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Social Security hits 60
Social Security had its 75th birthday last year. A more important event
will take place in April of 2011. That will be the first month that
Social Security benefit payments hit $60 billion. Think of that.
$60b a month is one hell of a lot of money. This payout (annualized) is
approximately equal to the entire GDP of the Netherlands, Turkey or
Indonesia. It is 50% higher than the entire economy of Switzerland.
SS first hit the $50 billion mark in December of 2007. It took 42 months
to add another $10b to the monthly payout. The next ten billion will
come more quickly. The “base case” assumption by the Social Security
Trust Fund puts that at October of 2013 (31 months). Their more
pessimistic or “high cost” estimate suggests we could hit the $70b mark
as early as March of 2012 (23 months).
Of course this never stops rising. The SSTF expects that the $100
billion a month level will be reached in 2019 (base case) and as early
as 2017 should the ‘high cost’ scenario play out.
Things really look bad for SS when you consider the revenue numbers from
payroll taxes. This chart tracks past and projected pay roll tax
revenue versus benefits (based on the Trust Fund's Base Case)
The High Cost analysis is even worse. For what it is worth, I see almost
no chance that the ‘high cost’ will be achieved. It’s going to be even
worse than this:
The 2011 - 2019 projected cumulative shortfalls between payroll taxes and benefits are as follows:
Base Case Deficit…..411 billion
High Cost Deficit…..972 billion
There is a pretty serious debate going on in Washington about what to do with SS. At 6% of GDP and 20% of the budget SS has to come on the table. There are many in this discussion that hold to the belief that SS can’t be touched.
If the budget deficit
outside of SS was at 3% and the medium-term outlook was for sold GDP
growth (with low inflation) the USA could possibly afford the economic
cost that SS is about the bring to bear. But sadly, that is not the situation we are looking at. Outside of SS, the country will produce deficits of 10% of GDP and will require Trillions of new debt annually.
It is important to remember that every dollar of deficits at SS requires
a dollar of additional debt to be held by the public. The defenders of
SS keep looking at something called a Trust Fund that was supposed to
“pay” for all of the SS red ink. But the defenders fail to understand
that drawing down the Trust Fund just means that we go deeper in the
hole on Debt Held by Public.
The Paul Krugmans and Dean Bakers of this debate have held to the
position that the amount of debt the country issues on an annual basis
is not a metric to seriously consider. They think that the funding
deficit resulting from the real economy and at Social Security doesn’t matter.
I think they are wrong. If we wait 2 or 3 more years to wake up to the realities of funding SS, the cost of addressing the problem will be significantly higher. Failure
to take this beast on today will probably result in substantial cuts in
payouts for all beneficiaries in the not too distant future. That would be the worst possible outcome for the Krugmans and Bakers. For the life of me I can’t understand why these guys don’t see what's coming. The history books may well say that the staunchest defenders of SS were responsible for it’s demise.
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So you're sure that it "won't roll another 40 years?" Have you seen the SS actuary's report? You might find it interesting. "W" tried to have it shelved. It didn't help "W"'s plan to turn SS over to his criminal Wall Street buddies. The retirement fund is in good shape. Medicare is a problem. But Obama fixed that, right?
Then what are you even worried about? Your buddy Barry is in there watching your back. In 40 years you'll be dead. Just pull out the hopuim pipe and take a few hits and plan your next vacation. Ponzi to infinity.
Oh newsflash there is no trust fund. Those are non markitable securities. So when there is a SS deficit the Treasury has to sell more treasuries into the market. But now worries. Take a long drag off the pipe and go back to sleep. Because being asleep is what Boomers are best at.
Barry isn't my buddy. I didn't vote for him. He cut the FICA contributions, and is hardly a friend of this program.
Whether the SS IOUs are marketable or not is irrelavant. Think of them as privately issued bonds. The transaction is between the US government and the citizens of the USA. I fully expect performance.
I never said you would not get every dollar you are promised. Simply the dollars won't buy anything. Can you point to me where a certain dollar purchasing power is promised anywhere? It's supposed to keep up with CPI, and it roughly does and will in future. Granted CPI is extremely manipulated, but that's what happens in a ponzi.
If you spent 1/2 the time reading about SS as you do complaining you would be far more knowledgeable. Simply whining about it doesn't really help your cause very much.
If inflation takes off, it will be everyone's problem and I'll see you on the barricades.
As far as knowledge goes I've forgotten more about SS than you'll ever know. Yeah, you had that coming.
This is what a lot of people miss. They look at SS balance sheets and assume the treasury will honor the non-marketable securities. At current market rates of <1%, sure the treasury can borrow and send SS the cash, so they can mail it out to receipents. But once borrowing cost get north of 5%, this explodes the general fund and the federal budget. There is no cash. There is only promises to pay. I know the FEDs really want to uphold their promise but someday the laws of gravity (or laws of printing) will take over.
The government pays for lots of things, and they will continue to do so. All I'm saying is SS is the top priority and not the bottom one.
The problem is the $$$$$ go to the Pentagon
and to the BANKSTERS.
WHY CAN'T YOU PEOPLE SEE THAT???
The Ponzi is the Pentagon.
The Ponzi is the TBTF BANKSTERS.
Transfer payments is how they get the masses hooked on gov spending. Europe has a budget problem. Don't think Greece can rival the US for mil spending even on a per cap basis.
So what happens is the gov promises the masses free stuff. They then loot and kick over part to the masses. Over time there is less to loot and the politicians/oligarchs want to keep more so the amount kicked up in comparison goes down. The dependant masses scream and that justifies an increase in the rate of pillage. The end game is where there is nothing left to steal and the guys on top own everything and the idiot masses wonder "How did this happen"
Once you accept the fact that it's morally right to steal from one ot give to another this is where it will always go. some may be born into better parts of it, but it will always end the same way. We could have 0 military spending and it would change nothing at this point. The system is designed to suck up and centralized wealth and any government will do the same. It's the nature of the beast, you can't get angry for a lion for hunting prey can you?
This isn't a transfer payment. People pay in when they are young and get paid out when they are old.
Not according to the courts. For a guy who feels very strongly about this you haven't done a lot of homework on the topic. Go back and do some reading, start with Fleming v. Nestor and then Helvering v. Davis.
Simply saying "The Supreme Court is wrong and I'm right! Give me money!" while heartfelt is not a convincing argument.
Ultimately this will be a political decision. Not a matter of law. That's what you don't understand. Once the people understand clearly that this program is in no danger except from people like you, you will have to find a new hobby horse.
You're right; Bruce, they're wrong. And they're wrong from the simplest and basest of human causes; greed and simple theft. Our government is a disaster in action.
Re-run the projections with no cap on the payroll tax.
EXACTLY !!!!!!
Simply put SS at the end of the line when looking at cuts, and everything is AOK.
"SS only go to Auschwitz to pay for their past crimes; no Ausweis from Auschwitz. So say goodbye to SS". So say the plutocrats who love freedom and hate...central planners of working people's happiness through 'entitlements'. They only love central planners of financial rape. I'm not defending excessive government spending, especially en hegemonial defense/offense projects. But I am defending destroying the safety net that the banking plutocrats debased by creating the mega-private ponzi, now mega-public sector ponzi thanks to FED/government collusion. So the next step is to double-f**k the same people you already robbed once by destroying the economy? We have to be in Decadent Rome under Septimus Severus, son of Leptis Magna, african born Caesar, who loved marble toilet seats in home town and a praetorian guard of 55 000 personal soldiers. All paid for by the plebes. His son, Caracalla, destroyed ROME irretrievably. I am not Chumbawamba but you are warned of what has already happened in similar situations.
We know we're talking about SSA, not S.S.
But, right, the BANKSTER are the problem
along with the Pentagon.
Get rid of the black hole of the TBTF & WARS.
I just tried to find the number of Auschwitz survivors and it's very difficult to get this number, funny that despite all the 'destroyed' records and cremated bodies we 'know exactly' how many people died there but no1 seems to have a survivors number, seems counter intuitive
I once played mixed doubles tennis with a lady whose left arm had her Auschwitz number imprinted on it...indelibly. Very moving experience for me as adolescent. I've never seen anyone, (she was in her early forties), with such an appetite for life. She was like that woman in Libya we saw amongst the freedom fighters...Awesome on tennis court!
phallic, you cougar, U†
Krugman for President. Lets put a spectacular ponzi implosion in every pot.
"defenders fail to understand that drawing down the Trust Fund just means that we go deeper in the hole"
How can you "draw down" a Trust Fund that consists of non-marketable promises to pay? These things aren't even Treasury Bonds; they're just pieces of paper that say, "Money that should have been deposited against future SS payments has already been spent by Congress, but don't worry, when the time comes they'll put more of these worthless IOU's in the drawer and order up a new higher debt ceiling."
You are correct. When we draw down the 'Trust Fund' we are really just borrowing more from China (or some other fool). There is no money in the TF.
lol...we can start with John McCain...
McCain gets $1,930 a month from 'broken' Social Security system
http://www.bizjournals.com/sanfrancisco/stories/2008/07/14/daily79.html
The rich get most of their income from capital gains/dividends which bypasses payroll taxes so I have no problem with capping SS to income.
Remember it's fiat money.
The money is always there.
Just add more bits in the computer.
They'd love to do that. Too bad that wages aren't budging, either. Inflation will lead to everyone, not just old people, manning the barricades.
We borrow from China for lots of things. Those get eliminated first.
So you say bike boy. But you are in the minority. You write like you are the god who sets the priorities. Let me clue you in. You and your set do not set priorities. And push come to shove SS is not on the top of the priority list.
That outcome is not possible because if you spend 200% of your income on drugs, you can't make up for it by cutting your other expenses 100%.
Your figures are way off.
Much of the funding is not in the "lock box". It is being collected every day. It is available and will be as long as FICA comes out of people's paychecks.
A sad arguement to say the least when one considers the demographics
Either your being disingenuous or your understanding of this subject is so stunningly superficial that's it's almost embarrasing to listen to you.
SS now pays out more than it takes in. This is going to continue to accelerate. Where will the difference come from?
The money that comes in through FICA taxes is not "available" for SS. It gets thrown in the general fund and every penny of it is already spent. And even with that, Uncle Sugar still had to borrow $1,500,000,000,000.00 to cover it's costs. What part of this don't you understand?
FICA tax was reduced and that is why there is a
current shortfall.
Just get rid of the FICA cap.
The $$$$ are going into bombs, and more bombs.
The Pentagon is the problem.
SSA is not the problem.
The treasuries have been issued.
"SS now pays out more than it takes in. This is going to continue to accelerate. Where will the difference come from?"
From everything else.
"The money that comes in through FICA taxes is not "available" for SS."
Says who?
"It gets thrown in the general fund and every penny of it is already spent. "
Again, check your paystub. It is clearly earmarked. As for it being lost in a general fund somehow, Is there an accountant in the house?
LOL
Ah yes. Accurate and meticulous accounting standards.
So the accountants at FASB will get this all figured out right?
Holy shit dude.
Any CPA can do it. The figures are public, I'm afraid. Ordinary folks don't know "mark to market" from a hole in the ground. They know when they are eating cat food. I'm pretty sure of that.
And you don't know your ass from your elbow you colassal ignorant govt tool.
You want to wind up the state? Cool. I'm tired of paying taxes and I get very little for what I pay in.
BTW, You got kids?
Correct. Much of the funding is FICA. But as the numbers show, a rapidly increasing amount is not covered by FICA. The difference is a very big number over time. Big enough to tip the scales in my view.
Folks look at it and say, "Oh, its just another 50b, who cares?" That way of thinking catches up with you. 8 years from now it will be 250b. There won't be anyone left saying, "who cares?" then.
Simple. Put FICA first. No increase in taxing or borrowing for anything else until SS is under control.
But let's not completely "yadda, yadda" the trust fund. It's been paid for with funds earmarked for that purpose. The payees have every right to expect pay back.
You seem to think that SS is the center of the universe. You are so out of whack.
Put FICA first? Give me a break.
dup
The problem is that the payees are getting payback at the expense of workers now.
The root of the problem is that the money deposited in the past is no longer there, so now they have to dip in for more than just payroll deductions, to a substantial amount.
Why should you keep taking FICA out of my paycheck when I am never going to see that money again ??? What makes you entitled to my money???
It's not your money it's the FED's.
In my state (as in every state) local property taxes pay the bulk of school costs.
However, if it is just the FED's money, can I stop paying my property taxes now?
Bingo!