.

              Try writing an IOU to yourself and then go down to the bank and claim that it is valid collateral money you want them to loan you.

              They will laugh you right out the door.

            2. The bonds are a real asset to Social Security…

              Bullshit. When those bonds are liquidated in the event of a shortfall, they’re liquidated by the government selling a separate bond to pay for it, and only the Treasury is allowed to purchase the bond. In other words, the equivalent of using a cash advance on a credit card to pay for a separate debt obligation.

              When SS has a shortfall, the Treasury literally takes out debt to cover it. How the hell does that make it an asset?

        2. Assets are not a surplus. It had negative cash flow in 2010, and every year since. IOW, a “Deficit.” The opposite of a “surplus,” if you have any interest in honesty.

    4. Bullshit it “lifted them out of poverty”.

      And if there’s a motherfucking surplus, then I guess they can reduce my rate from 6.2 to 5 percent and be okay.

  18. I don’t know that I’ll ever be able to retire. Barring a lottery win I’m going to be stuck managing my small, but fairly successful machine/welding/fabrication shop until I die. I’ve got a couple kids working for me now that are usually able to operate pretty independently, but that’s a new thing for me, usually the kids I get are fucking bricks who need their hands held.

    It’s kind of depressing, especially when I see the enormous fucking checks I write in April.

    And no, I was never counting on getting SS, but the $100,000-ish I’ve been taxed to support it sure would have helped.

  19. I don’t like this solution, but a strong round of inflation would even out this mismatch.

  20. Here’s a fair and market-based plan that would put an end to social security:

    1. On Jan 1, 2015 announce that all payroll contributions into Social Security stop immediately.

    2. Everybody currently collecting benefits will continue to do so, paid directly from the Treasury.

    3. Everybody more than 10 years away from the age of eligibility will receive, in lieu of a retirement annuity and benefits, a “retirement bond” (as described below).

    4. Anybody less than 10 years away from eligibility may choose between the traditional style of benefits based on what they’ve paid in to date, or to waive their benefits in exchange for a retirement bond (as described below).

    5. An individual’s retirement bond shall be guaranteed by the full faith and credit of the US Treasury, the face value of which shall be the sum of all payroll contributions made until December 31, 2014 plus accrued interest (compounded at the historical rate of interest paid on 10 year Treasuries).

    6. Each bond will mature and be payable in cash on the date the individual would have otherwise been eligible to receive social security benefits, until which time the bond shall continue accrue interest, compounded at the same rate as the government pays on 10 year government bonds).

    7. The bonds will be tax-exempt and fully transferable (i.e. marketable without restriction).

    And the market will take it from there.

  21. For cryin Out loud! We all know that SS funds were NEVER in a “Locked Box”; and that whatever funds that were earmarked for SS were looted YEARS AGO by congress! So, let’s just drop all the pretence, that SS hasn’t been flatlined since the Carter Administration!

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