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SS on NFP & More

Bruce Krasting's picture



Social Security (SS) is out with preliminary numbers for January’s payroll tax revenue:


Screen Shot 2013-01-03 at 12.41.12 PM copy


This is, of course, a preliminary number, and there will be revisions. The January data is based on a set of assumptions that SS uses to run its computers. Actual data will take at least three months. I find it interesting that SS is assuming that the US economy starts off the year in low gear.


-The January 2013 YoY increase in payroll tax revenue is projected to be $1.1B (+2.2%).


-The January 2012 Yoy increase in payroll tax revenue was $3.2B (+6.5%).



I looked at the YoY % changes in SS tax revenues. Its pretty clear that the big improvements in Q1 – 2012 will not be repeated in 2013:




Possibly the computers at SS are taking into consideration a “post cliff” slowdown. The CBO has projected a decline in GDP in the early part of the year, so it is possible that SS is modeling based on that assumption. (The 2% increase in payroll taxes sucks out $10B a month in spending power.)


The payroll numbers for Q1 2012 were very solid: January + 275K, February 259K , March +143K, Total = 677k. The early read from SS is that we will be lucky to see one-third of that in 2013.


I do look at the SS numbers in the context of the monthly Non-Farms data. This is a murky analysis as the BLS fudges its numbers with various adjustments. Looking backward over a longer period of time, there is a correlation between SS and NFP, but in any given month, it's random.


To the extent that the SS numbers do tell a story, they are suggesting that the December NFP will be a tad on the soft side. Under 150k; my best guess is 125K. The wild card is Sandy. ADP thinks the storm added 40k construction jobs. (Zero Hedge discussion). That could bring the actual total for the month closer to 165k. We shall see.


The December NFP is looking like a non-event. The real question is what is going on in January. It’s freezing in “Sandy Land”; it will be for weeks. I doubt that much construction is getting done. Between the cold, and the cliff drag, it looks like a slow start to the year.




SS has also come out with the January 2013 Benefits Paid number. A lumpy $66.666B went out the door.




The benefit “nut” for January is $3.3B, (5.1%) higher than a year ago. The YoY payroll tax revenue was up only $1.1B (2.2%). Got that? Revenues up 2%, expenses up 5%. Boom!


The January numbers can be used by wonks like me to estimate annual results. The bottom line at SS in 2013 will be a cash deficit of $75B. The 2012 deficit was $52B.


Keep in mind that the deficits at SS must be funded by issuing more Debt to the Public. The debt needed for SS is ON TOP OF the debt needed to fund the government’s other operating deficits.


The USA now has two big drivers of debt. Most folks understand that the deficit adds to the debt. The country will soon learn that SS is becoming a very big driver of incremental debt. The upcoming debate on entitlement reform will force the issue of SS = Debt to come on the table. I can hear the howling already….



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Thu, 01/03/2013 - 19:30 | 3120403 HurricaneSeason
HurricaneSeason's picture

The government will put social security and government pensions and 401k money and military pensions and pension guarantee corp all into the "treasury pension bonds".  If the fed slows down on writing bad checks, all pensions will be bankrupt anyway. Let no crisis go to waste, the government needs to be more important and has it's eyes on the loose money in 401Ks, anyway.

Thu, 01/03/2013 - 17:43 | 3120108 Bicycle Repairman
Bicycle Repairman's picture

LOL.  We're looking at $1.5 trillion deficits because of MIC spending and a corrupt healthcare system and you're worried about $67 billion.

Glad to see the 2% contribution put back in place.  The tide of history is rolling right over you.

Thu, 01/03/2013 - 18:06 | 3120174 earnyermoney
earnyermoney's picture

As someone else pointed out on another thread, the MIC enforces the worlds reserve currency status of the US dollar. Amazing how many governments are willing to accept a green piece of toilet paper in exchange for their valuable goods and services.

Thu, 01/03/2013 - 19:39 | 3120423 HurricaneSeason
HurricaneSeason's picture

China has nuclear weapons and factories. They probably laugh at the money wasted on 800 foreign bases and that's why they tell the BRICS and anybody else that will listen, to stop using the dollar for foreign trade. Maybe not the bribed foreign leaders, but the foreign people who get bombed or missles or bases parked in their back yard are probably supportive of the Chinesen on that. More and more every year. It will be foreign countries that decline billions in bribes to host bases that bring down the MIC, not congress.

Thu, 01/03/2013 - 18:15 | 3120202 Bicycle Repairman
Bicycle Repairman's picture

$$$ Reserve currency status is on the way out.  While the MIC has helped to preserve it, it cannot save it.

Time for a rethink, before there is a collapse.

Thu, 01/03/2013 - 20:01 | 3120476 Matt
Matt's picture

Mighty optimistic of you to think there is sufficient time for a change in plans.

Thu, 01/03/2013 - 20:06 | 3120493 Bicycle Repairman
Bicycle Repairman's picture

Is there a difference between changing course now or continuing 5 years?  Is there a difference between changing course or provoking a nuclear exchange?

Thu, 01/03/2013 - 17:24 | 3120051 working class dog
working class dog's picture

maybe if the corporate welfare (entitlements for the rich) dump off their responsibilities of running a proper business of taking care of workers benefits and healthcare instead of cooopting the gubbament chronies with lobbyists and PAC monies to get them re elected in return for corporate welfare and dumping retire benefits on to the public. We are very close to China with their refusal to make public company balance sheets as the commies call them state secrets,

Take away the loop holes for not paying their fair share of doing business in the US and you may not need as much social security, the scum corps. are dumping thier workers onto the public costs.

Thu, 01/03/2013 - 16:29 | 3119861 azzhatter
azzhatter's picture

but....but... the trust fund

Thu, 01/03/2013 - 17:12 | 3120009 Bruce Krasting
Bruce Krasting's picture

The TF has pieces of paper in it. It does not have "cash". The checks for SS have to backed with cash, not paper.

To get cash, SS hocks some of its paper with Treasury. But treasury has no extra cash either. So treasury must borrow the cash shortfall to fund SS.

There is a TF. Nothing in it that is "spendable" though.

Thu, 01/03/2013 - 18:27 | 3120231 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Michael Hudson asks the simple question: why can we print in unlimited quantities to fund bank bailouts and new wars, but not for Soc.Sec? Soc.Sec must pre-fund, and must be paid by the very recipients of the benefit. Maybe we can get the banks to pre-fund their next bailout too?

Thu, 01/03/2013 - 17:59 | 3120154 Bicycle Repairman
Bicycle Repairman's picture

T-bills are nothing more than paper.  So is a budget.  So what?

Thu, 01/03/2013 - 19:12 | 3120356 Panafrican Funk...
Panafrican Funktron Robot's picture

This is the correct answer.  It's all fucking paper (or more appropriately, ones and zeroes in a computer).  It's all just a game of slowing and/or speeding up the rate of increase of those ones and zeroes, and trying to maintain an increasingly eroding faith that those ones and zeroes are tradeable for actual goods and services.  It's all theatre.  

Thu, 01/03/2013 - 18:08 | 3120183 earnyermoney
earnyermoney's picture

LOL. Are you Paul Krugman?

Thu, 01/03/2013 - 18:20 | 3120213 Bicycle Repairman
Bicycle Repairman's picture

LOL.  No.  And plans and promises are worth the paper they are printed on plus the political will to see them thru.  Let the t-bill holders worry about t-bills.  There is plenty of political will behind those SS IOUs.

Thu, 01/03/2013 - 16:44 | 3119906 kaiserhoff
kaiserhoff's picture

Lost in space like the lock box...

or maybe that wolf ate it.

Thu, 01/03/2013 - 16:26 | 3119857 Joe Davola
Joe Davola's picture

Maybe the SS computers anticipate a slowdown, or maybe they are sandbagging the numbers just to make it look not quite so bad later.

Thu, 01/03/2013 - 16:25 | 3119852 SmoothCoolSmoke
SmoothCoolSmoke's picture

We all know SS has taken in more, over it's history, than it has paid out.... quite a bit more really.  (You did know that ....right?).

So, my question is, what is the total amout that has been "borrowed (stolen?)" from SS over it's life?

Thu, 01/03/2013 - 17:05 | 3119995 Bruce Krasting
Bruce Krasting's picture

About $2.7 Trillion......

Thu, 01/03/2013 - 17:52 | 3120131 NoControl
NoControl's picture

If we only had some sort of Lock Box....

/sarc off

Thu, 01/03/2013 - 19:20 | 3120379 NotApplicable
NotApplicable's picture

Just think, if it were in BitCoins, they'd have to steal it the hard way.

Thu, 01/03/2013 - 16:25 | 3119846 sangell
sangell's picture

What's going on with SSDI. Is that included in the total SS data or is there a seperate accounting? It seems everybody is on it or trying to get on it.

Thu, 01/03/2013 - 17:18 | 3120033 Bruce Krasting
Bruce Krasting's picture

The benefit number of 66,666,666,666.66 includes both OASI (Old Age Insurance) and DI (Disability Insurance).

The DI numbers were going up like crazy back in 08 and 09. But it has slowed of late. I think they are just slowing the process down. You used to wait six months, now it is nine.

DI will blow up in 2016 (the DI TF runs dry). It will be interesting to see what the "fix" is for thi one. Think higher taxes.....

Thu, 01/03/2013 - 17:27 | 3120060 cosmyccowboy
cosmyccowboy's picture

as a used car salesman (i know) you would not believe the number of fine healthy 20, 30 and 40 year olds i see drawing SSI!!!

mam... what is your income, well i'm TRYING to get on SSI! mam...TRYING to get on SSI does not qualify as INCOME!

Thu, 01/03/2013 - 23:33 | 3121050 andrewp111
andrewp111's picture

Unless he pays with cash.

Thu, 01/03/2013 - 16:34 | 3119877 kaiserhoff
kaiserhoff's picture

Ain't that the truth.  There is even a push to make obesity a disability..., pass the taters, Maude.  I needs a check... yuck, yuck.


About those 100 inch arses, sangell.  Did you measure or was that an estimate?  Damn fine comment.  Explain to us what a hubsi is some time.  Laughed until I hurt.

Thu, 01/03/2013 - 17:30 | 3120070 cosmyccowboy
cosmyccowboy's picture

my 52 year old crack head brother is drawing SSI to the tune of 700 bucks a month, a EBT card and rent support down on panama city beach.... who's the fool?

Thu, 01/03/2013 - 16:19 | 3119824 kaiserhoff
kaiserhoff's picture

Glad you can deal with this crap, Bruce.  My tolerance for policy wonk speak peaked in the 90's, but it matters not.

I know what they are going to do.  Gross pointed out this morning, the Fed already buys 90% of new treasury issues.  They are going to CANCEL THE DEBT!  Not all of it.  The shit would hit the fan, just the part "owned" by the Fed.  Back door printing of the most subtle and treasonous kind, but possible, and the only out. 

Show me I'm wrong, Bruce.  I would really like to be wrong on this, but I feel it coming.  This is the way the world ends.

Thu, 01/03/2013 - 18:08 | 3120182 ouchtouch
ouchtouch's picture

No need to cancel the debt, Timmy or his successor can just pay it off with $trillion platinum coins.

Thu, 01/03/2013 - 16:40 | 3119897 Shameful
Shameful's picture

Why cancel it?  Since the "profit" on those bonds is remitted to the Treasury it's mostly a wash.  One could use the argument that the high debt to gdp damages the bond market, but as has been pointed out the Fed is the bond market.  In this way they can keep kicking the can more effectively without making big waves that might tip of our foreign creditors that we are scamming them.

Thu, 01/03/2013 - 23:36 | 3121055 andrewp111
andrewp111's picture

Cancel it because the interest becomes too burdensome. Exponential growth bites you eventually, even when rates are as low as they are now. You end up with most of the budget going to interest. Japan is going to cancel at least 20% of its BOJ held debt. Eventually, the USA will mint trillion dollar coins.

Thu, 01/03/2013 - 17:09 | 3120005 Dadburnitpa
Dadburnitpa's picture

By emulating the FED, I think a strategy to end world hunger can be modeled.  All starving people should just eat their own vomit.  Problem solved.

Thu, 01/03/2013 - 16:51 | 3119944 kaiserhoff
kaiserhoff's picture

Extreme back door printing.  They fund the government with debt, and later, only a little later cancel the debt, flooding the money supply just as if every taxpayer got a 50,000 dollar check for Christmas, except THE FUCKING GOVERNMENT SPENDS THE MONEY.  Not easy to understand, but that's the beauty of the con.  Most taxpayers won't associate the out of control spending directly with the write off.

It squares the circle.  Some of the better minds here have been trying to figure out how you get to wrenching inflation with no jobs and wages in the toilet.  There is only one way.  Print the money.  This is how they will print, and control the money.  The perfect Statist Coup, and what's to stop them?


Thu, 01/03/2013 - 17:01 | 3119981 Shameful
Shameful's picture

I'm not saying they won't do that, but they don't need to write it off.  In effect it's already an accounting trick, the Fed "buys" Treasury paper, which in turns pays interest to the Fed which in turn is remitted back to the treasury.  The excess money bleeding out of the system comes via gov spending (hello money to connected!), as you point out.  I think they will do this, but I don't see why to make the accounting entry to cancel the debt.

Imagine this instead "My fellow Americans, the debt to gdp is now over 150%.  I know many of you are hurting so we cannot let those people down now, when they need it most.  So I have proposed additional taxes on those who are doing so very well in this economy when so many of us are doing so very poorly.  And it is my hope that we can finally reign in this growth of debt, thank you and God bless"  AKA tax the hell out of the remaining producers and consolidate the wealth.  Like Lenin said using the twin forces of inflation and taxation.

Thu, 01/03/2013 - 17:13 | 3120017 kaiserhoff
kaiserhoff's picture

Taxes are fairly obvious.  Inflation is more diffuse and harder to place the blame.

Thanks for staying with me on this.  You're focused on the income, and quite right about that, but look at the principle.  This year the government will spend 1 trillion more than it takes in.  The fiction is that they will some day repay that debt.  They won't.  Here's the kicker.

Next year the deficit could be two trillion, then three, then to the moon.

Thu, 01/03/2013 - 19:56 | 3120466 HurricaneSeason
HurricaneSeason's picture

Somebody has to pretend to buy those IOUs or the IOUs that the feral Reserve and China hold will be worth less. I think the Feral Reseve will push away from the blackjack table with the chips they have and concentrate on raising taxes, interest rates and austerity while lowering the annual deficit as quickly as possible. They cant lend out an additional $5 trillion or $10 trillion that they never had to begin with or like you say, the debt wont be taken seriously and no attempt will be made to pay any of it back. That's why they are saying they've shot their wad, just before the debt ceiling talks. They need to cut the deficit by $700 billion soon which will mean 10-15 million jobs or maybe 30 million jobs with substantial wage cuts. Either way, money pulled completely out of the economy with unemployment and severance pay tacked on.

Thu, 01/03/2013 - 16:12 | 3119818 Gromit
Gromit's picture

Also consider the cash deficit as a $75B boost to consumer spending.

Thu, 01/03/2013 - 16:07 | 3119804 Moe Howard
Moe Howard's picture

Don't Ponzi Schemes accelerate at the end? Meaning won't the failure hit us like a ton of bricks?

I sure hope those folks who depend on only SS income have some family they did not alienate, because they are sure going to need some help within the next five years.


Thanks for the update Bruce.

Thu, 01/03/2013 - 19:30 | 3120404 NoTTD
NoTTD's picture

As someone once said, you go bankrupt gradually - then suddenly.

Thu, 01/03/2013 - 19:11 | 3120350 Matt
Matt's picture

Ponzi schemes only end when people try to leave. Solution? Make leaving a crime.

Thu, 01/03/2013 - 19:16 | 3120366 NotApplicable
NotApplicable's picture

Or impossible, by making the ponzi out of the currencies we all cannot live without, then, as you note, criminalizing any and all alternatives as terrorist activity.

Thu, 01/03/2013 - 16:06 | 3119803 mrktwtch2
mrktwtch2's picture

with the obesity rate of te baby boomers..many wont see 62 let alone 65..

Thu, 01/03/2013 - 19:12 | 3120355 NotApplicable
NotApplicable's picture


Their healthcare costs are going to be astronomical, thanks to the crime known as third-party payments.

Is it too late to start my own Hoveround company?

"Haul your ass around for free! Call now, operaters are standing by to process your aid application."

Thu, 01/03/2013 - 17:15 | 3120023 lasvegaspersona
lasvegaspersona's picture

I'm 60+. My son and I play a game called 'what is happening to America's Ass?' Walmart is a good place to play. At first we just would giggle and he would point. Now that he is a little older the game is not to show emotion over the gi-nor-mosity we see before us... and yes some are boomers but the fat is pretty well spread over the demographics.

My point is that we boomers can be cruel... becareful what you say about us ya punks.

Thu, 01/03/2013 - 16:26 | 3119855 a growing concern
a growing concern's picture

I see we have some fat Baby Boomers voting you down. This is a true statement, however.

Thu, 01/03/2013 - 17:19 | 3120036 Dr. Sandi
Dr. Sandi's picture

Boomers own your skinny ass.

Thu, 01/03/2013 - 15:52 | 3119738 Disenchanted
Disenchanted's picture




So when will Flemming v. Nestor begin to apply to more people("restrictively") than just commie aliens(Nestor)?

I think we're getting close.


Background to the Case:


The fact that workers contribute to the Social Security program's funding through a dedicated
payroll tax establishes a unique connection between those tax payments and future benefits.
More so than general federal income taxes can be said to establish "rights" to certain
government services. This is often expressed in the idea that Social Security benefits are "an
earned right." This is true enough in a moral and political sense. But like all federal entitlement
programs, Congress can change the rules regarding eligibility--and it has done so many times
over the years. The rules can be made more generous, or they can be made more restrictive.
Benefits which are granted at one time can be withdrawn, as for example with student benefits,
which were substantially scaled-back in the 1983 Amendments.


There has been a temptation throughout the program's history for some people to suppose that
their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a
person makes FICA contributions over a number of years, Congress cannot, according to this
reasoning, change the rules in such a way that deprives a contributor of a promised future
benefit. Under this reasoning, benefits under Social Security could probably only be increased,
never decreased, if the Act could be amended at all. Congress clearly had no such limitation in
mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF
POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is
hereby reserved to the Congress." Even so, some have thought that this reservation was in
some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.


more here: http://socialsecurity.procon.org/sourcefiles/FlemmingVNestor.pdf

Thu, 01/03/2013 - 17:15 | 3120026 FMR Bankster
FMR Bankster's picture

As I've suggested here before: In my working life I've had social security taxes rise and fall, and social security benefits be increased and decreased. This is nothing but another goverment program and what you recieve (if anything) is up to politicians. Does that everyone feel better?

Thu, 01/03/2013 - 17:57 | 3120145 kaiserhoff
kaiserhoff's picture

You've seen social security taxes fall?  Get a picture of Big Foot for me next time you see him.  You and me, Dude.  We gots the media by the short hairs;)

Thu, 01/03/2013 - 15:46 | 3119723 wonderatitall
wonderatitall's picture

booooosh....and watch out cuz zandi is going in dry obama


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