Social Security and it's Surplus. Over 2 Trillion

Hopefully my friends on the right will grasp that SS is not broke. Does it need adjustments? Yes...we live longer, so of course it needs to be adjusted.

http://nbcpolitics.msnbc.msn.com/_ne...tion-date?lite

“The redemption of those bonds can only occur out of current income,” explained Senate Budget Committee chairman Kent Conrad last year. “The general fund has been borrowing from Social Security and we've borrowed well over $2 trillion,” he said. “That money has got to be paid back. How's it going to be paid back? It's going to be paid back by the other general expenditures of the federal government having to be reduced to make way for the payments that we're going to have to make on those bonds.”

Nice logic. Yeah, SS isn't broke, but the rest of the fucking government charged to cut spending enough to repay this debt is.

You don't have to be on the right, left or anywhere else to be smart enough to realize this is a fucked up situation.

Nice logic. Yeah, SS isn't broke, but the rest of the fucking government charged to cut spending enough to repay this debt is.

You don't have to be on the right, left or anywhere else to be smart enough to realize this is a fucked up situation. Originally Posted by Boltfan

The logic was to get you to think.Since that did not seem to work , I will try and give you a paint by number view.

If there are three huge drivers of Federal spending (SS, Medicare and Defense)...which do you think has gotten us into the huge deficit mess?

I will give you a hint, SS and Medicare are in the surplus 2 TRILLION>


If you saved 2 million dollars and the rest of your family was 14 million in debt...would you think it funny that they kept blaming you for their debt?

SS and Medicare are definitely NOT broke. There is just no money in their accounts. There's a difference, you see.

SS and Medicare are definitely NOT broke. There is just no money in their accounts. There's a difference, you see. Originally Posted by CuteOldGuy

Do you think the US will not pay its debt to these funds?

Do you understand that the three biggest costs on the Federal side as far as spending goes are SS, Medicare and Defense, yet most of even the Tea Wacko's do not want to cut Defense. The people hollering the most about spending....do not want to cut the biggest expense in our government!

And you wonder why I think human nature will beat common sense? Everybody has human nature, very few have the common sense...

Back to SS and Medicare. Your Bank does not have the money to pay its depositors if there is a run on the bank but they are not broke.This country has a huge amount of assets. We are not broke. As long as this country has the ability to pay, we are fine, as long as we maintain the trust of the rest of the world we are fine but the Banks almost broke that trust in 2008.

On the flip side...We have gutted our middle class. Our political system seems to be failing. Not the greatest of long term outlook, no matter what party has been in power, nobody has bent the spend curve. Oh we had a couple of bubbles that made it look better than it was. Does that count?

Where will the US get the money to pay it back? Our credit has been downgraded, we are about at the peak of tax revenue under our current system.

It's like getting a bonus at work, and lending it to your deadbeat brother-in-law. You got the bonus, but you will never be able to spend it.

If SS and Medicare are ever repaid, it will be with highly inflated dollars with much less purchasing power than when it was lent.

Congress and the President MUST quit spending! Yes, even on defense. Maybe especially on defense.

Why pick on Social Security? Since Social Security will be solvent until 2037, why must it be part of any fiscal overhaul now?

Rep. Xavier Becerra, D-Calif., a member of the Bowles-Simpson has accused Republicans of wanting “to raid Social Security to pay for their past failures to balance the books.” He said Social Security has “$2.6 trillion in reserves dedicated to paying the retirement, disability and survivor benefits that American taxpayers have earned” and that $2.6 trillion “doesn’t add to our deficit.”


Quote:

What's in the trust fund?
“What people sometimes forget is that when somebody my age goes to collect on their Social Security I want money, cash,” Bowles, who is 65, replied. “And I go to present that obligation to the Social Security trust fund and it doesn't have cash. What it has is the government IOUs there which are as good as gold. But the government has to go out into the marketplace and borrow the money. And so it increases the national debt.”
The gross national debt is now equal to about 100 percent of gross domestic product, the highest level since right after World War II, and it will grow as more Americans retire and collect Social Security and Medicare benefits.



The controversy hinges on the nature of the Social Security trust funds. They aren’t trust funds like wealthy investors leave for their grandchildren. So what are they?
Some people, such as Bowles, refer to one fund but there are in fact two of them: the Disability Insurance fund and the Old-Age and Survivors Insurance fund.
Most analysts look at the system’s finances as a whole and aggregate the two funds. The Social Security Administration displays all the trust fund data on its site.


Where does the excess money go?
For most of the past 30 years, since the reforms designed by the 1982 Greenspan Commission to extend Social Security’s solvency, the system has collected more in revenue from Social Security taxes on workers than it has paid out in benefits to retirees, widows, orphans, and the disabled.
The excess revenues did not go into “an ironclad lockbox where the politicians can't touch them,” as Al Gore proposed as a presidential candidate back in 2000.
As a Congressional Research Service (CRS) report explained in 2000, “Contrary to popular belief, Social Security taxes are not deposited into the Social Security trust funds ... Along with many other forms of revenues, these Social Security taxes become part of the government’s operating cash pool, or what is more commonly referred to as the U.S. treasury. In effect, once these taxes are received, they become indistinguishable from other monies the government takes in.”
But the Social Security revenues are “accounted for separately through the issuance of federal securities to the Social Security trust funds … but the trust funds themselves do not receive or hold money. They are simply accounts.”
By the end of last year, those securities, or bonds, amounted to $2.6 trillion, the number Becerra used.

The bonds earn interest. That interest — essentially paid by the federal government to itself and amounting to $117 billion last year — helps pay for the benefits.
Last year — partly due to high unemployment and the aging of the population — Social Security taxes collected (nearly $640 billion) were less than the benefits paid out (more than $701 billion). The system had a “negative net cash flow.”



Cashing in the bonds
That reversal points to the future of Social Security when the $2.6 trillion in bonds will need to be cashed in to pay the benefits promised to future retirees.
According to the latest Social Security trustees report, about 14 years from now, the interest earned on the bonds won't be sufficient to cover the annual difference between benefits and tax revenues.
At that point, the trust funds will be drawn down — the bonds will be cashed in — until the bonds are gone in 2037. If Congress does nothing before 2037, benefits would need to be cut by 22 percent to keep the system in balance.
“What often confuses people is that they see these securities as assets for the government,” the CRS report said. They aren’t really assets, but liabilities.

See Link

Where will the US get the money to pay it back? Our credit has been downgraded, we are about at the peak of tax revenue under our current system.

It's like getting a bonus at work, and lending it to your deadbeat brother-in-law. You got the bonus, but you will never be able to spend it.

If SS and Medicare are ever repaid, it will be with highly inflated dollars with much less purchasing power than when it was lent.

Congress and the President MUST quit spending! Yes, even on defense. Maybe especially on defense. Originally Posted by CuteOldGuy

I agree with you.

What I would like to get through some of these Tea Folks head is that Defense spending is what is eating up this country.

SS and Medicare are in a Surplus , yet the country as a whole is in deficit.

How can this be if not for Defense spending. It is the biggest driver of spending. If you can not get it through so called conseratives heads, how do you expect to get it through liberals heads!?

It's not just defense, every department overspends. Defense does so with a little more gusto. And I still think SS and Medicare should be state run and funded. There is no Constitutional support for those programs.

It's not just defense, every department overspends. Defense does so with a little more gusto. . Originally Posted by CuteOldGuy

It is the biggest driver. Either we need to cut Defense spending or raise taxes or both but this crap the GOP has sold folks of lower taxes and more spending has not worked out like they said!

Look, I agree there needs to be accross the board cuts....what I am trying to do is to make these so called conseratives understand where the biggest expense is coming from. They act as if SS is the problem. No Defense spending is the elephant in the room they will not discuss.

. And I still think SS and Medicare should be state run and funded. There is no Constitutional support for those programs. Originally Posted by CuteOldGuy

That may very well be but the reality is the Fed's have it now and it is running a Surplus. 2.6 TRILLION.

You ever notice when you put up actual numbers , the joe blows and whirlaway and nevergiveitathought or JD will not enter a discussion? You do know why that is don't you?

Why is that, pray tell, WTF?

(Why do I feel like Ed McMahon here?)

Why is that, pray tell, WTF?

(Why do I feel like Ed McMahon here?) Originally Posted by CuteOldGuy

LOL, I kinda miss those two!


Because they are the one's calling for cuts in Federal Spending but they do not want to cut Defense spending by any amount that will actually make a difference.


They want to cut programs that are running a surplus! But then when you start looking at those programs (Medicare) they scream "Death Panels"


So those cats want to cut Federal spending but do not want to cut Defense, Medicare or SS.

They then want to cut taxes on the rich! Reagan and Bush cut taxes on the middle class and now the Tea wacko's gripe that half the country does not pay Federal taxes (and they do not even get that right, they say "No taxes" which is a lie).

How does one reason with a person that gripes about half the country not paying taxes but wants tax cuts to stimulate the economy!?

Until Congress decides to cut spending and not merely reduce its growth we will continue on this path to financial disaster. And before anyone states it again YES that includes military spending. However it must be all spending not just military.

This illusion of the SS trust fund is nuts. The only way to redeem those treasury bonds is to borrow the money from someone else or raise revenue in the form of taxes. Raising taxes supresses economic activity which reduces tax revenue and increases tax expendatures so that is not a great option. The other options are to cut spending, which congress seems to be incapable of, or reduce benefits so that redeeming the bonds are not necessary.

I think our economy is past the point where raising taxes will harm it, or reducing taxes will help it. We borrow at such a level that tax policy is becoming more and more irrelevant. We must bring our spending in line with Constitutional limitations, the way the Constitution was meant to be read, not the ineffective, bastardized translation it has become. When we restore our Constitution, spending will come under control.It will have to. And it must be soon, if it's not to late already.