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Social Security Versus CBO - Who Do You Trust?
The 2014 Social Security report to Congress is finally out (Link). The report was released four-months later than permitted by law; this is the sixth year in a row that the Report has been late. The word 'sloppy' comes to mind; Treasury Secretary Lew gets a 'D' for timeliness.
I'm blow out by this year's report! It was just 13 days ago that the Congressional Budget Office released its numbers for SS (Link). There are very significant variances on key metrics for SS. The inescapable conclusion comparing the two reports is that either; (1) CBO is misrepresenting numbers with some kind of political agenda in mind, or (2) SS is sand bagging its numbers for reasons that have to be political as well.
There are few key metrics to consider. The first is the Immediate and Permanent (I&P) payroll tax increase necessary to 'fix' SS for the next 75 years. CBO says that the I&P is 4%, while SS claims it is only 2.88%. One might look at the two numbers and say, "What's the big dif?, the two #s are only 1.12% different!" Actually, the 1.12% comes to very big bucks. Over the 75 year period it comes to trillions of dollars. For 2015 the difference in the I&P calculation comes to $75B. That's a lot of Billions.
Another data point is the estimate for the year in which the SS Trust Funds become depleted. CBO has this date as 2030 while SS thinks it will be delayed until 2033. One could drive a truck through the different estimates.
A critical milestone for SS will be the year in which the SSTFs top-out and begin the rundown to zero. CBO has this happening in 2017, while SS says it will not happen until three years later in 2020. A three year difference in something that is only 2 1/2 year away? How could the models differ so widely?
It's my opinion that SS has warped its numbers. What SS has provided is:
Ho Hum, nothing has changed from last year. No needed to think about SS today, and certainly do not to make this an election issue. We wouldn't want Conservative folks to have something to talk about this fall.
CBO, on the other hand, is saying:
Red Alert! America's biggest single expense is a running amok. In less than 15 years there will be a crisis, and it will be very expensive to 'fix' it. For heaven's sake, please, let's have a dialog about this before it's too late!
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People need to pay for extra body parts and boner medication out of pocket. This is fucking bullshit nearly every fat ass I know over 65 has knee and hip replacements. I have an idea stop fucking eating so much.
' justice and equity'
Yea, right.
Why are we taxpayers getting stuck with the pension tabs in places like Detroit? Who didn’t see the BK coming?? C’mon.
The UAW pensions are another one….
All those pensions are between those people and their employers else, yet we are forced into participating by bailing them out. Every time there’s a bailout, our money is diluted just a little more.
Who might those government parasites be? Firemen? Policemen? Teachers? When those parasites spend those pensions buying the private product you create does that mean taxpayers support you? Are you then a government whore?
No, you haven't solved the chicken or egg argument.
Go fuck yourself and take your public pensions and shove them up your ass. You are a complete fucking moron and a shit head. Dumbass, yes you, you should have tried to collect the money for those pensions when you were working. Oh, the taxpayers would not have agreed to doubling their tax rates so some lazy ass government employee could sit around and do nothing for over three decades before they die? Wow, that is fucking shocking. Those pensions were never even remotely possible and government at every level should stop paying them out period. If you don't like it go commit suicide or do something useful with your life. No sense in just having your ass sit around and do nothing anyways.
Who might those government parasites be? Firemen? Policemen? Teachers?
YES
Like my name?
First, who sits at the table to represent ME when the public sector union is negotiating a contract. Who? Who? The fucking politician who gets half his campaign funded by the union.
Fuck you. They are parasites. People, real people have to produce something of value, sell it, and hand over tax for the .gov payroll. Or , best case, .gov prints the cash, and taxes everyone by devaluation of the currency.
Then gov employees get gold plated pensions. For what. Putting in 25 years as a drone? Do I sound jealous, or envious? Fuck you on that too.
And to answer your question; when .gov pension parasites spend their pensions, they are just recycling stolen cash back into the system.
I can't wait until it ALL goes to shit.
So then you are a government whore. Circular argument bullshit. You also have not solved the chicken or egg argument.
Stupid, the money was not yours to begin with. Your income was collected via the barrel of a gun and threat of prison. You are in possession of stolen property, the funds should be returned to their rightful owners and I would appreciate it if you could dig your own grave before your useless ass dies.
Yes, let's all gather 'round and waste time on figuring out which arm of the fed governement is telling the biggest lie.
The crux of our economic woes lay in the fact that over the last several decades we have created entitlement societies on the back of the industrial revolution, technological advantages, capital accumulated from the colonial era, and the domination of global finances.
Promises were made on the assumption that those advantages would continue in both Europe and US, and that ever greater prosperity and entitlements would be sustained through debt financed consumption growth. In that eerie fantasy world, debt fueled consumption was to be the catalyst to bring about ever more growth. Now reality has begun to come into focus and it is becoming apparent that this is unsustainable. More on this subject in the article below.
http://brucewilds.blogspot.com/2013/11/the-crux-of-our-economic-woes.htm...
My question is when they make the SS projections are they including the 2.5 trillion the US govt owes SS ?
Yes, which is part of the reason it's all BS. If your left pocket owes your right pocket a billion dollars,
how rich are your?
Oh Christ! I see your back with your bookkeeping entry bullshit. The learned accounting professor. Thank god you are not a Social Security actuary.
Are you a withglee clone?
Another "it's all an actuarial issue" clown.
The funny question, but you're surely going to dance around that elephant: under what circumstances would an actuary value an SS promise at less than 100% par?
When the system takes in less than it gives out. You know, just as the Social Security law implies. I'm sure you knew that and your question was rhetorical.
Oh great. So if I understand your definition correctly
1. The borders of "the system" can be defined at will - you know SS, DI, Medicxxx, Obamacare, or the whole federal budget?
2. Only current flow is looked at, so future ability will be addressed only when we get there?
Future ability will be determined by future inflows again, just as the law implies. We can go five years, ten years, 50 years or 100 years into the future.
If I were you, I would be more worried about your future ability to buy a gallon of milk. Social Security will be there as long as a majority don't allow Krasting to convince us our assets don't belong to us.
So you are indicating yourself that future SS payouts will be notionally correct, but purchasing power-wise (ability to buy a gallon of milk) not necessarily?
Ponzi Scheme: An investment "plan" which is so underfunded in real assets that only the first investors can ever hope to get their funds out. All later "investors/marks" take a big haircut unless further investors/suckers can be lured into providing more funds (see also pyramid schemes). Once all the suckers try to extract their capital the "scheme" collapses (see Madoff or the financial crisis of 2008). Thus, I'm taking mine at 62-won't get much but I'll get a little to buy more gold. The first out have the best laugh in any ponzi. Now you know the truth Mr. Accounting 101/sucker. Plan accordingly.
The solution: Work, produce or die! Survival of the most fit. Same solution as in the last 100000 years of human evolution.
For Christ's sake! Who in the hell told you Social Security was an investment plan? A pension? It was never designed to be such a thing. Go back and read the law! Today's workers support today's retirees. That's the law.
Of course you will take the money at 62. You'll take it every month until they put your worthless ass in the ground.
Uh Fool, you might want to change your screen name.
Your complete financial illiteracy is a really poor match, and why is a spoiled socialist brat on a finance blog?
But I do understand Social Security law, the Social Security treasury fund account and that Social Security was never implied to be a pension fund, again by law. Today's workers support today's retirees, just as it was designed to do.
But hey, you are the professor. I'm sure you know all about that stuff too. Perhaps you have virtual constructs on the brain.
It's all too easy.
Law? LOL!!! What does that mean in 2014?
You have a point.
...& his point came outta your ass; hence the downvote and this little message informing you of exactly what just happened...
Cheers.
It's a toss up because we all know Social Security isn't secure, yet it's hard to believe any information with "CONgressional" in the name.
Please do tell why it isn't secure. And please, no talk radio bullshit!
Because the government borrows or prints one trillion plus dollars per year to pay its bills..
Suffering and hardship for the masses--it's what's fiscally responsible!
why anyone would "believe" ANY of thses numbers-both of which are generated by different parts of the same old worn out, corrupted, controlled and manipulated federal machine, is unimaginable.
http://www.theburningplatform.com/2014/07/28/ssdi-fund-depleted-in-two-years/
Much better article, diz.
Like BurningPlatform.com
Wall Street, politicians, media tycoons, movie stars, and all the rest of the elitists are getting their money out of the system right now. The rest of the citizens will be left with IOUs and huge debts. My solution is to force the billionaires in the system to purchase 30 year 2% government bonds. Don't call it taxes because, after all, they can get their money back. Instead call it investing in the future.
So shall will warehouse or euthanize unwanted boomers.
Lead to the head or slow starvation and lack of meds for them.
Bruce,
Nothing will change until there is a crisis.
There is no will on the part of Americans or the politicians we elect to work on or even admit to these problems.
Everyone thinks everyone alse is the problem but, in aggregate we are all the problem.
It's the same with public pensions.
Being from RI where small reforms are in litigation it is interesting listening to the public sector workers repeating over and over - but, but you promised.
It is also kind of scary to see the hatred that happens when promised benefits are not forthcoming.
It's going to be the same when SS. totally hits the skids.
There are just to many of us boomers and our treasury was depleted to save the banks.
Your analysis is always appreciated though.
"There are just to many of us boomers and our treasury was depleted to save the banks."
When they passed TARP and started opening queing up the Maiden Lane SIVs I said that the whole fucking mess should be nationalized and made the property of SS.
Nothing that was bailed or bought should have been gifted or even sold back to the Oligarchy at the moment that it became profitable.
Socialist programs are going to be gutted after generations had been forced at gunpoint to pay into them while the prime monopolies are propped and protected on an even larger scale....
They should be mad at the pols and their union rep...who oversold them...
Public unions in the federal gov't do not have collective bargaining and there's a good reason for that. I don't think I need to explain what that is...
All this 'accounting' is based on the existence of the SS trust fund which is completely gone. Of course, the treasury still 'owes' $4T to SS which is part of the $18T public debt. But this is stupid because the government doesn't have the money. SS still has to compete with every other government agency to get its money back.
Even now SS is running at least $50B in the red, and the boomers haven't even started retiring en mass. Yes, when SS gets this money from treasury, it reduces the the US debt. But because they don't have the money, it is part of the deficit which is added right back to the debt. The crime is that they don't get it from taxes, they don't even borrow it, they just print it.
All this comes from Keynes who stupidly thought savings are bad for the economy, justifying the rank theft of the trust fund in the first place. Increasing payroll taxes will increase unemployment, which is worse than just printing the deficit.
It's not a trust fund! The appropriate term is a treasury fund account and that account is behaving just as the law implies. According to the law, those excess funds must be used by congress to fund general government operations. Treasury notes (much like the ones China, Germany, Japan, Russia, Warren Buffet, and the Koch brothers horde and I received from my grandmother for college) are given back to the treasury fund account to be redeemed at a later date. Again, just as the law stipulates. There is no slight of hand, nothing illegal and congress is not stealing anyone's money.
Now, before any idiot starts ranting about worthless IOU's please understand this treasury fund account and also understand the redemption of treasury notes. China and the Koch brothers will receive full value for their treasury notes and no one would expect anything less. Same goes for the Social Security treasury fund account.
Krasting works for the oligarchs. He is trying to convince you that your assets are not real. Krasting thinks you are a dumbass and can be easily manipulated. I promise you, if you give up on your assets, the people and entities Krasting carries water for will gladly take it.
will receive full value
Please elaborate. You know paying out full notional value is easy for them...
Why wouldn't the oligarchs want you to believe in the system?
Exactly. Bruce's favorite whipping boy is SS.
Some guy went to jail , a while back. Had a plan,scheme,investment that operated just like Sociable Security. Maybe it's were they got the idea.
What was his name? Scratch head...... Scratch chin....scratch ass.... Oh yeah !
Charles Ponzi
It's not an investment! Pensions are investments, Social Security is not.
What the government collects at the point of a gun is called a tax. And yes, SS is not an investment it is also not a tasty lemon bar. You keep refering to the equivalence of the bonds held by China et. al. and those held by SS. They are not the same and I think you know this. The bonds are prohibited from public sale and are valued only by the fiat of the Treasury.
And I think you know that those treasuries behave in the same exact manner as those held by China, etc. regardless if they are publicly traded or not. They all have to be redeemed. The only difference is that those treasuries in the SS treasury fund account are our assets not China's.
And if those bonds go tits up, guess what else won't be paying out either? Good luck collecting those corporate pensions.
And then we have IRA's & 401K's. Reckon those are safer than SS?
Dear Old Lady, We lost your dough. Sorry about that. Have you considered a Reverse Mortgage? Fred Thompson will hold your hand through the entire process! Please hold your breath and we'll get right back to you! BEEP...BUZZZ....CLICK.
Dear Old Lady.
The politicians who promised this lard, in return for your vote, are fucking dead. Before they died, they lived very comfortably on their government pensions and benefits.
Now some did better. They went into office with nothing, but came out millionaires. While only making $150,000 a year!
Life's hard. If you stupid, it's real hard.
John Wayne