key data on the broad economy’s performance a month in advance. The
payroll tax and benefits numbers for May came out last Friday. This
information represents about 150mm workers. So it is even broader than
Non Farms payroll (“NFP”) numbers.
These numbers will be revised. There is tricky seasonality. Some months
are five weeks, others four. Holidays come into play, especially when
they are over a month end. There are also quarterly adjustments. These
represent reversals of prior year reported results. (In 2010 there was a
downward restatement of prior year revenue of $26b).
Knowing all this I still look at the numbers in the belief they provide
valid information on the broader economy and (hopefully) a decent look
at the Non-Farms data due out at the end of the week. For what it is
worth; my read of the numbers is that the NFP will disappoint and the economy is stalled.
I think of the May data as a baseline for April. If that were to be the
case it would give a window to the April NFP. The YoY tax increase is
$542mm. Approximately 1.5mm jobs. This would suggest (to me) that the
April NFP number is a range of 0 -200,000. So I am all under the Street estimate of +200,000.
The
year to date through May is nothing to write home about either. This
looks at the past few years. Yes, tax revenues are up from a year ago,
but they are also at 2007 levels. I estimate that the average wage for
those who found work in the past five months is less than $30,000.
It’s hard to get excited about this picture. I took a lot of flack
recently with the comment that the difference between 2009 and 2011 is
that in 2009 there were no “jobs” and there was no “work”. In 2011 there are still no few “jobs” but there is “work.” To some extent the improvement we are seeing is a function of people who can’t find a “job” (teaching) who have been forced to “work” (flipping burgers). So really there is not much improvement at all.
Social Security is continuing to run red ink on the critical ratio of
payroll tax revenue to benefits paid. This looks at the first five
months over the past few years. Benefits march higher while revenues are flat:
A closer look at the difference between the primary income and expense.
The red ink for the five months in 11’ is the first since 1983. Not long
ago SS was a cash cow that funded a portion of the federal deficit. Not any longer.
Note:
Recently I made note of the benefits paid at SS exceeding $60 billion in a month. I used this slide:
The bean counters at SS revised that number. It’s still above $60b but $130mm lower than the first estimate:
This is no big deal. It is a 1/8th percent adjustment. Literally, a rounding error. But it struck me funny. How could $131mm be a rounding error? In a month? The answer of course is that the amounts involved are so very large. The Social Security payout is running at $1.4mm every minute. That comes to $23 thousand every second. And that’s 24/7. And rising.
RF:
Your "solution" to SS's crisis will merely add more numbers to the trust fund. It will not make it any easier to pay benefits for all the surplus dollars have been lent to the Treasury to pay for other expenses. In addition the "interest" credited to the fund is in the form of debt, not cash, so it is not liquid. In effect, paying from a trust find is like paying for battleships - out of current revenues and debt.
Also, if the ceiling has no cut off, then people will be receiving onlky 15 cents for every dollar they contribute above the ceiling, to infinity.
I don't think those affected will be too happy with the situation.
Don Levit
For this year, after $106,800, your earned income is no longer subject to SS withholding. A simple but likely not well received solution to the SS "crisis" would be to raise or eliminate that ceiling.
Best regards,
RF
Has this data been adjustsed to account for the 2% reduction in payroll taxes per the tax rate deal from back in December? If not, then it's not an apples to apples comparison.
Adjusted.
Bruce,
What are the units on the tax revenue chart (figure 1)? Is this all tax revenue and please disclose the source. Thanks.
Sorry. That is all billions.
The link to the SSTF data.(menu page. There is a ton of data, look at menu options. What you want is the report on taxes, and the other on benefits.
http://www.ssa.gov/OACT/ProgData/fundsQuery.html
So my wife takes $10,000 out of my bank account and goes to the mall and spends the money. She leaves a note on my pillow saying she owes me the $10,000. My situation is intact 'cause I have a note from her.
When I ask her for the money she gets a cash advance on the credit card and retires the note. All is well in the family... wait a minute, now I have to pay off the card too???
Dont worry boomers
Your social security and medicare is intact because you guys have no shame.
You will burden future generations in debt and destroy this country before you would accept the slightest sacrifice of any benefits.
So much for shared sacrifice. You.boomers will be known as the most selfish generation ever.
Dont worry boomers
Your social security and medicare is intact because you guys have no shame.
You will burden future generations in debt and destroy this country before you would accept the slightest sacrifice of any benefits.
So much for shared sacrifice. You.boomers will be known as the most selfish generation ever.
Your shit is getting old... Almost as old as I am.
As the self-proclaimed World's Oldest Xer, I can only say "Where's my cut!"
But seriously, given fedgov's love of deficits, the checks won't stop. For as Sir Alan Greenspin himself once testified, "We can guarantee any obligation of the government, what we cannot guarantee is its purchasing power."
So sure, we're all gonna get our checks. It's just that they might only be enough to pay for bag of Dog Chow.
+5... Excellent post Bruce.
It's Worth Noting:
You still have to pay payroll taxes, FICA (SS and Medicare), on unemployment checks...
So those good ol' 99ers weren't left out of contributing in 2009 and 2010...
BTW: I believe there is $3.7 Trillion in the SS Trust Fund...
An IOU, Intergovernmental transfer, supposedly held in US Treasuries from Congress and Presidential looting since the Alzheimer's Puppet Reagan, to the Amerikan Caligula, to Slick Willey, to Shrub, to the Wall Street Puppet and CIA Stooge... Barry Soetoro...
Time to pay up Timmay... SS wants their money... cash those treasuries...
Speaking from experience, there is NO FICA on unemployment checks. Not back in 71, nor in 2011. Federal income tax is back on them though.
$2.6T in the SSTF. Total intergovernmental account (other TFs) +$4.6T
Everytime I read one of these articles on how Social Security is going belly up it makes me laugh. I once took the time to compile the statistics a few years ago and this is what I deduced about Social Security:
Social Security is funded by the citizenry through payroll deductions. The history of SS and the available statistics prove that over one's working life, they will pay - on average - approximately $3 - 4,000 into this fund over the period of a year. They will work generally for 40 - 50 years before they are forced out of the labor market and will be unable to collect SS until they are 65. The average check they will receive is approximately $1000 a month. In general, men die at 65 years of age and women die at 70.
What all this means is that - on average - a worker will pay nearly $220,000.00 INTO SS over their lifetime and will TAKE OUT - on average - approximately $118,000.00 before they die, leaving a surplus of over $100,000.00.
Per person.
Now . . . multiply that by 150 million workers and then multiply that by 40 - 50 years. Wouldn't that be a lovely pile of cash to control? Don't you wonder how all that lovely cash just . . . seeps away. And isn't it strange that Social Security has always been presented by the government and the media as a huge liability and a drag on the nation . . . yet, it never goes away?
Interesting times.
Take a look at longevity numbers again. It is more like 75 for men and 80 for women and increasing every year. So add more than $100,000 to your "draw-out" numbers for each person. Don't forget the amounts that they will draw out of medicare and medicaid. Plus the increasing number of people on SSD. It is an insolvent ponzi. Prepare.
Yep, there's no way DC elites would cut a program that was a money loser. They'll run the ponzi into the ground and then declare a crisis, then vote to do more damage, because thats what they do.
Bruce:
Can you provide the link for these numbers?
Does the revenue include ionterest, which is debt?
I was under the impression, that excluding interest, the income was lower than the revenue in 2008.
If that's the case, Treasuries were bought,with an immediate budget impact (raising debt held by the public), for the interest was originally credited as debt.
Don Levit
Sorry Don, sloppy of me. Raced off to play golf....
The link to SSTF data (let me know if you have problems. there are many pages/tons of data)
http://www.ssa.gov/OACT/ProgData/fundsQuery.html
The numbers in my chart are A) Payroll tax revenue and B) Total benefits paid.
The additional numbers that are not part of this are (I) interest income, (II) tax income benefits) (III) over head.
In 2011 my numbers for (I) 117b (II) 26b and (III) 7.5b
(I) is non cash (II) and (III) are cash, but only change things by net $18b.
I look at the bottom line. But the place to focus is on the two big numbers. Payroll and benefits tells the story.
Revenue is down cuz the payroll tax holiday.
I'm as big of a doomer as there is out there, but holy shit talk about disinformation.
Unless I am mistaken, the Trust Fund revenues don't fund the payroll tax cut- that comes out of the general fund (which, of course, had to borrow the money on the open "market"). So, the trust funds assets are unaffected by the payroll tax cut.
Or, to exemplify, it works like this: the trust fund gives up the 2% of payrolls as money coming in (the workers kept that money). The general fund then gives the trust fund extra bonds for that 2%. So the trust fund's balance sheet is unaffected. The general fund's balance sheet shows an increase in borrowing from the trust fund.
another idiotic post from someone who knows shit..
hey Einstein, load SS data into Excel and calcalute y/y
payroll holiday was enacted from Jan2011,, whole 2010 year SS taxes were down about 4-5%..
payroll holiday cut just 2% from from 16.5% , so that reduction was just +-12%..
yet so jan/feb 2011 SS taxes are still down y/y
good luck
alx
The solution for SS is an easy one. Simply fix the number of those on benefits at current levels. Those wanting to receive benefits go on a waiting list. One can avoid the waiting list IF an immediate family member now on Social Security were to drop off the rolls.
This would encourage baby boomers to LIMIT the medical treatments their parents receive or to not put them into nursing homes in the hope that they would fall at home or in some other fashion 'leave' the benefit rolls sooner.
kind of lame...
dont forget all those people paid SS TAXES, SO THEY'RE
TO RECEIVE..
#1
SS program per se is not bankpurt ( Medicate/medicare are) , exist suprlus , well kind of.. it was spent...
#2
problem is
SS is classical financial ponzi scheme.. as long as money from new entrants are bigger than payout scheme works..
#3
only solution is .. keep on paying to all guys who eligible, or upto 5 years before eligible..
rest of .. stop SS program for anybody who is less 50 years old..
pay out all money that certain person paid in SS taxes, and say YOU'RE FREE TO GO.. INVEST WHERE YOU NEED, AND DONT COUNT ON GOVERMENT FOR HELP..
alx
Problem is you have no revenue to keep up benefits for those already on the programs. There is no money unless they collect it. Ponzi scheme collapse.
but they could actually prioritize govt spending and cut elsewhere. but that will never happen.
Of course the slimes in DC will argue its a revenue problem when its a spending problem.
Alcoholics will always tell you running out of liquor is a problem, not the drinking itself.
You're a fucking retard. I paid into the fund for 1/2 a century.... You go on a wiating list for the fucking brain transplant.
Relax. If you are what you say you are, you have nothing to worry about (sort of).
You say you paid for 50 years. So you are least 65. Trust me. The checks that you get will not be reduced. I hope you live long and suck them dry.
But here is the problem you face. That 2,000 a month is going to be worth 1,000 in what you can buy/rent. The "promise" will be broken in a diferent way. Did you get a COLA increase last two years? Nope is the answer, yet the price for everthing is up. Got it? Take a breath.
I feel your pain. Unfortunately we paid / are paying for those currently receiving benefits, not into a "savings acct" for ourselves.
Somebody junked you, amazing. I don't really want SS to be a Ponzi scheme but the truth seems inescapable- it's a fraud and it will end badly.
exactly... its not fair..
read my post above..
alx
sorry Bruce, wont fly
until data here is updated (http://www.ssa.gov/OACT/ProgData/tsOps.html)
all those figures are just estimtes..latest data only for 2011feb
alx
I understand. I mentioned that there was 'noise' that makes the info less reliable. I highlighted the revision issue in the note. But the error rate was miniscule.
In my little sphere of Upstate NY there are 3 people I know who have "thrown in the towel" on looking for jobs and are now applying for SS or SSD benefits because there is nothing out there that pays as much as SS/D would.
I assume this trend will accelerate as the economy continues to deteriorate.
Increasing recipients while decreasing tax revenues. Nice way to crash an economy.
The DI fund is out of control. This is the weak link of SS. It is exactly as you describe. When you get DI you can get medicare. Sort of free healthcare. Impossible to get these days from private insurers. It would cost $10k+ a year in NYS.
What this does is push off the crash. It creates current consumption and increases debt. Another nice way for a crash.
Tks for the local color.
b
one interesting proposal i heard was actually to LOWER the age of eligibility for SSI. "Get that work force out of the work force" and start hiring those kids again. You'd be surprised how many citizens aren't even elegible for SSI to begin with since they've never really had a full time job long enough. Interesting idea i thought.
Well done, Bruce. I continue to think this is the cleanest measure of where the economy is going. While the MSM crows about job numbers, some of us notice job quality, or more accurately, the lack of quality.
The annual trustees report is supposed to be released about now, but the last couple years they seem to have pushed it back to give themselves more time to cook up "transitory" growth projections.
Should be out soon. Can't wait.....
What the United States calls 'work' and 'output' is the transformation of capital into waste. The rate of capital extraction has so far been able to outpace the rate at which it has been destroyed by our 'nonsense economy' ... but no more!
Add similar 'work' and 'output' in other countries, the endless need to replace capital destroying 'infrastructure' and 'impossible to predict' disasters such as hurricane and tsunami destruction inflicted on low- lying area (protected by 'infrastructure') ... and the ability of capital extraction to keep up with 'demand' becomes impossible.
Krasting and the rest of the 'smart guys' laments the failure of capital extraction to keep pace with waste.
Hmmm ... some things are just not worth doing, as they can never be done well.
Best to start with a capital conservation plan: OOPS! To do so would strand pretty much the entire US economy which relies on a steadily increasing infusion of new capital. What to do?
Keep on as before and the capital runs short of required and output collapses. This is what is taking place outside the reach of the establishment which can only produce 'fake' capital.
Not keep on as before and starve the waste- based system of capital, using the capital for something else ... (that 'something else' nobody currently imagine.) Quite a choice but here we all are. There is nowhere to go, the society has reached the end of the gangplank.
Don't worry! JP Morgan sez the world's GDP is going to expand multiple times! Let's all go out and get drunk!
Total cost of the "Wor on Terra'" is $1.415T with a burn rate of $13,365,677/hr, $222,761/minute, $3713/second, for the last 12 years (12th projected). Just like SS, all stealing in the name of fraud by the bank-fascists.
http://www.fas.org/sgp/crs/natsec/RL33110.pdf
My favorite (page 2)
"Coalition support to cover the logistical costs of allies, primarily Pakistan, conducting counter-terror operations in support of U.S. efforts;"
Wake me when prudent savers get a bonus of any kind instead of their children groped, killed in action, crotches scanned AND stuck with the bill 2 generations deep (almost 3).
"wait 'till you bring them home." then you'll see what the real price is. non-issue at this point.
"AND stuck with the bill 2 generations deep (almost 3)."
That seems to imply it's possible to pay the bill.
I'd like to know where you get your optimism.
It is not possible to ever inflate your way out of an inflation adjusted obligation. KABOOM is a certainty, just a matter of when.
UNLESS you are the lawmaker and change the rules.
40% or Core CPI is the cost of housing which is still declining. So as the wealth of the average American declines, the FED crows about how they are controlling inflation. What a bunch of bull.
Ohhh yes you can. Ask the Bernank. Just rig the inflation #'s used for adjustment calc's. Easy peasey.
Don'tcha know? If you don't like the results you get just change the way the results are calc'ed. Don't worry about creating real change.
Have another drink. It's cinco de mayo.
I don't always drink beer, but when I do, I prefer Dos Equis. Stay thirsty my friends. ~the most interesting man in the world.
yep, they sure have, can and will continue to do so. That is why my TIPS position was kicked to the curb about a year ago. No regrets.
Don't forget: they do control the definition of "inflation".
Sometimes, the simplest statements are are a brutal kick in the crotch.
I'm waiting for the Marxist in Chief to go full radical and propose that no combination of pensions + Soc Security can exceed $50k in any one year; exempting politicians and union members of course.