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SS Newbies - 60K a Week!
I follow what’s being discussed about Social Security. A Google alert
produces 20 stories a day on average. In my view most of it is drivel.
The passionate (and prolific) supporters of Roosevelt’s great legacy
constantly make the same assertions. That SS has a Trust Fund that will
last until 2037, and that SS does not have any impact on the deficit.
Neither of these things are true.
When you look at a financial statement always look first to the lower right for the “bottom line”. It's no different with SS. Their bottom line for 2010 was a deficit of $49b.
This is how the Trust Fund presents its results. They don’t hide the deficit. They highlight it, as they should. I just wish that Huff Post and all the others that are blathering that "SS is off limits in 11’ as there is no problem” would just shut up and read what SSA is reporting.
I try to forecast these numbers. My estimate last summer was -35b. So I
was off by $14b. I thought I had a negative view. I still missed the
revenue number by 3%. A year ago a fellow who knows SS quite well
suggested that I was “Chicken Little” with my forecast that SS would begin a period of perpetual deficits in10’. After all, this was not supposed to happen until 2016. But, of course, it has happened.
In 2010 there were 1,509,278 net new beneficiaries of SS checks. Ten
years ago in 2000 the number was 462,740. The rate of increase is more
than three times what it was just a decade ago. There are a bunch of
folks who are, let’s say, leaving the system. Therefore the actual number of newbies getting checks is closer to 2.5mm a year. It comes to 60,000 a week. Business must be booming at SSA. Clearly this is a “growth”
story. If you’re looking for work, file an application with the local
SS office. They’re hiring. AdMin at SS was $6.5b last year. Look for that to go up by at least $500mm in 10’.
My current outlook for SS in 2011 is a picture not unlike that of 10’. I
see some evidence that the revenue side (payroll tax) has stabilized.
On the assumption that we see full year GDP growth around the current
thinking of +3% I would expect revenue to grow by about $25b. I am much
more confident on my outlook for expenses. These will come in at least
25b higher than 10’. Absent any significant prior year adjustments this
would put the full year cash flow in deficit by $40-60 billion. The
critical ratio of Pay Roll tax minus Benefits will be in deficit by
$55-75 billion. Call it a disaster. And that's the "good"news.
Note:
I’m laughing at myself while writing this. My forecasts are based on a
3% growth story. But look at the headlines. The global energy complex is
in doubt at the moment. Sure, a case can be made that the new “Ins” that are coming to govern these critical areas will be motivated the same as the old “Outs”. Money.
If they don’t pump, they don’t get paid. I don’t care who is in. They
all will need money, so the best chance is a soft landing. A speed bump,
at worst. But if you had asked me a month ago to make odds on what has
happened I would have lost a ton of money. The situation and any
economic projections are simply up in the air. I am reminded of this
version of an old story:
A scorpion and a crocodile meet on the banks of the Nile. The Scorpion says:
“Crocodile, please let me crawl on your back and swim me across the river. I need to get to the other side.” The crocodile responds:
“Not a chance! If I let you crawl on my back you would bite me and I would die!” The scorpion answers:
I would never do that. If I bit you while on the river I would drown. Rest easy and give me a ride.
The crocodile thinks this over, sees the logic and agrees to give the
scorpion a lift. But in the middle of the river the scorpion bites the
croc and they both die. Before he goes under the croc yells to the
Scorpion. “But why? Now we are both doomed.”
The scorpion cries out, “Nothing makes sense in the Middle East!”
(yes it's real. LINK)
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Yes, selectively don't pay. That is what I propose. At least as far as SS goes. Read my comments from above re a means test. We've got to say "no" someplace, don't we? This would be easy.
Agreed. Sorry.
Unfortunately, the people who don't depend upon SS benefits have most of the political clout.
Do you know, btw, if that $2.2T of Treasury debt held by the SS Trust has accrued interest--or have we been played as suckers who provided money for free?
http://reason.com/blog/2008/10/24/saving-social-security-episode
Explains a lot of what's going on with S.S.
Bruce,
I won't question your math or crocodile/hand but I have to ask - have you started looking forward into the next federal fiscal year(s) and potential COLA?
barliman
P.S. My understanding is there was no adjustment being made for the year we are currently in. Correct me if I am wrong, please.
2009 and 2010 were no COLA years. Both years will result in ~25b increases in net benefits. More people in the system is the answer.
However, for 2012 there is going to be a hefty COLA increase thanks to the good work by Ben B. The 12' annual increase will be 40-45b as a result. Thanks B!
Ho hum. Another ooooo, scary post from our bankster buddy, Krasting.
Go read any given post by Bruce Webb and you won't waste another second of your life on crap like this.
@weinerdog43 JYF
Ho hum. Another weinerdog piece of shit singing ho hum, while we waste another second of our lives reading worthless replies like his. Thanks....
I'm almost sure this is Bruce Webb. Come on out BW. We can talk about it...
By the way, it was Webb 14 months ago who started with the Chicken Little Sky is falling stuff. Webb was dead wrong. I was right.
http://brucekrasting.blogspot.com/2010/01/im-no-chicken-little.html
We have hoarded the finest bruce's at zero hedge. All other bruce's are inferior.
Boomers, cant live with them...
I get the feeling my Mum and Dad are moving in with me sooner than later.
But what you pessimists always forget is that nuclear fusion is right around the corner and will save humanity!
PALIN/QUAYLE 2012!
OBAMA = Sec of Treasury
More like Pelosi/Barack 2012
Krugman = Sec of Treasury.
Stop making fun of Palin. At least Palin can generate her own money, unlike those 'Crat leeches in office.
Bunch of bull. For 35 years the "bottom line" has been a surplus which was supposed to be in trust. So the current year deficit is a cash deficit against 35 years of overpayments. Until the "trust fund" is exhausted any adjustment to benefits is tantamount to defaulting on federal bonds as that is what they have been doing with the cash surplus for 35 years. Now everyone knows we have to default all we are asking is that every holder of bonds whatsoever whether they bought their bonds with surplus capital or whether it was involuntarilly taken out of current earnings in the form of the FICA tax get the same haircut. Understand that? Obviously not seeing as how you try and obfuscate it.
Lol. Another propaganda puppet who believes there's a "trust fund" somewhere. Just where is this mystical, magical bank account?
didnt al gore want to put the money in a "lockbox"?
next to global warming myth....or was it all that hot money that caused global warming?
But the money really was spent. Sure there are special social security bonds that represent the money, but there is no fund with cash in it, just IOUs. That means that every dollar of deficit between revenue and outlay will have to be borrowed to pay the benefits. Just one more straw for the debt camel's back. It always comes back to the same question, "how long can you keep borrowing the money"? When the answer is "not any longer" then everyone will take a hit. However, the hit won't be fairly distributed, it never is. Those with political clout will take the lesser hit, those without will get hammered. It will be based on expediency, not on fairness.
It doesn't matter, a bond is a bond. The gov'mint cannot default on SS bonds while making everyone else whole. Period.
We get that the money was spent, it was spent on tax cuts for the rich that were supposed to create a glorious economy. How did that work out for ya?
Not bad--not bad at all...
Cold fusion........any day now
If seawater is the fuel, we'll find out JPMorhan bought every ocean.
Motel ?
Even if true, you need a gazillion barrels of oil to build a fusion plant. lol
No, but they are currently working on it in the south of France and the last estimate I heard was $ 27 billion and climbing.
Don't worry - everybody is included in the project - the EU, U.S., Russia, China - it's an equally opportunity pooch screw.
barliman