SS, for first time in 25 years, taking in less than going out

[StageLeft]

According to this article:

http://finance.yahoo.com/focus-reti...N0aGVuZXh0YmFpbG8-?mod=fidelity-readytoretire

A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.

It would have been a lot simpler to fix the system years ago, when we could have used Social Security's cash surpluses to buy non-Treasury securities, such as government-backed mortgage bonds or high-grade corporates that would have helped cover future cash shortfalls. Now it's too late.

I thought projections were that SS would run out of money in 2042 or 2025 or something? Is this different than that? I don't believe SS really has money kicking around; it lives basically pay check to pay check but that it could keep doing that for a while yet. However, according to this it will need additional funds to be able to pay out its benefits.

 

[RyanPaulShaffer]

I thought projections were that SS would run out of money in 2042 or 2025 or something? Is this different than that? I don't believe SS really has money kicking around; it lives basically pay check to pay check but that it could keep doing that for a while yet. However, according to this it will need additional funds to be able to pay out its benefits.

From what I've seen from the GAO, for example, SS has been running a surplus for years, but that surplus has been raided to pay for other programs.

 

[Fear No Evil]

Don't worry, the $ will be worth less than the Peso in a few years. So we could pay out millions to each person in SS and it won't matter.

 

[PokerGuy]

The projections you see of SS not running out of money until 2040 or so are based on the premise that all the surpluses they've been running for decades are now available when they have to pay out more than they take in. Since that money was plundered long ago by the idiots in DC, SS will now have to pay from yet another smoke and mirrors borrowing scheme.

 

[KB]

When people are jobless they don't pay SS. Previous estimates weren't based on > 10% unemployment. Expect SS taxes to increase to 7 - 8 percent.

 

[StageLeft]

When people are jobless they don't pay SS. Previous estimates weren't based on > 10% unemployment. Expect SS taxes to increase to 7 - 8 percent.

That would be awesome. Especially since we know they won't be rolled back when unemployment drops again.

 

[soccerballtux]

According to this article:

http://finance.yahoo.com/focus-reti...N0aGVuZXh0YmFpbG8-?mod=fidelity-readytoretire



I thought projections were that SS would run out of money in 2042 or 2025 or something? Is this different than that? I don't believe SS really has money kicking around; it lives basically pay check to pay check but that it could keep doing that for a while yet. However, according to this it will need additional funds to be able to pay out its benefits.

Wow, me too.

Even better, the SS funds have been used to purchase Bonds from the Treasury.

I recommend you read over the CBO estimates; note the graphs where inlays exceed expenditure and when; the inversion starts ~2007-2015.
edit: here you go, front and center page 1: http://www.cbo.gov/ftpdocs/96xx/doc9649/08-20-SocialSecurityUpdate.pdf
edit2: here's the 2009 updated one: http://www.cbo.gov/ftpdocs/104xx/doc10457/08-07-SocialSecurity_Update.pdf

So, according to this article you linked, we just crossed the 2020 mark today. Would not surprise me giving the recession.
Expenditures are going to continue to ramp up.

This is on top of medicare costs ballooning, a $1.6T federal deficit this year, healthcare legislation being passed
which, in the first 10 years we pay for 10 years but only have the program running for 6 years (the most ingenious Obama accounting trick yet).

Now factor in the baby boomers selling all their assets so that they can continue living-- houses, stocks, etc. How is the market possibly going to turn around for any of these? How is the government possibly going to get more revenue to tax? It's not.

We have radically new times ahead. Obama is showing himself to be history's most foolish president. History books are going to look back on this time and log Obama as the worst president this country has ever known.

 

[Thump553]

As I recall the tipping point was always predicted for right about now-we might be a few years early because the recession/reduced employment decreased inflow into the fund while leaving outflow unaffected.

Odds are the projected date SS will burn through its trust funds and run out of money (which is still quiate a way off in the future) has moved up as well.

 

[Whoozyerdaddy]

The projections you see of SS not running out of money until 2040 or so are based on the premise that all the surpluses they've been running for decades are now available when they have to pay out more than they take in. Since that money was plundered long ago by the idiots in DC, SS will now have to pay from yet another smoke and mirrors borrowing scheme.

That or SS tax will be soon be higher than the income tax... And let's face it, the way the program has been robbed from to pay for other things over the decades, SS has really been little more than an income tax with no deductions. Of course... it was only a tax on the lowest incomes...

 

[ElFenix]

That or SS tax will be soon be higher than the income tax... And let's face it, the way the program has been robbed from to pay for other things over the decades, SS has really been little more than an income tax with no deductions. Of course... it was only a tax on the lowest incomes...

not an income tax, a wage tax.

 

[spidey07]

Barrack will use this to push his already stated massive tax increase goal of removing the HCE cap for SS (hey east and west coasters, that means you guys). Hold on to your wallets people, Barrack's coming.

I guarantee it.

 

[StageLeft]

Barrack will use this to push his already stated massive tax increase goal of removing the HCE cap for SS (hey east and west coasters, that means you guys). Hold on to your wallets people, Barrack's coming.

I guarantee it.

Quoted

 

[QuantumPion]

not an income tax, a wage tax.

That's like saying the estate tax isn't a death tax, just a funeral tax.

 

[Patranus]

How do you think Clinton "balanced the budget"?
(Hint: He raided or "borrowing" form Social Security)

 

[soccerballtux]

How do you think Clinton "balanced the budget"?
(Hint: He raided or "borrowing" form Social Security)

It's really not necessary to blame this on Clinton, it started under Nixon with unified accounting. Technically it didn't start with him either, he just brought it back.

Clinton-- it would be pretty impossible, in my book, to not balance the budget he was given. The economy grew at a pace faster than the government could grow. As we saw, however, no worries, the government was able to catch up, just needed some time....
The budget he was given-- imagine replacing typewriters in every office with computers and MS Word, and record keeping books with MS Excel. Clinton did little to nothing for the economy. It would have happened even if Kim Jung Il were president.

 

[soccerballtux]

Barrack will use this to push his already stated massive tax increase goal of removing the HCE cap for SS (hey east and west coasters, that means you guys). Hold on to your wallets people, Barrack's coming.

I guarantee it.

Quoted

as long as I like the way I look...

 

[ElFenix]

That's like saying the estate tax isn't a death tax, just a funeral tax.

there are significant incomes in this country that are just a fraction wage income. SS doesn't even pretend to be an income tax. iirc, they've never had to answer the question "boss buys you lunch, is it taxed?" for SS.

 

[Patranus]

Social Security is nothing more than a scam.
If I pay in 300k over my life time and drop dead at age 60 where does that money go?
Not to my estate, that is for sure.

It is time to get ride of this government sponsored pyramid scheme.

 

[spidey07]

Social Security is nothing more than a scam.
If I pay in 300k over my life time and drop dead at age 60 where does that money go?
Not to my estate, that is for sure.

It is time to get ride of this government sponsored pyramid scheme.

or at least let me opt out. Small business/self employed get hit the most by it.

 

[Steeplerot]

3 words to even out a good part of the revenue loss from baby boomers retiring.

Path to Citizenship

 

[Ozoned]

Means testing for access, and elimination of cap on amount of income that can be taxed. Problem solved.

 

[Jhhnn]

Gotta love the usual rightwing raving. When SS contributions were raised under Reagan, it was with the express idea of lending that money to the govt, to be repaid later with interest. It was boomers' attempt to account for the demographic bulge, to create their own retirement funds.

People actually trusted Reagan, people all across the political spectrum. He'd campaigned on the premise that the then $1T federal debt was an abomination, after all. Holding to the idea that federal debt would be contained, it seemed like a good idea at the time. Even today, if SS obligations were the only federal debt, it wouldn't be any big deal.

But that's not what happened, at all. Taxes were cut hugely at the top, and the SS surplus was used to cover part of the spending spree on cold war military hardware that ensued. "Free Trade" "trickle down economics" and "Deregulation" combined with the increased net income at the top to begin the offshoring of manufacturing in earnest.

The need for federal deficits to "stimulate the economy", to cover the inherent deception, became a structural part of republican governance. And why not? It gave safe haven for part of the increased money top earners took in, gave them more leverage over the govt, and held dollar value high because foreign recipients of offshoring dollars wanted to keep their money safe, too... and false high dollar value means very good value for Americans increasingly investing overseas...

So now, when the effort Boomers put out to secure their futures needs to be honored, well, uhh, errr, there's all this other, more important debt, you see, and, uhhh what it means is, err, that you're screwed, guys &gals... It's all your own fault, of course, because you believed the wrong people, bought into the idolatry of greed, cast your votes on the basis of emotion rather than reason, let the financial elite make off with your birthright- the right to have productive, decent paying work in partnership with capitalists, the right to a little bit of security and a teensy little slice of the pie, of the American dream...

American Capitalists disowned many of the people reading this before they were even born, because they make more money by selling out the nation than by supporting it...

 

[sandorski]

Lockbox

 

[spidey07]

Means testing for access, and elimination of cap on amount of income that can be taxed. Problem solved.

Say what? OASDI is what, 6.2%? You eliminate the cap and you're adding a significant burden on producers and consumers in addition to the restrictions already imposed on HCEs. And means testing? If I paid for it, I should get it, no discrimination.

What you propose would really hurt Americans. That's my money, the more you take the less I have to grow. Removing the cap is the worst idea ever, coupled with means testing is just wealth distribution. I don't work so damn hard to have it stolen and given to others.

 

[Patranus]

Say what? OASDI is what, 6.2%? You eliminate the cap and you're adding a significant burden on producers and consumers in addition to the restrictions already imposed on HCEs. And means testing? If I paid for it, I should get it, no discrimination.

What you propose would really hurt Americans. That's my money, the more you take the less I have to grow. Removing the cap is the worst idea ever, coupled with means testing is just wealth distribution. I don't work so damn hard to have it stolen and given to others.

And that is the thing. SS as it is now hurts the poor/minorities now a lot more than it hurts the wealthy but the "progressives" justify its existence by saying they are "helping the poor/minorities".