Security Trust Fund for some time. The 2010 revenue numbers have been
terrible. They are running 3% below last year’s very crummy results. I
was anticipating that the 2010 top line would look like 2009.
Unemployment has been steady at just below 10% for a long time. There
was no logical explanation for the continued drop in YoY payroll tax
receipts. So I was confused.
Two important sources have “explained” this drop. Both the SSTF and the
CBO have confirmed that somehow there was a miscount over at Treasury
for $25-29 billion.
The explanation from the CBO today:
Receipts
from social insurance taxes are also expected to decline this year—by
$29 billion (3.2 percent) from last year, mostly because of an
adjustment by the Treasury to correct for the allocation of receipts in earlier years.
The explanation from the SSTF in their August report to Congress:
The
estimated decline in trust fund income from 2009 to 2010 is due to the
economic recession and to an expected $25billion downward adjustment to
2010 income that corrects for excess payroll tax revenue credited to the
Trust Funds in earlier years.
Some thoughts on this:
-This is not supposed to happen. In the monster numbers the government
tosses around this is not a big deal. But $25b is still a lot of dough.
It is equal to the GDP of Vermont.
-There is not an adequate explanation of what has happened. What the
hell does “earlier years” mean? (Note the common language by both CBO
and SSTF)
-By
the rules of the TF this money was invested in Special Issue Treasury
securities. It earned interest on those securities. So Treasury created
the $25b and gave it to the TF in cash, then the TF invested it back
with Treasury. But there was no money. It was a double count. One would
have thought that Treasury actually balances and confirms its cash
accounts from time to time. This gets back to the question how long this
error has been going on.
-In my opinion the SSTF has misrepresented its financial condition to
the public and to Congress for more than eleven months. Faced with an
embarrassing $25billion restatement what do they do? They bury the loss.
They have artificially reduced reported monthly payroll tax receipts by
approximately $2b per month for all of 2010.
That is not how a loss of this magnitude should be handled. A public
announcement and a one-time loss would have been the appropriate way to
account for it. What standard should we hold SS to? At least that of a
listed public company (I would argue a much higher standard).
If a public company played fast and loose with top line earnings to
obfuscate a bottom line loss there would be hell to pay. The market
would take the stock out in the woods and shoot it. The SEC would fine
them 10% of what they hid. The press would have a field day and anyone
near the cover up would be forced to resign. But this is D.C.
-I am now assuming that the SS top line number will make a $2b YoY jump
in October. That would have been the tip off for me and others who watch
this puzzle. It would have implied a few million new workers in the
month. As that will not happen the increase would have been a red flag.
So disclosure on this was necessary before 9/30 (they pre-release solid
estimates on PR receipts). Disclosure was made in the recent TF report.
Here’s the link(pdf). If you’re not looking for the quote from above, the disclosure is not so obvious, nor is it complete.
Bruce...........have you taken down your BLOG? People are asking.
Huh?? I just checked and am still alive at http://brucekrasting.blogspot.com/
However you do have me wondering and worring a bit. Someone has hacked my google account. I had to reopen everything with different information that I now can't remember.
Blogspot and shit load of otherthings I do was hooked to that account. So now things are becoming unglued.
What makes you say this and who is asking??
Paranoid,
Bkrasting@gmail.com
Found it and details were sent by email.........please confirm recieving the email.
A notice appeared in the Sent File; "Windows not able to complete request."
Thanks for this article Bruce. It just shows that so many numbers we are fed are unreliable. They should at least be forced to give an explanation of what has happened.
I think you are being too kind to Treasury and Soc Sec ... this could very well be them deciding to simply skim $25B off the top and seeing how the "oops" cover story plays. If it doesn't raise too many eyebrows now, they are golden to keep skimming at least $25B off the top from now until eternity (or the whole system crashes down, whichever comes first).
How do we mere mortals really know how much should really be going into the Trust Fund during any given pay period?
Pocket change.
I think it is appropriate for SSTF to rename itself to SHTF.
Ok this makes sense. The whole timing and tenure of oh we have to help the people of afghan, send money now and then you find this missing 25 billion makes sense. The fundraiser didn't go well enough and there will be a huge need for money over the next few weeks as war breaks out for lying reasons.
Also what the hell is up with this.
http://www.youtube.com/watch?v=SSJFJkoCo6Y&feature=related
All sorts of loose change rolling about these days...
Very interesting.
First, if you are an employer, don't pay your social security taxes and see what happens. It sure as hell isn't an "oopsy-daisy, we'll take a do-over".
And hiding it for months should be a fireable, if not jailable as these crooks are PUBLIC SERVANTS, offense. Anybody losing their head over this? bwaahaaahaaa, excuse me, I just had to get that laugh out.
Anyway, what strikes me about this article is: TAX RECEIPTS ARE STILL DOWN.
While MSM and the Adminstration tout "jobs created" and spend trillions in promises to get them
While the stock market is still valued like companies are making money through the rising tide in America, when it is really they are making money on the blood of the American worker.
While colleges are using GOVERNMENT money to convince people to go into debt and to school for a dubious value degree, thus creating/keeping thousands (if not millions) of jobs in academia and assorted useless institutions.
While Congress spends like a drunken sailor and wastes time prosecuting someone for bullshit drug use (just think of the jobs this creates for bureauocrats).
While all of this is going on AND they "find" $25 BILLION in double counted funds
THERE IS STILL A FARKIN' DECREASE IN TAX REVENUES.
Tell me again about this grand "recovery."
What's the problem? Just print some more.
They should switch to this.
http://www.gnucash.org/
Oh wait. I forgot fed and treasury accounting is magic make believe pixie dust stuff. Not real accounting.
I have to agree with Bruce, "If a public company played fast and loose with top line earnings to obfuscate a bottom line loss there would be hell to pay". If I, in the private sector, made errors of that magnitude there would be hell to pay. I would never be allowed an accounting postion or for that matter any other position again as long as I lived. If I tried to cover it up like that there would be hell to pay. Greasy sleezy describes it. It isn't their money to to play fast and loose with. oh!!!!!!!!!!! I understand!!!!!!!!! These were guys from the private sector that did botch it that badly. That is why they are in applied for public sector jobs. That is why they are able to mess around in the public sector. They don't have to be competent. Just another bunch of bunglers giving good accountants a bad name.
Mr. Krasting, i wish there was someone to thank for folks like you. Sunshine is one of the last things we have left to use against The Ponzi. As a great poet once said: Don't stop believing. We need your muckraking.
i'm not sure what kind of music you like, but if its EDM (electronic dance musiq) then i got you: http://www.youtube.com/view_play_list?p=DBB6891B8CA31A85
foiled again by the doubleclick...i'll figure it out one day
scribble
Is there a SSTF? Serious question... I thought it was just another unfunded liability. And I thought we just hit the point where SS taxes no longer cover SS distributions? Thx.
Yeah, the SSTF holds UST bonds which are just IOUs on surplus SS funds which were spent by the government for general operations. This is why it is nonsense to claim as some do that we ran a surplus under Clinton-we never ran a surplus-we just borrowed from SS taxes. This intergovernmental borrowing started under Johnson and the DEMs who wanted to start all the great soc programs while running the Vietnam war, but not paying for any of it with actual tax revenues (and to hide the size of the deficit, of course). POLs of both parties are continuing the "tradition" of hiding the deficit size with this ponzi.
About the best explanation I've yet to see:
http://reason.com/blog/2008/10/24/saving-social-security-episode
BK, don't you think you should direct your criticism where it truly lies, with the previous administration?
are you a 6yr old?
I was not my fold, it was Buuuussshhh.
Question for you: How many black man are in jail and admit they are guilty?
You can relpy this message when you're at 5 persons.
Obama
http://abcnews.go.com/Health/popup?id=2242810&content=&page=12
Bush
http://www.washingtonpost.com/wp-dyn/content/article/2006/08/25/AR2006082501481.html
And for some of your peace a mind: They both screwed you.
I wonder how that idiot will explain himself in november.
that would imply the Reagan, Bush sr, Clinton & Bush jr administrations pal.
I will tell you why Leo, they are broke. It is one of their few sources of income left.
About 73% of Social Security filers last year took their benefits early, even though they would receive larger checks if they had waited until full benefits kicked in at 66. Here's why these folks thought it was the right decision.
I took my Benifits early. Mostly to get on the Social Security rolls. It appears that once you receive Benifits they rarely cut them or change the age you can receive them. I did it to protect my interest.
I also thought that if they run out of Money at least I will get some of what I put in back.
P.S. On the small pamplet that came with my card it says: YOUR SOCIAL SECURITY ACCOUNT is used to record any earnings you receive that count toward old age, survivors, and disability insurance benefits. The size of benefits will depend upon the amount of earnings credited to your account.
Yes, your account not the Governments account.
Nope Leo. They wanted to buy solar stocks while still cheap..
I also ran the numbers and decided to take SS as quickly as possible -- at 62 and that will start late this year. A bird in this year's hand is worth much more than a goose egg in the future. I plan to take what I paid in and then "make too much income" to qualify when that is gone. Just taking my paid-in back, without any interest. It was taken without my having a choice so I'm just going to break even.
thanks again for the interesting information but is it really true that a "public company who played fast and loose... and anyone near the coverup would be forced to resign"? that may have once been true but judging from the financial events beginning in the spring of 2008 until today, it is true no longer.
Our government is criminal, corrupt and illegitimate.
Keep the news flowing ZH!
have confirmed that somehow there was a miscount over at Treasury for $25-29 billion.
Timmy can't keep up with his own money. Does anyone really expect him to be able to keep up with ours. Unless of course you might think he's some kind of crook. Nah
I suspect we won't know the true status of the SSTF until it stops paying.
Yes, and you never really know your banks solvency status until you get a good bank run going and they "run out of cash" and freeze accounts.
Bruce, I think $25 billion is what it cost the post office to deliver those SS checks. On the other hand, considering the post office's past quarter of $3billion in losses, $25 billion seems like a small number.
All joking aside, I'm still waiting on finding out the Pentagon's unaccounted $2+ trillion.
And we still have to dutifully mail in our money?
I like the handwritten 65 on the ad, which will soon be 80 then 90 someday.
Also, I like the fact that they say yes its missing, but never tell you where it went or exactly how it was double counted. Who just duped us for $25 Billion? Must have gone to the shiek for some Oil rights.
what happened to the 5 billion in $ 100 bills bush lost in iraqnam ????
they got all dusty and stuff so they just threw them away. Who wants dirty money these days when you can print fresh new ones by the click of a mouse.
First, let me again sing (although I do not sing, except maybe some old country songs when drunk in the shower when no one is around) praises to Bruce and his work.
I am 54 years old, and will not qualify for S.S. as I did not work enough in the "Private Sector" long enough. I am now essentially retired. I put VERY LITTLE money into S.S., and so I feel entitled to NOTHING.
As our country sinks more and more into the quagmire / abyss, I continue to think that I have chosen about as well as possible re savings and investments in an era of lies and uncertainty.
I keep edging closer and closer to gold as the refuge. A great site to explore is fofoa.blogspot.com. <---- Highly recommended for those who have passed Gold 101.
I am DoChenRollingBearing.
For decades now, a FOGARB (Friend of Gold and Rolling Bearings)