quote:

WASHINGTON – Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.

The deficits — $10 billion in 2010 and $9 billion in 2011 — won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

-http://news.yahoo.com/s/ap/20090927/ap_on_go_ot/us_social_security_early_retirements

Note the last sentence above. It illustrates that previous year's surpluses were actually spent and that they must now be repaid from the general fund thus adding to the deficit.

quote:

Originally posted by floersh:

quote:

WASHINGTON – Big job losses and a spike in early retirement claims from laid-off seniors will force Social Security to pay out more in benefits than it collects in taxes the next two years, the first time that's happened since the 1980s.

The deficits — $10 billion in 2010 and $9 billion in 2011 — won't affect payments to retirees because Social Security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit.

-http://news.yahoo.com/s/ap/20090927/ap_on_go_ot/us_social_security_early_retirements

Note the last sentence above. It illustrates that previous year's surpluses were actually spent and that they must now be repaid from the general fund thus adding to the deficit.

(sarcasm on) Yup, no one saw this coming (sarcasm off)

GRAYMAN

What do you expect when DC continually raids the SS fund?

quote:

Originally posted by Woody_in_La:
What do you expect when DC continually raids the SS fund?

The Social Security Trust fund is the epitome of borrowing against your future.

It will be interesting to see what the actual deficit is next year. I mean they can no longer cover up several billion dollars with FICA surpluses and they also have to start paying back some of those T-Bills all at the same time. Its the double whammy that so many seem so unconcerned about.

Those baby boomers sure did have the racket going. Lookie too. At the moment those bills start coming due in the form of higher taxes look who's retiring. Early no less.

ALL
R and D into the funding of SS is a maze of complex trails.
Overtly, the SS fund is indeed broke. But because it is a Law of Entitlement, and MUST be funded, the recipients are garanteed income. I am one of them, unashamedly, having paid my SS FICA since 1957.
bt
The basics are that the fund is Payroll supported, FICA funds. Now, this is currently placed in the General operating Treasure, NOT earmarked for SS, hence can be siphoned off for any use. BUT the checks must come out, monthly, so if the Treasurey does run deficits, it is extremely difficult to actually ID where and whom is owed what. A true Shell Game.
bt
Next year, SS actual income will drop. Medicare cost per month goes up, SS stays the same for the entire year, and the end result is less in the Senior pocket. Now add to that, the actual cost of Cap and Trade taxes, actual cost of prescripition drugs we must pay for, and you can see why the Old Geezers are up and confronting Congress. Last August was just a taste. When the EPA regs, FCC Level Playing field regs, and the New Heath Care bills come in, you can bet the Old Geezers will revolt.
bt
IRS folks will need to increase their unpaid staff, cause most will simply shut off the tap.
bt
Semper Fi
end

quote:

Originally posted by TennSlim:

Its a ponzi scheme no different than Bernie Maddof except that they can tax the younger generations into indentured servitude to make good on it.

If... I mean when we begin to have trouble selling our treasuries to foreign buyers (aka japan and china), the only way the trust fund could be paid back is via taxes. You'll be lucky if the younger generations don't revolt.

This is the same doom and gloom that the cons talked about in the 80's. Fact is the system just needs tweaking. It is a good program that overwhelming majority of Americans support. If you doubt that, try to take it away.

quote:

Originally posted by SenClaghorn:
If you doubt that, try to take it away.

Hey! Keep your government hands off my SS and Medicare!

quote:

Originally posted by SenClaghorn:
This is the same doom and gloom that the cons talked about in the 80's. Fact is the system just needs tweaking.

That's a load of carp. The solution (aka the tweak as you call it) was to create the trust fund and double FICA taxes not to mention alter retirement ages. Well that was done and here we are 30 years later finding out that a PONZI SCHEME can't just be tweaked. Although, I might argue that the changes made in 83 weren't a tweak as much as they were a complete overhaul. And even that wasn't sufficient.

Now that Baby Boomers bought that line of carp back in the 80's. And we can all see today how wrong they were. We would have to be complete freaking idiots to believe it again after having witnessed the lie unfold in front of our eyes.

All these PONZI schemes do is kick the bucket down the road. The baby boomers kicked it to their kids. The question is will we kick it to our kids?

quote:

Originally posted by floersh:

quote:

Originally posted by SenClaghorn:
This is the same doom and gloom that the cons talked about in the 80's. Fact is the system just needs tweaking.

That's a load of carp. The solution (aka the tweak as you call it) was to create the trust fund and double FICA taxes not to mention alter retirement ages. Well that was done and here we are 30 years later finding out that a PONZI SCHEME can't just be tweaked. Although, I might argue that the changes made in 83 weren't a tweak as much as they were a complete overhaul. And even that wasn't sufficient.

No more carp, then.

Which shall it be?

>Decrease benefits to match the revenue stream?

>Increase revenue to match the benefit payouts?

>***** about it, do nothing about it, and carry on.

quote:

Originally posted by Yooper_tj:

quote:

Originally posted by floersh:

quote:

Originally posted by SenClaghorn:
This is the same doom and gloom that the cons talked about in the 80's. Fact is the system just needs tweaking.

That's a load of carp. The solution (aka the tweak as you call it) was to create the trust fund and double FICA taxes not to mention alter retirement ages. Well that was done and here we are 30 years later finding out that a PONZI SCHEME can't just be tweaked. Although, I might argue that the changes made in 83 weren't a tweak as much as they were a complete overhaul. And even that wasn't sufficient.

No more carp, then.

Which shall it be?

>Decrease benefits to match the revenue stream?

>Increase revenue to match the benefit payouts?

>***** about it, do nothing about it, and carry on.

Let we reword those options for you so they better illustrate reality:

1) Let the scammers fend for themselves since they built the bed they now have to lie in.

2) Tax the working class into indentured servitude so that the baby boomers who have been given everything their entire lives can retire in glee on the backs of their children.

3) Bankrupt the country by denying reality for as long as possible trying to kick the can to the next set of politicians.

Seems to me the plan at the congressional level is #3. The plan for seniors is #2 and the plan for Gen X and Gen Y is probably going to be #1 when they actually get the tax bill.

But in the end seniors vote more then Gen Yers. And well the baby boom population is bigger than the next two combined. At least as far as voting is concerned. So #2 it is..

This message has been edited. Last edited by: floersh,

quote:

Originally posted by floersh:

quote:

Originally posted by SenClaghorn:
This is the same doom and gloom that the cons talked about in the 80's. Fact is the system just needs tweaking.

That's a load of carp. The solution (aka the tweak as you call it) was to create the trust fund and double FICA taxes not to mention alter retirement ages. Well that was done and here we are 30 years later finding out that a PONZI SCHEME can't just be tweaked. Although, I might argue that the changes made in 83 weren't a tweak as much as they were a complete overhaul. And even that wasn't sufficient.

Now that Baby Boomers bought that line of carp back in the 80's. And we can all see today how wrong they were. We would have to be complete freaking idiots to believe it again after having witnessed the lie unfold in front of our eyes.

All these PONZI schemes do is kick the bucket down the road. The baby boomers kicked it to their kids. The question is will we kick it to our kids?

I find it interesting that you seem to be blaming the baby boomers for this so called ponzi scheme. Interesting.

As for the changes that could be made age is the most important to ensuring the safety of the system. Their is little doubt that we are living longer, we need to work a little longer. I for one would not have a problem with that.

quote:

Originally posted by SenClaghorn:

I find it interesting that you seem to be blaming the baby boomers for this so called ponzi scheme. Interesting.

I blame them for not putting an end to it in 83 when the writing was on the wall. I blame them for spending all the surplus money for the last three decades that they were in charge of this country. I blame them for their huge deficits for the last three decades that they have been in charge. Yes..

The baby boomers as a group were more numerous then their parents or their children. They have been in power within congress for 3 decades and with the presidency for 16 years. They have no excuses.

quote:

Originally posted by SenClaghorn:
As for the changes that could be made age is the most important to ensuring the safety of the system. Their is little doubt that we are living longer, we need to work a little longer. I for one would not have a problem with that.

That's what they said the last time around in 83. And they altered the age requirements. Didn't work did it?

The problem with all ponzi schemes is simple. The payers must be more numerous then the payees. Problem is the same whether it is the baby boomers or their children. Each successive generation is having less children then the one before it. And as long as that is true then this scheme can not work over the long haul. All you can do is kick the can down the road. But eventually someone gets left holding the bag.

quote:

I blame them for not putting an end to it in 83 when the writing was on the wall.

Yes that would have made perfect sense given the courts position on corporate retirement plans and the latest collapse of the stock market.

quote:

Originally posted by SenClaghorn:

quote:

I blame them for not putting an end to it in 83 when the writing was on the wall.

Yes that would have made perfect sense given the courts position on corporate retirement plans and the latest collapse of the stock market.

So in either case you still end up broke. Big surprise? Nope! This idea that you can spend spend spend and retire wealthy is a fantasy. The only question is what generation gets left holding the bag after having propped up the generations before it?

And no offense. But at present social security is a guaranteed loss unless you live like 3 decades on it. Its not like its a good investment or anything.

This message has been edited. Last edited by: floersh,

Okay... this entire thread is based on a misconception.

Social Security is not budgeted year to year. It is run on a revenue stream by way of FICA where benefits are paid out directly from those payroll taxes that are taken in.

OASI operates at a yearly surplus of about $175 billion dollars (it takes in $175 billion more than it pays out). That surplus is drawing down - meaning it's operating at a slightly less surplus every year, and will continue to do so until about 2037 when it will finally break even (assuming no administration does anything to correct it). After 2037, social security will operate "in the red"... not before.

Most importantly, having a projected shortfall of payroll taxes of $10 billion in 2010 and $9 billion in 2011, will not even come close to running social security in the red since the projected surplus for those years will be about $164 and $158 billion dollars respectively.

http://www.ssa.gov/OACT/TRSUM/index.html

Corrections to the current draw down (so we don't run it in a deficit starting in 2037) would have to be either a 16% increase in payroll taxes (which would take the current 12.4% payroll tax and bump it up to 14.4%)... or, decrease benefits by 13%... or, a combination of the two. These actions would at least give social security an actuarial balance for the next 75 year projection.

quote:

Okay... this entire thread is based on a misconception.

Not at all ... I thought the thread was quite clear ... though a few of the comments miss the mark a bit.

What IS clear is that next year, SS cash flow is going to be negative ... and SS will need to redeem some of the Treasuries that it holds in lieu of the money Congress borrowed from the SS Trust Fund over the years. This is bad news for two reasons. First, the recession has caused us to hit (however temporarily) the tipping point earlier than projected (was 2017). Second, since we are already deficit spending, there is no ready green with which Congress can redeem the Treasuries ... wasn't in the budget ... which will cause either more debt, higher taxes, or both.

The above is what this thread is about ... not the long term solvency of SS.

quote:

Originally posted by The_Bonesaw:

I don't know:

Taken from the 2010 budget put forth by Obama


$695 billion (+4.9%) - Social Security
$453 billion (+6.6%) - Medicare
-------------
$1148 billion

minus

$940 billion - Social Security and other payroll tax

equals

$208 billion in the red.

Or am I missing something..

-http://en.wikipedia.org/wiki/2010_United_States_federal_budget

quote:

Originally posted by I_M_Qwerty:

quote:

Okay... this entire thread is based on a misconception.

Not at all ... I thought the thread was quite clear ... though a few of the comments miss the mark a bit.

What IS clear is that next year, SS cash flow is going to be negative ... and SS will need to redeem some of the Treasuries that it holds in lieu of the money Congress borrowed from the SS Trust Fund over the years. This is bad news for two reasons. First, the recession has caused us to hit (however temporarily) the tipping point earlier than projected (was 2017). Second, since we are already deficit spending, there is no ready green with which Congress can redeem the Treasuries ... wasn't in the budget ... which will cause either more debt, higher taxes, or both.

The above is what this thread is about ... not the long term solvency of SS.

correct. Although, the long term solvency is a function of the short term. All projections have failed to show what is happening next year. So how accurate could they really be?

quote:

Originally posted by SenClaghorn:
This is the same doom and gloom that the cons talked about in the 80's. Fact is the system just needs tweaking. It is a good program that overwhelming majority of Americans support. If you doubt that, try to take it away.

If you doubt it try and take it away.

You mean like if it is broke? Like those who are paying into it today will more than likely get nothing when they retire?
You mean like upping the retirement age?

You mean like the spectacular return on investment?

You mean like how when you die your SS goes with your?
“http://www.heritage.org/Research/SocialSecurity/em940.cfm

quote:

Although, the long term solvency is a function of the short term.

That is true enough, I guess ... but there are really two separate issues that are in play ...

The first issue is that 2.5 trillion that Congress has borrowed on behalf of the American people from American retirees ... and how Congress is going to redeem that debt. The choices are at least four - raise the SS tax (in which case workers are paying off Congress' debt) raise income tax rates for some/all taxpayers, cut programs to create a budget surplus, borrow.

The second issue, and it depends a bit on how the first is resolved, is how Congress and the Administration are going to put SS on a solid footing for the long term.

This message has been edited. Last edited by: I_M_Qwerty,

quote:

The choices are four -

There are more than four choices.

This message has been edited. Last edited by: SenClaghorn,

quote:

Originally posted by I_M_Qwerty:

quote:

Although, the long term solvency is a function of the short term.

That is true enough, I guess ... but there are really two separate issues that are in play ...

The first issue is that 2.5 trillion that Congress has borrowed on behalf of the American people from American retirees ... and how Congress is going to redeem that debt.

The second issue, and it depends a bit on how the first is resolved, is how Congress and the Administration are going to put SS on a solid footing for the long term.

Your right. The first issue is the big issue. But its bigger than that.

I listen to people talk of budget surpluses and deficits. But very few ever take into account the fact the budget includes the surplus from social security. It doesn't take a rocket scientist to see that Bush would have less surplus then Clinton and the Obama is going to have less surplus then Bush. And at some point (apparently next year) they will have no surplus.

The trust fund is a mirage much like Enron. Fancy budget tricks at best. Ultimately a T-Bill can only be paid back via tax revenue or more borrowing. But whats worse is that it has allowed congresses for decades to drive government spending up without actually raising taxes. Spending that can not be sustained without that surplus. A surplus that everyone has known since it was created would not be around for ever.

Now next year we need to start redeeming our T-Bills to cover costs. At a time that our borrowing is already through the roof just to cover normal spending not covered by the non-existent surplus.

Its a double wammy.

quote:

Originally posted by floersh:

quote:

Originally posted by I_M_Qwerty:

quote:

Although, the long term solvency is a function of the short term.

That is true enough, I guess ... but there are really two separate issues that are in play ...

The first issue is that 2.5 trillion that Congress has borrowed on behalf of the American people from American retirees ... and how Congress is going to redeem that debt.

The second issue, and it depends a bit on how the first is resolved, is how Congress and the Administration are going to put SS on a solid footing for the long term.

Your right. The first issue is the big issue. But its bigger than that.

I listen to people talk of budget surpluses and deficits. But very few ever take into account the fact the budget includes the surplus from social security. It doesn't take a rocket scientist to see that Bush would have less surplus then Clinton and the Obama is going to have less surplus then Bush. And at some point (apparently next year) they will have no surplus.

The trust fund is a mirage much like Enron. Fancy budget tricks at best. Ultimately a T-Bill can only be paid back via tax revenue or more borrowing. But whats worse is that it has allowed congresses for decades to drive government spending up without actually raising taxes. Spending that can not be sustained without that surplus. A surplus that everyone has known since it was created would not be around for ever.

Now next year we need to start redeeming our T-Bills to cover costs. At a time that our borrowing is already through the roof just to cover normal spending not covered by the non-existent surplus.

Its a double wammy.

You think that is a big issue, take a look at this one:

[http://www.alz.org/news_and_events_16243.asp

It kind of makes the SS debate seem insignificant.

quote:

Originally posted by floersh:

quote:

Originally posted by The_Bonesaw:

I don't know:

Taken from the 2010 budget put forth by Obama


$695 billion (+4.9%) - Social Security
$453 billion (+6.6%) - Medicare
-------------
$1148 billion

minus

$940 billion - Social Security and other payroll tax

equals

$208 billion in the red.

Or am I missing something..

-http://en.wikipedia.org/wiki/2010_United_States_federal_budget

Yes, you are...

What is listed in the 2010 federal budget has nothing to do with what is actually paid out in benefits. The payroll taxes listed have not actually been earned or spent. The government (individual administrations) can list whatever it wants in the budget and then claim a surplus for it later on in order to make political hay (which is what they often do).

SOCIAL SECURITY BENEFITS ARE NOT DIRECTLY FUNDED BY THE BUDGET... how many times do I have to tell people this before it sinks in? Social Security is a system based on the number of beneficiaries vs. contributors.

In 2008, the U.S. took in 1.2 trillion in payroll taxes to fund Social Security, Medicare (the whole schmeer)... but paid out only $1.0 trillion in benefits (leaving itself $200 billion to the good). The estimates for the 2010 budget are just that (estimates). And in the case of Social Security, it's a way for administrations to play with the numbers of their budget for political purposes.

In 2010, payroll taxes will still outstrip benefit payments my more than $160 billion, in 2011, by more than $155 billion and so on until somewhere around 2037 when the payroll taxes will no longer be enough to fully fund benefits because that's when population growth will have stalled long enough for there to be more beneficiaries than contributors.

The fact is - the 2010 budget can claim to estimate 920 billion in payroll taxes, but it will still take in close to $1.2 trillion the next two years (minus the projected $10 and $9 billion dollar shortfall because of the economy). Even with that projected shortfall, beneficiaries have significantly increased to cause social security to go into the red.

What you are going to see (in the next year or two) is the Obama administration is going to come out and say - "Hey, we're running a surplus with social security, people! We projected an outlay of $1.1 trillion with only $0.9 trillion in receipts, but then ran Social Security for about $100 billion less than we said it would cost while taking in almost $300 billion more than we said we would. Aren't we awesome?!? Vote for us!!!"

quote:

Originally posted by SenClaghorn:
You think that is a big issue, take a look at this one:

[http://www.alz.org/news_and_events_16243.asp

It kind of makes the SS debate seem insignificant.

Well I'll be perfectly honest. I didn't read the whole thing. Either way its off topic a bit. And it certainly doesn't lend any credibility to the idea that social security can be saved.

quote:

Originally posted by The_Bonesaw:

In 2010, payroll taxes will still outstrip benefit payments my more than $160 billion, in 2011, by more than $155 billion and so on until somewhere around 2037 when the payroll taxes will no longer be enough to fully fund benefits because that's when population growth will have stalled long enough for there to be more beneficiaries than contributors.

But that's exactly what the opening articles contends is untrue. Think of it this way. If payroll taxes were $1.2 trillion in 2008 what do you think they'll be in 2010 after having near 10% unemployment not to mention the underemployed? Just like all other government revenue, payroll taxes are going to fall.

This article outlines what it has found to be reality based on current revenue income.

We WERE taking in surplus and it wasn't supposed to change until 2037 or whatever. Note Medicare was going to run in the red far earlier. But the reality on the ground resultant from this recession and the mass unemployment have changed things.

Your right the budget numbers are estimates. And in most years the income is an under estimate and the outflow is over estimated. But don't count on that happening in 2010 and 2011 as the current tax revenue does not suggest it can.

quote:

Originally posted by floersh:

quote:

Originally posted by The_Bonesaw:

In 2010, payroll taxes will still outstrip benefit payments my more than $160 billion, in 2011, by more than $155 billion and so on until somewhere around 2037 when the payroll taxes will no longer be enough to fully fund benefits because that's when population growth will have stalled long enough for there to be more beneficiaries than contributors.

But that's exactly what the opening articles contends is untrue. Think of it this way. If payroll taxes were $1.2 trillion in 2008 what do you think they'll be in 2010 after having near 10% unemployment not to mention the underemployed? Just like all other government revenue, payroll taxes are going to fall.

This article outlines what it has found to be reality based on current revenue income.

We WERE taking in surplus and it wasn't supposed to change until 2037 or whatever. Note Medicare was going to run in the red far earlier. But the reality on the ground resultant from this recession and the mass unemployment have changed things.

Your right the budget numbers are estimates. And in most years the income is an under estimate and the outflow is over estimated. But don't count on that happening in 2010 and 2011 as the current tax revenue does not suggest it can.

Bonesaw either hasn't read the article ... or has misunderstood it. He is correct that SS is technically solvent til 2037 ... but wrong that payroll taxes will outstrip benefit payments until then. The tipping point at which benefits outstrip payroll taxes, forcing reliance on the Treasuries held in the trust fund ... was according to the article, 2016 (I'd always heard 2017 but what's a year). However, if the article is correct, benefits will outstrip payroll taxes for the next two years.

quote:

Originally posted by I_M_Qwerty:

Bonesaw either hasn't read the article ... or has misunderstood it. He is correct that SS is technically solvent til 2037 ... but wrong that payroll taxes will outstrip benefit payments until then. The tipping point at which benefits outstrip payroll taxes, forcing reliance on the Treasuries held in the trust fund ... was according to the article, 2016 (I'd always heard 2017 but what's a year). However, if the article is correct, benefits will outstrip payroll taxes for the next two years.

Well, the article was in reference to Social Security (as a sole entity). I wasn't including Medicare except as an example of how much the overall system takes in. Medicare and Medicaid already operate in the red (but not by much). However, nothing currently proposed is going to fix this so the problem will get worse and put a greater burden on the overall system is something isn't done.

Using the title of this thread - I was only referring to Social Security (that portion taken in for the purposes of it alone compared to the benefits paid out for it alone), which is where I got the 2037 number (that came straight from the Social Security office's own reporting.

I did read the article, and I did understand it. I also dismissed it as having a high probability of being in error since the writer was completely wrong on the issue when he claimed that Social Security is already dipping into the "Trust Fund", which will be depleted by 2037 according to him. According to Social Security, the "Trust Fund" will not need to be touched in order to supplement the system UNTIL 2037 (by then it will have more than doubled).

My take on that huge error is that, since the author of this article apparently doesn't have a clue what he's talking about to begin with, he probably completely misunderstood the CBO's report in the first place.

quote:

Originally posted by I_M_Qwerty:
He is correct that SS is was technically estimated to be solvent til 2037

Sorry just needed to patch that up a bit.