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Chief Actuary for SS - Raid the Retirement Fund!
Stephan Goss, the chief actuary for Social Security (SS) provided a detailed report on the status of the SS Disability Fund (DI) to the House of Representitives. The short story is that DI is going bust in a few years. The options to fix this problem were spelled out in the report. The extremes of the required "fix" range from an immediate cut in DI benefits of 16%, or an increase in DI payroll taxes of 20%.
Nothing new there. But, there is a "Plan B" for the DI Fund. The solution is to raid the SS Retirement Fund for the deficits at DI:
A simple tax-rate reallocation between OASI and DI, as was done in 1994, could equalize the financial prospects of the trust funds avoiding reserve depletion until 2033.
Note: "Simple tax-rate reallocation" means $40+b a year....
Bingo! The raid on the retirement fund results in no cuts in benefits, and no new taxes. What's not to like about that result? The gutless wimps in D.C. would love to kick the can down the road a decade, therefore the Raid solution is an obvious choice. (The consequence of the Raid would be to reduce the expected life of the Retirement Trust Fund by as much as five years,.)
This is not the first time this has come up. The Congressional Budget Office, in its 2/5/13 report on the SS Trust Funds had these words in a footnote:
CBO’s baseline assumes that the Commissioner will pay DI benefits in full even after the trust fund is exhausted.
Note: For a discussion of the CBO report, see my article from 2/10/13 (Link).
Okay, we now have two legs of the government who have (functionally) suggested that a raid on the OASI fund is a possible fix for DI. Lightening does not strike twice in the same place very often, especially in Washington. The idea of raiding one fund to preserve another, has just gotten another big supporter. If the folks at AARP understood what was being proposed - they would flip their wigs!
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The True Cost of the Disability Program
I have a list, (it's pretty short) of the folks who I think are "doing the right thing" in Washington. Stephen Goss was on that list. I'm disappointed with him and his presentation of the "Facts" about the DI program.
Mr. Goss's report to the House ran nineteen pages; there are 14 charts. (Link) Everything a Congressman (or the public) could ever want to know about the DI program is spelled out in detail.
But, Goss completely left out the most critical cost of DI. The Chief Actuary failed to identify a cost directly related to DI. The numbers are big - $80b in 2012. The estimate is for more than a trillion of over the coming decade. If you look beyond that time horizon, the costs that Goss failed to identify are in the mega-trillions.
Goss failed to provide the full picture when he did not disclose the DI costs to Medicare. Every individual who gets DI benefits ALSO gets Medicare.
In a report dated 3/14/2013 (Link), the Congressional Budget Office (CBO) accurately described the real costs of DI:
Total government spending on DI beneficiaries is substantially higher than DI expenditures alone.Disabled beneficiaries receive coverage under Medicare, regardless of their age.
The cost of Medicare benefits received by DI beneficiaries was about $80 billion in 2012; CBO expects that it will be $130 billion in 2023.
I give Stephen Goss an "F" for failing to provide all of the information needed to evaluate the DI program. How do you sweep a trillion dollars under the carpet?
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i don't disagree with this concept. After 6 months of unemployment make them report to do some kind of work. Give thema 50% bump in benefits if they do so. if they refuse cut the benefit by 50% and end it after a year. Make work pay and people will work.
If by put the old folks back to work you mean
1 stop theft by govt
2 allow the invisible hand to work
3 and let nature sort out the rest
Then i wholly agree.
But if you are suggestion our psycho-ponzi-parasite in chief direct our economy and create a viable make work program for old folks; then respectfully I disagree and f*ck you, dirty socialist.
There seems to be a Statist answer for just about everything these days, except for the destruction the State created in the first place.
we should give DI benefits back to the states, which are more cost effective. pay them in lump sum and let them distribute it.
The real story here is a proposal to reduce SS's earmarked tax income in favor of DI. Although there is almost no direct relationship between SS's earmarked tax income and SS's benefit payouts, reducing SS's earmarked tax income might make it appear that SS's benefit payouts were becoming harder to fund, and thus lend weight to those calling for SS benefits to be delayed (ie retirement age raised) or reduced (which they usually do through not adjusting fully for inflation).
This suggestion might be of concern, if the SS Retirement Fund actually contained any money. But actually it is just a box full of IOUs. Mr. Goss' proposal would only amount to shifting the IOUs from one box to another. Kind of like rearranging deck chairs on the Titanic.
Thank goodness we have good and dedicated public servants like Mr Goss to keep everything neat and tidy. We wouldn't want the deck to be littered with lots of unsightly IOUs. Someone might slip on one and break an ankle. Then they would need to apply for SS Disability insurance.
Gas warfare in Syria??? We have more to watch than who is getting SSI. At this point it is all funny money. I think moving to Zimbabwe would come to mind as a good training mission for what the USA looks like 3years from now. More hunting opportunities there but you need an armed convoy to feel safe over there. Wait a minute........ our DHS is armed convoy capable now, maybe they are planning some hunting trips here??? I am so confused..... can someone help me out??
If the DHS goes hunting, you can feel assured that they're probably hunting...you. And me. And anyone who's posted to ZH. Remember, the world is the battlefield now, including the homeland.
Does that help you out?
if Obama said, "let's send troops into Syria", McCain and Graham would be yelling IMPEACHMENT. if Obama said "no troops", the bastards want to pass a resolution allowing it. you think he would figure out their little bizarro world by now.
Hey Bruce, you might want to mentions that
THE $4.5 TRILLION DOLLAR SURPLUS FROM BABY BOOMER'S PAYROLL TAXES WAS SUPPOSED TO BE IN A TRUST FUND. RONALD REAGAN DIDN'T LIKE RAISING TAXES, SO HE CONFISCATED THE SS TRUST AND SPENT IT! ITS BEEN GONE OVER 20 YEARS.
That $4.5 T is actually carried within the federal debt of $16 T. But SS benefits in excess of payroll taxes must come from the general fund (AKA the deficit). We were over $50B short last year, and the boomers haven't even started retiring enmass.
So where does Mr Goss think this magic money is going to come from? He's 30 years late in trying to steal the SS money.
Wrong. LBJ merged SS into general revenues back in 1968.
That was accounting only. It just went from off balance sheet to on balance sheet. Nothing changed in how the funds were handled or invested. Social Security has ALWAYS bought Treasuries with their funds, from day one of the program. The surpluses from year to year are added to that total, defecits subtracted.
Yes, the governmentt spends the money as it comes in and issues IOU's in the form of treasuries. This would be the case no matter how it would be invested. If you hang onto the cash(stuff it in mattress) you are not investing. If we had simply hung onto the cash, then the government would just be paying that interest out to someone else that it borrowed from to pay it's bills.
I would much rather they invested it something more tangible, like mortgage loans instead of the faith of the government (i.e. future taxes). Cash in the current Treasuries with the Fed and let SS buy that $85 billion in MBS's each month. Duh!
"Cash in the current Treasuries with the Fed and let SS buy that $85 billion in MBS's each month. Duh!"
Is the reason the Fed is buying these MBS because they are performing well?
A line from Animal House comes to mind regarding the government, "You fucked up kid. You trusted us."
There never were any $ in the "fund". The $ were/are immediately liberated by the US Treasury via T-Bills and spent on "government programs". The "fund" is supposedly full of T Bills. This was always by design.
How about we raid the War Fund instead? Oh, we don't have one? Well, lets just make some accounting entries and pretend we do!
What obvious bullshit! What we should do, is mint a trillion-dollar coin. That would be totally legit.
I don't know... Let's see..
We could have a marshmellow roast! With chocolate& gram crackers!! Invite all our friends @ $50000 a pop!
You call it Iraq, which critics complained just a year or two ago would end up costing us $1t. Now its $2T plus, and some say really $6T. Interesting that the war ended but the costs continue to climb. I suppose most of DI is under black contract, since a lot of the costs of disability are recent vets, who get top of the line prosthetics. DI is a gateway program, once you're on it lots of doors open. not sure how you linked this to medicare, but we know you hate all these programs.
Bullshit commie - "since a lot of the costs of disability are recent vets"
Cost of disability are 40-55 year old fuckups that don't want to work - look at the expansion of the program. It has been proved that once people used up the 99 weeks of unemployment, they would go on SSI disability, which by the way, is easy to get today. You just need the right doctor/lawyer.
so are you one of them, and if not, why not?
Because I have a real fucking job. My firm won't let me go, believe me I have tried...
You don't get unemployment if you quit or are fired for misconduct.
sometimes it seems that everyother person i bump into is drawing SSI!!!! from 5 to 65!
question- mam what is your monthly income for your loan application?
answer- well i get 674 for this kid and 674 for that kid and 674 each for the other 2!!!
Future liabilities for Medicare and Medicaid exceed 70 trillion, which is ignored by everyone in DC--now that's sweeping!
Why not change the requirements for DI and get rid of drunks and drug addicts, those are not disabilities, they are life choices, we need to limit the benefits to truly needy people who have paid into the system? Secondly, why not pass on all the losses from combat veterans to the countries we liberated? Here we have Iraq with millions of barrels of Oil under the ground and we get tagged with the war bill and the healthcare and disability of these soldiers fighting for their freedom. Fuck that place, get the hell out and make them pay their way. Seems like the only place this country wants to steal money if from the working class which is diminishing at a rapid pace.
"why not pass on all the losses from combat veterans to the countries we liberated?"
(facepalm)
"Liberate you, buddy!"
Why not, we stung Germany for billions in reparations after WW1 and look how well that worked out.
Plus, African Americans are demanding millions in reparations for slavery and think what a boon that would be for the economy.
(Sarkylert)
I doubt the Iraqis wanted to be "liberated". The American soldiers are illegal immigrants with guns.
Oh they wanted to be liberated and bad.
That's why we were over there dropping bombs on their heads spreading democracy and freedom with every explosion.
Iraq is practice for what is to become of America.
http://www.sott.net/article/259974-Ten-years-on-Iraq-lies-in-ruins-as-ne...
Ten years on, Iraq lies in ruins as new evidence confirms U.S. government used Death Squads to manufacture 'Civil War'
You beat me to it, didn't see this when I posted mine above.
lightning.
They mean lightening......of the fund ( what fund?)
We need to have stern doctor review boards to determine eligibility for SSDI. No more 'bi-polar' disorder as an excuse to spend 30 years on the dole. "REHABILITATION CAMPS for the lame and lazy might do the trick too.
Making drug and alcohol dependency an eligiblity factor for disability was a mistake as was obesity. I think that most applicants used to be denied in the first round just to see who was really serious about their disability. I don't know if that still happens.
I've known people who had real problems (a guy with really large benign brain tumors that affected his ability to manage activities of daily living and a woman with multiple sclerosis that caused intermittent blindness) who were both denied through two rounds. The woman with MS eventually got it but the brain tumor guy never did.
Really, that's bullshit. Maybe 6 months worth or 3
Fuck. I have an ingrown toenail. Do I qualify?
I thought you guys knew that permissive applications was now allowed since 2009 so the unemployment numbers would be reduced.
DC has kicked the can all the way down the road and into a dead end alley. They're now closing in on the overflowing dumpster at the very end of the alley and trying to figure out whether they should go left or right to kick the can behind it.
New retirement age in 10 years: 115. Penalty for reaching 115: everything you own as pre-tax death.
Ok im spewing crazy crap now im out of words after all the insane discussions and topics today.
You really need to change the terms, but then it could work.
How about: "A levy on remaining lifetime."
Finally! A plan that would work. Send this along to the AARP.
i can make the case that the Veterans admin has abdicated their responsibility and handed the problem off to SSDI, where the GOP armchair warriors who sent them to war, can take away their rights as veterans. the rest of the disability liability is outside our control, but veteran and veteran related disabilities should be funded by the VA.
True dat! Vets get totally schtupped when they come around for VA services. "You had the PTSD *before* you went to war, you sneaky Pete!". Hence they fall thru to the next level.
As the austerity ghouls really get their freak on, how long before ER admissions are blocked pending insurance or ability to pay come up? All the GOPers would *love* that one. This place would look like the 3rd world pretty quick. So you better pray your relatives will be having cash to go to the pharmacy and buy the IV bags and sutures you might need, otherwise it ain't gonna happen. Gonna shave 10 years off the life expectancy in this country in the next 10 years, I bet. Which is, of course, what the men in charge want. They just don't want the possibility of you revolting while they do it.
PTSD? Fuck, I fix that shit every day.
this is only part of the new understanding of what is going.
http://www.neurodynamic.info/uploads/Peniston_2_1_.pdf
most vets have much lower life expectancies, (though the MSM loves to show those 90+ Pearl Harbor survivors) america the land of something for nothing, you guys go fight the war, i'll stay home and make money. if you get one of these guys alone in the bar they'll tell you, you were just too stupid to know better. in vietnam they couldn't make you do more than 13 months, now its a revolving door with medications, and high suicide rates. now the men in charge know they need to take the guns away because too many of these guys know how to use them. this is why POTUS will not talk to the troops unless they are disarmed first.
You use the word "fund" somewhat optimistically, as if they money is actually there rather than swept into the general fund and deficit spent over time by our esteemed legislators.
lets move some fake accounting numbers over to shore up the other fake accounting account. fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.fake.
Do you think it's fake?
Hey Bruce,
I'll sell you my shares in that "fund" for fifty cents on the dollar.
What are you smoking?
I see no problem. Ben will print the difference, just as they are already doing today for Social Security.