Why Social Security is still falling apart

[Svnla]

http://www.dailyfinance.com/2011/12/14/why-social-security-is-still-falling-apart/?icid=maing-grid7%7Cmain5%7Cdl1%7Csec1_lnk2%26pLid%3D120433

What about the often cited SS Trust Fund that will save us all? There is no such thing with money in it.

The Trust Fund is something of an accounting fiction, stuffed with U.S. Treasury debt. The taxes collected have long ago been spent, with any Social Security-specific surplus collections going to fund other programs. As Social Security no longer provides surplus funds to the Treasury, its deficit is something of a double whammy. First, the Treasury loses that source of revenue, and second, it needs to make up the IOUs being redeemed. That results in an even deeper general revenue deficit, higher taxes, and/or the need to lower spending on other government programs.

Put it all together, and the one thing becomes abundantly clear: Social Security won't last forever in its current form.

Young folks, getting ready because...

younger workers will be paying more for a longer time to get their full benefits.

 

[bfdd]

So the government is lying to every single one of us and stealing our money? Why do any of you support them again? They care not for their contracts with us, only that they can get away with rape.

 

[woolfe9999]

The author's argument is based on a snapshot fallacy:

Social Security spent $49 billion more in 2010 than it took in as tax collections. By the time 2011 ends, it expects to outspend collections by another $46 billion. At this rate, the program's much-touted "Trust Fund" is expected to be depleted by 2036; without that fund, benefits are expected to fall to about three-quarters of current promised levels.

Take two recession years, with unemployment high, and payroll tax receipts down, and project them 25 years into the future.

 

[JS80]

The author's argument is based on a snapshot fallacy:



Take two recession years, with unemployment high, and payroll tax receipts down, and project them 25 years into the future.

lol you're like a child with your hands over your ears yelling la la la la la

 

[theeedude]

So the government is lying to every single one of us and stealing our money? Why do any of you support them again? They care not for their contracts with us, only that they can get away with rape.

Theft not found. We don't want to pay higher taxes for SS, instead we want to take money from SS to keep our income taxes low, the government is just giving us what we want.

 

[Fern]

http://www.dailyfinance.com/2011/12/14/why-social-security-is-still-falling-apart/?icid=maing-grid7%7Cmain5%7Cdl1%7Csec1_lnk2%26pLid%3D120433

What about the often cited SS Trust Fund that will save us all? There is no such thing with money in it.



Young folks, getting ready because...

Of course there is no money/cash in it. It would be terribly stupid if the fed govt stored all the extra SS receipts in huge stacks of cash in some warehouse.

You must invest the SS surplus. You must get a return on that investment or the surplus would be eaten up by inflation. Investing grows the surplus. Do people keep their 401(k) balance in cash? Of course not. They invest in something that dividends, interest or cap gains.

The question then becomes where do you invest it. Do you invest it in the stock market? What happens when we have a crash, as we recently did? This is why privatizing SS is a bad idea.

The safest investment has always been US govt bonds. So, the extra SS money is invested in (special) US govt bonds.

Now, I can see complaints about what has been a rather low interest rate on those (special SS) bonds. But I cannot see a complaint about investing US govt bonds in general.

Fern

 

[woolfe9999]

lol you're like a child with your hands over your ears yelling la la la la la

Gee, what a logical refutation of my argument, complete with pictorial illustration no less.

There's a transparent fallacy in the OP's article. Unless or until someone successfully argues otherwise, the point stands.

 

[nanette1985]

Are there any baby boomers here who actually believed they'd ever see money from Social Security? There's nothing new about any of this.

Life expectancy has gone from 59.7 in 1930 to 68.9 the year I was born to 77.9 for someone born in 2007. according to this chart http://www.infoplease.com/ipa/A0005148.html

The age of retirement should have been bumped up accordingly over the years. Then we all would have been putting in more money total, retirees would have been taking out less money total, and Social Security might have been still showing a surplus.

 

[Brovane]

Of course there is no money/cash in it. It would be terribly stupid if the fed govt stored all the extra SS receipts in huge stacks of cash in some warehouse.

You must invest the SS surplus. You must get a return on that investment or the surplus would be eaten up by inflation. Investing grows the surplus. Do people keep their 401(k) balance in cash? Of course not. They invest in something that dividends, interest or cap gains.

The question then becomes where do you invest it. Do you invest it in the stock market? What happens when we have a crash, as we recently did? This is why privatizing SS is a bad idea.

The safest investment has always been US govt bonds. So, the extra SS money is invested in (special) US govt bonds.

Now, I can see complaints about what has been a rather low interest rate on those (special SS) bonds. But I cannot see a complaint about investing US govt bonds in general.

Fern

Excellent point. Literally where would you park several trillion dollars in cash? So they basically bought special government bonds. In my opinion they should have separated out SS and medicare from the general fund and basically bought Treasury bills on the open market. That way it would have been harder for the SS surplus to be spent on tax cuts, wars etc.

 

[highland145]

Theft not found. We don't want to pay higher taxes for SS, instead we want to take money from SS to keep our income taxes low, the government is just giving us what we want.

I'm just happy to be paying 4.2% of my paycheck.

 

[Brovane]

I'm just happy to be paying 4.2% of my paycheck.

Don't get used to it. That one cannot last.

 

[bfdd]

Theft not found. We don't want to pay higher taxes for SS, instead we want to take money from SS to keep our income taxes low, the government is just giving us what we want.

that taking from SS to keep our income taxes low is the theft. if they wanted taxes low they should have stopped paying for stuff or raised taxes, not taken it from the shit they sell as the social safety net for everyones future. it's cool though you're always in here defending the government regardless.

 

[Craig234]

It's a serious issue that the government will have to come up with trillions of tax dollars to pay the Social Security fund the money it's borrowed and spent.

That's a reason why more Americans voted for the guy who favored a lockbox for the money instead of spending where the other guy did on borrowed 'tax cuts'.

But since not enough Americans voted for the lockbox guy to prevent the election being stolen, we got the rich given even more money adding to our debt.

And one thing they've done with that money is to buy our elections to ensure that the people don't 'fix' the issue, and instead it'll be 'fixed' by cutting SS, etc.

We could 'fix' SS tomorrow by undoing some of that by removing the cap.

Now, name me the politicians who call for doing that or a similar policy based on the rich paying a fairer share - the list is almost empty, far from passing.

 

[Brovane]

It's a serious issue that the government will have to come up with trillions of tax dollars to pay the Social Security fund the money it's borrowed and spent.

That's a reason why more Americans voted for the guy who favored a lockbox for the money instead of spending where the other guy did on borrowed 'tax cuts'.

But since not enough Americans voted for the lockbox guy to prevent the election being stolen, we got the rich given even more money adding to our debt.

And one thing they've done with that money is to buy our elections to ensure that the people don't 'fix' the issue, and instead it'll be 'fixed' by cutting SS, etc.

We could 'fix' SS tomorrow by undoing some of that by removing the cap.

Now, name me the politicians who call for doing that or a similar policy based on the rich paying a fairer share - the list is almost empty, far from passing.

There is a cap on maximum amount of benefits and a cap on the maximum amount that needs to be paid in each year. So are you taking about lifting the cap on the maximum amount you can pay each year but keeping the cap on the maximum amount of benefits?

 

[Craig234]

There is a cap on maximum amount of benefits and a cap on the maximum amount that needs to be paid in each year. So are you taking about lifting the cap on the maximum amount you can pay each year but keeping the cap on the maximum amount of benefits?

Yes.

The rich have received massive unfair advantage under policy; this slightly reverses it.

 

[Fenixgoon]

The author's argument is based on a snapshot fallacy:



Take two recession years, with unemployment high, and payroll tax receipts down, and project them 25 years into the future.

the fundamental operation of the SS system is almost a mathematical impossibility. you have more and more retirees drawing from a system to which fewer and fewer workers contribute.

it's a house of cards waiting to fall, IMO

 

[jstern01]

the fundamental operation of the SS system is almost a mathematical impossibility. you have more and more retirees drawing from a system to which fewer and fewer workers contribute.

it's a house of cards waiting to fall, IMO

Untrue. If SS funds had not been used by the government to balance budgets since the 1970's, it would be financially sound for decades or more to come. The simple fact that the government used those funds and then put generally worthless treasury IOU's in there is the biggest issue. There is no way the US government can allow SS to redeem them, because they do not have the cash, without the risk of inflation on an unheard of level.

 

[dmcowen674]

Why Social Security is still falling apart

What about the often cited SS Trust Fund that will save us all?

There is no such thing with money in it.

Young folks, getting ready because...

You know why there is no such thing?

Because you and your kind voted Republican.

Al Gore ran that he was going to put it in a "Lock Box"

Instead you chose Bush so stop complaining, this is what you wanted.

 

[Ausm]

The op's article is a joke.

 

[Craig234]

the fundamental operation of the SS system is almost a mathematical impossibility. you have more and more retirees drawing from a system to which fewer and fewer workers contribute.

it's a house of cards waiting to fall, IMO

Funny, the Republicans said it wouldn't last long at all in the 1930's, too. They were wrong. I'd say the error is in your 'math'.

 

[Genx87]

Funny, the Republicans said it wouldn't last long at all in the 1930's, too. They were wrong. I'd say the error is in your 'math'.

If it were at the original cap of 6% between employee and employer it wouldnt have lasted. Even the SS administration says SS is unsustainable in its current form.

 

[PokerGuy]

If it were at the original cap of 6% between employee and employer it wouldnt have lasted. Even the SS administration says SS is unsustainable in its current form.

It isn't if you're a particularly stupid party hack like Craig. Normal math doesn't apply to people like him, there's always an infinite amount of other people's money that can be used to pay for stuff.

 

[Genx87]

It isn't if you're a particularly stupid party hack like Craig. Normal math doesn't apply to people like him, there's always an infinite amount of other people's money that can be used to pay for stuff.

In his view a program lasts provided we can change the variables so it is always lasts.

The Republicans in the 1930s were correct. In the form it was passed in the 1930s, it wouldnt have lasted.

 

[Mursilis]

Untrue. If SS funds had not been used by the government to balance budgets since the 1970's, it would be financially sound for decades or more to come. The simple fact that the government used those funds and then put generally worthless treasury IOU's in there is the biggest issue. There is no way the US government can allow SS to redeem them, because they do not have the cash, without the risk of inflation on an unheard of level.

No, the other poster is right - a system in which people get out more than they put in (including a reasonable rate of return) is unsustainable.

 

[Brovane]

Untrue. If SS funds had not been used by the government to balance budgets since the 1970's, it would be financially sound for decades or more to come. The simple fact that the government used those funds and then put generally worthless treasury IOU's in there is the biggest issue. There is no way the US government can allow SS to redeem them, because they do not have the cash, without the risk of inflation on an unheard of level.

Where else would have the government park several trillion dollars in cash?