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Social Security Full Fiscal Year Results – Flash Report
In Washington, almost every report is late. The exception is Social Security. They have their numbers for September posted as of today. The folks in D.C. run their clocks on a fiscal year that ends in September. The following are the results and YoY comparisons for fiscal 2010 and 2011 for SS.
Both the top line revenue and benefit expenses rose over the year. It’s not surprising to see that the pace of payouts is continuing to outstrip the rate of revenue growth.
It should be noted that the $24.3b of increased payments is not a result of a COLA (inflation) adjustment. There has been no inflation adjusted increases in the past two years for SS. The higher 2011 payout is exclusively the result of more retiring workers becoming eligible for benefits. The number of new beneficiaries is now growing by 10,000 a day, 7 days a week. That number is going up in fiscal 2012. It will go up every year for the next 14 (The boomers are coming on fast and steady).
I believe that there will be a COLA adjustment for 2012. I estimate ~2%. The inflation adjustment and the aging population will result in an increase in benefit payments next year of ~$40 billion (5.7%). With revenues rising much less than that, the red ink at SS is going to rise next year and for as far as I can see into the future.
What matters (to me) is cash flow. On the critical measure of FICA tax revenues minus Benefits the number comes up negative. For 2011 it will be $57.9 B in deficit. That compares to the red ink a year before that was (only) $47.2B.
The other Cash components that I am estimating for fiscal 2011 include:
Tax on Benefits = +$23b
RR retirement = -$5b
Overhead = -$7b
The sum of all the cash components brings the annual number to -$46.9b versus 2010’s -$36.2. Clearly, things are continuing to head the wrong way at the SSTF
Interest Income is a component of the picture that is not paid in cash. It is paid in script. I expect this number to be $114b. When the "paper" is included in the calculation it will look as if (and be reported as such) that there is a net surplus of $67.1b. I think this is deceiving. The Headline will read “Surplus”, but the reality is that SS is just a drain on us today. It is just a larger promise that has to be kept tomorrow.
For those who “Cheer” a surplus that includes phony interest I point out that in 2006/2007 the surplus was $190b and in 2008 (just 3 years ago) it was $180b. 2011 shows a significant slowdown. The Surplus will have fallen by 2/3rds from that recorded in 2007 (before TSHTF). In a matter of a few short years (and way ahead of the current forecasts) there will be no surplus at all. Not even one made out of confetti.
There are significant adjustments that have been made to the 2010/11 numbers. These represent re-statements of prior years estimates. The adjustment amount in 2010 came to a -$26b. So far in 2011 only $14bn has been recorded. Of the $13.6b of improved tax receipts in 2011, approximately $9b comes from changes in YoY adjustments. In other words, the apples to apples comparison of revenues is only +$4.0b (0.6%).
The annual adjustments to income cloud the results at SS. My conclusion is that on a straight comparison basis there is very little YoY change in revenues at SS. The implication is that there is little growth in total payrolls and there is little growth in wages. That’s not surprising at all. I expect that this will show up in the next few months of NFP numbers. I would, as a rule, take the “Under” on all those estimates.
There is one interesting thing to consider with SS. They have this paper surplus called a Trust Fund. That Trust Fund earns paper interest. Lots of it. At the end of the year that fund will total $2.65 trillion. It will have an investment average maturity of 7 years. The rate of interest paid to SS is currently 4.25%.
Now consider that the Treasury yields today for 7 years is a measly 1.58%. The difference of 2.67% comes to a whopping $70 billion a year in “excess” interest being paid to SS.
If one applied this same thinking to SS’s sisters, (the Military and Federal Workers Funds) it comes to ~$4T of principal that we are (over) paying interest on. The excess interest on the whole mess that is referred to as the “Federal Pension Obligations” comes to a very important $100+ billion. Every Year!
I’m not sure what to make of this. Clearly society is providing a significant ON BUDGET subsidy to these programs (this alone is 7% of the deficit). At a time when everything else is getting ReFi-ed at lower rates (and savers are getting creamed on their holdings) there should be a discussion of the biggest ReFi of them all, the federal Trust Funds.
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"This government has $ billions to piss away on hair-brained schemes"
http://wallstreetpit.com/84494-the-secret-govt-bank-thats-financing-more... The Secret Gov’t Bank That’s Financing More SolyndrasI'm sure that "Granny" appreciates your concern, but you're ignoring or selectively applying moral principle(s).
Our work, or your (Big Brother's) guns: Choose one, you cannot have both!
I'd like to see how much of the guaranteed loans somehow went into the $1b VC's pockets.....those guys are completely void of ethics and would have no problem filling their pockets with your money, once they realized their investment was going to be a total loss.....kind of like what the bankers did in 08.
"a total loss"
It's a real bitch what they did to climate change, eh? Too bad Al couldn't deliver.
Trillions to banksters, trillions on wars and trillions to foreign countries. And it grandmas, the unemployed and the disableds fault. Work your ass off, pay in thousands and now you hope to retire on an IOU. I don't want to hear one word about fucking entitlements. And make no mistake.....some overseas fart and don't think for one minute we won't send trillions in a heartbeat.
And what's up with the one republican faggot that says the gov't won't be paying for anymore disasters?? Then his state got blown away and now he wants FEMA funds? Or how about Michelle bockman deushbag that says god is telling us were spending too much because we had an earthquake followed by a hurricane?
LMFAO, I dont care for most dems either but go ahead and take your anger out and vote in someone like that ---then you'll find out in short order how fucked up things can really get.
Sorry, were just gonna end up like Mexico. Stick a fork in it, this fucking country is done.
OK rs,
Thanks for saying all I wanted to add except for one thing.
The 'productivity gain' comes more from the new technology and over-worked employees and this seems likely to be the source of this gain for the forseeable future. The society actually loses with the gain because of displaced workers, so where is the gain?
Possibly, we have come to a point where a 'user fee' should be paid by the employers as a dividend to help offset the higher cost being paid by the society for the displaced workers. In an equitable system for all this would be the case, but because of our culture and the power of propaganda by the MSM we seem to believe that the gain belongs to the bankers rather than the society.
This issue of equity is seldom raised in the US without shouts of 'Commies', socialism, God, 'no work-no pay'-------ad infinitum, by the people themselves which we know are not those who are displaced.
Maybe we truly are brain-dead om
I was going to +1 you because I agree with your conclusions, but as a gay man I can't support even those I would otherwise agree with when you feel your point must use gratuitous bashing of a subpopulation using words that you were brainwashed into using from day one, your use of the word faggot makes everything else you say worthless, though the neocon rightwing would be proud of you because in your careless bile you separate yourself from those who should be your political allies. Stick a fork in it indeed, no nation can exist when it is so filled with hate one for the others.
I though "faggot" was just a contraction of "fucking maggot". When did the gay community adopt it as their mascot?
I think what he may have meant was "closeted self-hating republican who unfairly bashes gays to gain political advantage and hide his true identity while being wide open to extortion because he is closeted".
Everyone has an ox. I guess yours just got gored.
sorry, dude. some words are extremely incendiary and set the whole paragraph on fire. As a straight dude, I will try to use that particular word less often. Never is asking a lot, but will try to get there...
That said, I think guys like Ron Paul and Jesse Ventura have an interesting argument when the whole idea of discussing gay rights and marriage comes up....they say it should not even be on the table. Why does the govt have ANY say on whom has the right to marry anyone? straight, gay, it doesn't matter....
the govt protects none of us. or if it does, only in our dreams.
I can only ask that you try, and thanks for the apology, but think of those that use it and mean it to do harm, it is so low class, so uneducated and unbecoming, a poor statement of their upbringing, a reflection of the parents that raised them and the peers that brainwashed. Not to mention nearly all cases of homophobia are just covers for being in the closet anyway (see: Study Links Homophobia with Homosexual Arousal) http://www.philosophy-religion.org/handouts/homophobia.htm . Scapegoating has a funny way of coming back to haunt those that do it, and it is just unnecessary to start with. Assholes will be assholes, you seem cool enough but I have to call people on mistakes like this so we can separate those that made an error and those that really hate others.
First of all, I don't have a problem with gays. I have 3 brothers, one is gay. I have 8 brother and sisterinlaws, 1 gay guy and 1 gay gal. The guy that lives behind me is gay and also bartends my favorite bar. In fact my brotherinlaw just had a birthday party at a gay bar that I attended with my wife.
I guess what I was trying to do was just really insult a republican.....I mean afterall they are the ones that have clinics to convert you from gay to straight right? What ultimate word could I call them to piss them off to the max? I'm sure there's many.
I admit I was too busy trying to slam someone and didn't take you into consideration so I apologize for that.
But thinking I have a problem with gays is funny to say the least as you can see im surrounded by them but then again you wouldn't ever guess that just by reading my post.
Furthermore.......i'm not very 'politically correct' on any subject and god forbid if we get on some similar subject when i've been drinking. My writing has always got people fired up, it's not an act I just speak my mind. I just get tired of the way society has so many lies involved in it and everyone is trying to kiss everyone else's ass. Well look where it got us. I'm gonna say what I got to say........and people just need to come to terms with the truth.
Kinda reminds me of college composition years ago, teachers were like damn, mr noble, you sure have a way of putting things. It wasn't long before my essays were requested with anticipation......even if they had to read it with one eye closed. LOL.
Didn't you hear that the definition of 'gay' has been changed? It's all documented in one of last season's episodes of South Park. Now, the term 'gay' simply refers to obnoxious idiots.
Interesting. I guess that means im gay 2-3 nights a week. LOL. Personally im waiting for the new Squidbillies coming out on 9-11.
"Drink Glug!"
Nice rant. Just keep your rage focused and everything is going to be OK.
BTW I believe the politically correct term is "republican with a wide stance". Is there really just the one?
In 1994 Congress was nice enough to add the disabled, mentally retarded, recent immigrants, children, pregnant Mothers and many others to the Social Security system so that it now encompasses:
Federal Old-Age (Retirement), Survivors, and Disability Insurance
Unemployment benefits
Temporary Assistance for Needy Families
Health Insurance for Aged and Disabled (Medicare)
Grants to States for Medical Assistance Programs (Medicaid)
State Children's Health Insurance Program (SCHIP)
Supplemental Security Income (SSI)
Patient Protection and Affordable Care Act
Thusly it is not a retirement program but a giant welfare scheme.
God forbid nothing ever happens to you. See the problem here? Our leaders have plundered everything for their own pet projects and now they've convinced you to turn your focus on your fellow citizens that are in need. Had we not a bunch of fucking bozo clown assholes running our asses into the ground there would be more than enough money to go around. But no we can't have that can we. Your a goddamn idiot.
Sorry for the idiot comment but you really should reconsider the real source of our problems, and much of the rest of the worlds, which seems to emanate from the worlds asshole---better known as DC.
I was pretty sure that is what he was saying. You oughta have a sandwich and a nice glass of milk.
His message was a little ambiguous. This isn't an issue to be trifling with.
Hmm, what DO you give the Govt that's taken everything?
"Dreams Come Due, Government and Economics as if Freedom Mattered", ISBN: 0-671-61159-3, by John Galt
The book is dated, but many of the things it talks about are still valid today
Isn't there the 2 percentage point one year reduction to individuals (from 6.2% down to 4.2% on the first $106,800) set to expire 12/31/11? That and an increase in the $106,800 limit ought to increase revenues somewhat (barring even higher unemployment, of course).
"Isn't there the 2 percentage point one year reduction to individuals (from 6.2% down to 4.2% on the first $106,800) set to expire 12/31/11? That and an increase in the $106,800 limit ought to increase revenues somewhat (barring even higher unemployment, of course)."
Unfudged unemployment figures seem to say that almost 50% of folks who would like to work and are able, cannot find jobs. Some of those used to earn quite a lot annually, so there might be quite a lot of $$$ unearned now. And unfudged unemployment sites -- and the Fed itself as well as others -- seem to say it's not getting better and probably won't for quite some time.
So how's a miniscule tax increase (compared to the deluge of funds that will be needed and the growth of unfunded-liability give-aways in the meantime) going to help?
And what happens if the REAL about-to-ask-for-benefits numbers are fudged by the government too? Why wouldn't they be?! There may be millions BEYOND the 10,000-per-day-24/7/365-boomer-applicants-for-years-to-come who are already factored in that are going to be wanting their legislators to give them outher peoples' money. Our problems relate to over-estimating what the economy would do, underestimating the monies that should have been set aside but weren't, and never paying attention to how far and fast the system was slipping back. Does anyone think taxpayers are going to stand for it? Why would they?
"in 1990, near the start of Japan's woes, the median age was 37.4 years, meaning half the population was older than that. The U.S. today has a median age of 38 years. We're at roughly the same demographic place that Japan was at 20 years ago." Daily Beast
That 2% reduction is reimbursed to the Social Security paper trust fund from other tax revenue. So there will be no positive impact from it's end.
They can't be out of money, they have checks left.
Thanks for your work Bruce. Coming headline. "The End of Entitlement. Baby Boomers Retiring Cause SS to go Ba-Boom".
http://www.thedailybeast.com/newsweek/blogs/wealth-of-nations/2009/06/09/baby-boomers-it-s-all-your-fault.html
Entitlement? May I remind you that money actually came from me, and my employers, into that fund. We didn't have a choice. We also didn't have a choice on what those fukkers did with it. We thought it was there, earning interest!
Dayum, we're stupid! Yeah, its a Ponzi scheme but in no way do I consider it a fucking entitlement!
A Republican strategist just reported from a series of town meetings held across the USA. What was the overwhelming message he got? Fear of Al Quaeda? Fear of gay marriage? Nope, it was don't touch SS and medicare. Not "let's have reasonable reform", it was "don't touch it".
SS isn't going anywhere.
You type that like it's a good thing!
http://reason.com/blog/2008/10/24/saving-social-security-episode
You mean they would sooner see the money go to Granny than TBTF banks?
I'll be "open" to discussion of entitlement reform when;
1) All Foreign aid is stopped permanently
2). All Foreign Wars that are not voted on by congress are stopped and the soldiers returned to US soil.
3). All Foreign bases are shut down permanently
4). All farm subsidies are halted permanently
5). All gov't workers, to include the president and congress, are put on the same salary/retirement/health program that is equivalent in the private sector.
Only then would I trust that the reforms were being implemented because they were necessary and not to further enable those previously listed boondoggles to continue.
Hear hear! But why stop at farm subsidies? Shut all the subsidies down and let merits, or lack there of, determine the viability of whatever business is being subsidized.
And while we are at it tax all income earned or unearned/capital gains at the same rate. Close all loopholes, all of them. Start enforcing laws and distributing justice equally without regard to wealth. Wealth may be available to be had, but it has to be earned and not doled out to a privileged few because they are the "job creators." But most of all, stop thinking that what the nation once was it can be again, we have 102 times the population (in legals alone) and the rural agrarian model of yeoman farmers prospering from the land (and slaves) is long LONG gone. Get used to it or suffer by not accepting it, but it is you alone that you damage by being pigheaded when you think you can live in a very dead world of the deep past. By the way, I say that to nobody in particular, but if the shoe fits please wear it without whining.
At a certain point the money runs out and the generations that are stuck cleaning up the colossal financial and social messes left to us by the baby boomers are going to decide that they're done paying for them to live in comfort and ease.
The "greatest generation" begat the worst, and now we're expected to give them a gilded send-off? In appreciation of what exactly?
decide that they're done paying for them to live in comfort and ease.
Live in comfort and ease? From SS?? You really are a fucking idiot!
Yet you're the one working for the gubbermint.
Meh, a government pension + social security + both physical gold and silver in appreciable amounts + five acres with standby power +food for at least six months + guns and ammo.
If that's the definition of an idiot, yes, I am one.
Do you get a government pension and social security? Sweet deal and a deal is a deal. Carry on.
Gene, you miss my main point. This is an academic discussion. Use math if it makes it seem more real to you. Knock yourself out.
Then check your pay stub. You're paying and that's not changing.
I think you miss one of Bruce's main points, which is that the first waves of boomers are just now lapping at the shores of our economy. The waves are going to keep crashing down on us week after week for years to come. Unlike real waves, however, these ones aren't going to recede to make room for the next ones, they're going to stick around for a decade or two. The math points at this being a much bigger problem than the politicians seem willing to admit.
That there is a huge problem we agree...that it is the boomer's fault, we disagree. I won't repeat the arguments I've made before but bashing boomers will not help. Some of us will continue to pay in until we are dead and never collect a cent. We got screwed just as much as younger demos. Just because we were 'there' when the program was operating does not mean we liked or supported it. Do not forget (as an example) Medicare Part D was rammed down EVERYONE'S throat. Bush screwed us all and it was not because we did not fight.
When people blame the boomers for the mess we're in they're not blaming any one particular person, or even the actions of the majority of boomers, they're blaming the generation for letting things get to (if not actively pushing them to) this point. They controlled government all those years. They made the laws, and in some cases failed to correct them. They created the out of control social programs. They taught in our schools, at our universities. They ran the ad agencies. They "changed the world" to more closely fit the idealized image of the world fomented in the 60s. They burdened subsequent generations with their promises made to themselves. They failed to account for the costs and expenses of their own retirements. Those boomers who didn't personally get directly involved in any of these things are guilty by association on the basis that these are generational issues and problems - turning a blind eye to a glaring problem, or shrugging one's shoulders is effectively disregarding the well being of the future generations, to whom they owed a responsibility, just as my generation has obligations to the generations that will follow.
You can blame the system, blame the policiticians, blame the corporations, whatever. It doesn't change the fact that one (or more) generations have failed the generations that follow.
They controlled government all those years. They made the laws, and in some cases failed to correct them. They created the out of control social programs.
No, the banks have controlled the government all those years! Ever since the creation of the FED in 1913 to be exact.
Of course - the banks controlled the passage of every law for the last 98 years. I have no idea what I was thinking.
They sure influenced a lot of them along with other large special interest groups such as pharma, agriculture,et al, who got themselves the best government money could buy!
You're not deluded enough to think the every day common baby boomer had one fucking say in the laws enacted?
Life's full of problems and this one is yours. Get used to it.