Social Security tipping over into the red

posted at 1:28 pm on February 4, 2010 by Ed Morrissey

Last month, we noted that Social Security had delivered its worst performance in decades.  Now, Allen Sloan warns investors at Yahoo Finance that the entire program has gone into the red — and will stay there.  Get ready, Sloan says, for the mother of all bailouts:

Don’t look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.

A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.

Instead of helping to finance the rest of the government, as it has done for decades, our nation’s biggest social program needs help from the Treasury to keep benefit checks from bouncing — in other words, a taxpayer bailout.

The only event that might keep this from being the very next bailout would be a faster-than-expected collapse at FHA, which has followed the Fannie Mae/Freddie Mac strategy of buying marginal paper and securitizing it through MBSs.  Otherwise, we’re already beginning to bail out SSA, thanks to a generation-long bailout of the federal government by the SSA in the other direction.

Technically, the fund should receive $120 billion in interest payments from the Treasury, which owes SSA for decades of skim repaid only in IOUs.  However, the interest itself will only be paid in IOUs.  Sloan explains the problem:

The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).

This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.

Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn’t provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance.

Just to make clear, that $92 billion surplus includes the nonexistent interest payments from Treasury.  The fund will go into the red for $28 billion, meaning that we will have our first cash-negative year ever in SSA.  It won’t be the last, either.

The crisis in SocSec was supposed to arrive in 2019, according to the CBO in 2008.  Who came up with that figure?  Peter Orszag, the same man who missed the 10-year deficit projection by over $2.2 trillion in the spring of 2009, and who now runs the Office of Management and Budget.  Democrats used that figure, as well as others produced by various sources in the years preceding that analysis, to argue against Social Security reform, and to paint Republicans who warned that the crisis was a lot closer as Chicken Littles or grubby politicians who just wanted to get their hands on Grandma’s Social Security check.

Steve at No Runny Eggs looks at the recalculated projections:

Between this fiscal year and FY2019, instead of a cumulative Social Security primary deficit of $100 billion, we’ll have a cumulative Social Security primary deficit of $157 billion. That is, of course, we actually do get all the economic and tax growth that the CBO seems to hope we will. If we don’t, the chart I put together back in September showing just how easy it was to turn the CBO’s hope into red ink as far as the eye can see will be rosy.

That also doesn’t include Obama’s plan for a second round of $250 checks to every Social Security recipient. That is a drag of another $13 billion on this year, which would make this year’s cash deficit somewhere around $51 billion.

This means that the federal government not only can’t rely on SocSec surpluses, which have been used to paper over budget deficits, it will have to increase the federal deficit to make benefit payments from now on.  George Bush and the GOP saw this coming, while Democrats like Orszag insisted that we had nothing to worry about.  Even if we had a federal government living within its means, this would be a crisis — but with the debt that Obama is accumulating, it’s a fiscal tsunami waiting to crest.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Comment pages: 1 2 3

Anyways, like investing in government Treasuries is a good idea like the SocSec funds are currently?

WashJeff on February 4, 2010 at 2:05 PM

If the govt is so unstable & corrupt, then NO investment, other than a gun & ammmo, are going to be of any use to ANYONE.

Badger40 on February 4, 2010 at 2:09 PM

Knucklehead on February 4, 2010 at 1:58 PM

To be fair, Toyota doesn’t want you driving some Toyotas just now.

And there is supposed to be another scandal coming. And the Prius, great as it is in some ways, had significant problems from day one. I was surprised that they haven’t had a scandal before this.

IlikedAUH2O on February 4, 2010 at 2:09 PM

The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010. The second is $92 billion, the overall Social Security surplus for fiscal 2010.

OK, I’m no financial wizard, so maybe I’m not understanding the terms here. The trust fund will earn $120 billion. Why is that being subtracted from the surplus instead of added?

Obviously I’m missing something.

taznar on February 4, 2010 at 2:10 PM

–And if we had “invested” Social Security funds in the stock market as was proposed under Bush’s plan, things would probably have been significantly worse than they now are.

Jimbo3 on February 4, 2010 at 2:03 PM

Impossible to know, but likely not correct. Markets are cyclical, and yes, the decline of the last year or so may have occured anyway, but with SS amounts going into the market instead of the govt black hole?

Market would’ve declined less. Would’ve recovered quicker. Economy would be much stronger with that money circulating as capital for businesses to use rather than being wasted by the govt. Defecits would be lower as businesses and individuals are paying in more taxes because they’re making more money. Etc.

Midas on February 4, 2010 at 2:12 PM

OK, I’m no financial wizard, so maybe I’m not understanding the terms here. The trust fund will earn $120 billion. Why is that being subtracted from the surplus instead of added?

Obviously I’m missing something.

taznar on February 4, 2010 at 2:10 PM

Who is paying the interest? I think the interest is simply on IOUs to the Federal Government.

zmdavid on February 4, 2010 at 2:13 PM

Badger40 on February 4, 2010 at 2:09 PM

Gold, silver, copper, oil, would be better, but everything will take a hit since demand will shrink as teh economy of the world adjust to the new reality.

WashJeff on February 4, 2010 at 2:14 PM

The best they could do is simply freeze all benefits for a decade, and all federal pay, and all federal benefits, and all retirement payouts, and all social spending…All frozen.

No new spending…and every line of the budget reviewed to remove all pork…force the congress to vote on every line..No vote, no money.

JIMV on February 4, 2010 at 1:55 PM

And start raising the retirement age, and the years worked for full government pension.

The steps could have been less dramatic, 10 years ago, but the Democrats convinced their f’ing (Rahm)ed voters to not worry, be happy.

Tomorrow is now.

MNHawk on February 4, 2010 at 2:15 PM

OK, maybe I finally got it. The Trust will have $92 billion left at the end of the year, after having earned $120 billion in interest. So what was the balance in the Trust at the beginning of the year? Higher or lower than $92 billion?

taznar on February 4, 2010 at 2:15 PM

WashJeff on February 4, 2010 at 2:14 PM

I’m getting more cynical & pessimistic everyday.
Unless the goold, silver, copper, & oil were in crates in my backyard, I still wouldn’t feel safe enough.

Badger40 on February 4, 2010 at 2:15 PM

Because when you get down to it, this gist of this entire thread is not government bailing out social security, but government bailing out government. Social security is government. Pension obligations are government.

So who’s left to bail out government?

MNHawk on February 4, 2010 at 2:17 PM

Taznar:

You are missing something. The interest “earned” is monopoly money — it’s an IOU from Treasury. That is, it’s the left hand promising the right hand money. Remove the $120 bn from $92 bn and the imaginary “surplus” vanishes, replaced by a deficit.

NYCcon on February 4, 2010 at 2:18 PM

If the govt is so unstable & corrupt, then NO investment, other than a gun & ammmo, are going to be of any use to ANYONE.

Badger40 on February 4, 2010 at 2:09 PM

QOTD!

RepubChica on February 4, 2010 at 2:18 PM

Obviously I’m missing something.

taznar on February 4, 2010 at 2:10 PM

When SocSec loans $120B to the general fund, what you basically have is the government loaning money to itself. So where does the general fund get the extra money for interest to pay back SocSec? Taxes.

So what is the difference if the money comes from income taxes or payroll taxes? There is none.

Think in your head if wife loaned her husband extra money and demanded interest in the repayment. Where does this “interest” come from when you view the couple as one entity? Did the couple come into new money because the wife charged her husband interest?

WashJeff on February 4, 2010 at 2:18 PM

Why do I now have this feeling, that this destruction by the Dems has been going on long before Obama took his throne. I also have a feeling it’s now going to be a race. Between Obama, annointing himself King for life, or the November elections.

If this destruction of our economy, and growing debt continue, we’re not going to survive to November, are we?

capejasmine on February 4, 2010 at 2:18 PM

Bring on the bouncing SS checks! Oh, it will be so sweet! The Dems have been buying votes with government largess for decades and now the bills are coming due chickens have come home to roost.

Kafir on February 4, 2010 at 2:19 PM

But I am told by my Leftist superiors that anyone that calls for SS reform, and those that opposed it from the beginning, are redneck, backwards, ignorant, and probably racist.

Sigh.

visions on February 4, 2010 at 2:20 PM

I think I got it, in the next paragraph,

This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.

So if you ignore the interest (much of it government IOUs), then its a loss. If you count the interest (including the IOUs), it isn’t a loss.

taznar on February 4, 2010 at 2:20 PM

Gold, silver, copper, oil, would be better, but everything will take a hit since demand will shrink as teh economy of the world adjust to the new reality.

WashJeff on February 4, 2010 at 2:14 PM

Gold and Silver are already taking a hit. Kitco has gold down $50 for the day already. Silver is a buck down and platinum is off $72. Overall a really poopy day for the market.

Johnnyreb on February 4, 2010 at 2:20 PM

I’m getting more cynical & pessimistic everyday.

Badger40 on February 4, 2010 at 2:15 PM

It is getting tough to stay opptimistic. Reading those Harrisburg, PA bankruptcy stories on Drudge this morning did not help. My state if IL is bad bad shape. Who is going to move to my state to create demand for houses ten years from now?

WashJeff on February 4, 2010 at 2:21 PM

This is why there is a SS lock-box, right?

tarpon on February 4, 2010 at 2:21 PM

And if we had “invested” Social Security funds in the stock market as was proposed under Bush’s plan, things would probably have been significantly worse than they now are.

Jimbo3 on February 4, 2010 at 2:03 PM

Or maybe we could just let people keep their money and decide for themselves how to invest or save to fund their golden years. That might work

DarkCurrent on February 4, 2010 at 2:21 PM

Remember Bush’s SOTU speech in 2004 when he mentioned that SS reform had been blocked and the Democrats, led by fat assed Teddy Kennedy got up and cheered?

Wonder if their cheering now? That slice of video would be priceless this election season.

GarandFan on February 4, 2010 at 2:23 PM

Gold and Silver are already taking a hit. Kitco has gold down $50 for the day already. Silver is a buck down and platinum is off $72. Overall a really poopy day for the market.

Johnnyreb on February 4, 2010 at 2:20 PM

Indeed. I wish I knew more what to do; my gut says to yoink all my IRA and 401k monies out of the market for awhile. Ah, the eternal anxiety-causing question. lol

Midas on February 4, 2010 at 2:23 PM

I wish I could remember the names of the various liberals that I debated back in 2005 who told me over and over again that SocSec was basically sound, and only small tweaks would be needed to keep it in the black forever.

MarkTheGreat on February 4, 2010 at 2:23 PM

We are 10 feet from the edge of the cliff and the vehicle has no brakes!!!

Robbya on February 4, 2010 at 1:31 PM

It’s a Prius?

MarkTheGreat on February 4, 2010 at 2:24 PM

Or maybe we could just let people keep their money and decide for themselves how to invest or save to fund their golden years. That might work

DarkCurrent on February 4, 2010 at 2:21 PM

Liberty is not allowed under the Progressive ideology that has taken over the Democratic party. Any other ideas?

visions on February 4, 2010 at 2:24 PM

OK, maybe I finally got it. The Trust will have $92 billion left at the end of the year, after having earned $120 billion in interest. So what was the balance in the Trust at the beginning of the year? Higher or lower than $92 billion?

taznar on February 4, 2010 at 2:15 PM

Social Security is owed huge sums by the federal government. They have been running a surplus for the last 25 years. The budget deficits for the last 25 years were understated because of the surplus which will theoretically need to be paid back now that SS is in the red. I doubt they can pay it back though.

zmdavid on February 4, 2010 at 2:25 PM

Lets let the government run health care too. /s

tommer74 on February 4, 2010 at 2:25 PM

Any other ideas?

visions on February 4, 2010 at 2:24 PM

Absolute enslavement and Malthusian population control?

daesleeper on February 4, 2010 at 2:26 PM

Somewhere, sometime, some politician is going to (inevitably) sacrific his or her career and make sweeping Social Security reform, resulting in drastic, drastic cuts to beneficiaries. It won’t be pretty, but it will be necessary.

Abby Adams on February 4, 2010 at 1:44 PM

Means testing – plan on it.

Vashta.Nerada on February 4, 2010 at 2:26 PM

Have some fun with this:

FDR FIRESIDE CHAT — June 28, 1934

Later in the year I hope to talk with you more fully about these plans. A few timid people, who fear progress, will try to give you new and strange names for what we are doing. Sometimes they will call it “Fascism”, sometimes “Communism”, sometimes “Regimentation”, sometimes “Socialism”. But, in so doing, they are trying to make very complex and theoretical something that is really very simple and very practical.

WashJeff on February 4, 2010 at 2:26 PM

–And if we had “invested” Social Security funds in the stock market as was proposed under Bush’s plan, things would probably have been significantly worse than they now are.

Jimbo3 on February 4, 2010 at 2:03 PM

Perhaps you are correct in that regard, but there is one major difference. The type of investments Bush was advocating were close to no risk CDs which probably would have lost the value in the short term, but when you are planning for your retirement you don’t think like that. Everything would have been regained when a recovery began.

With Social Security the way it is now we will never be in the black again. Why people think the government can spend my money better than I can I will never know.

txaggie on February 4, 2010 at 2:27 PM

It’s a Prius?

MarkTheGreat on February 4, 2010 at 2:24 PM

Heh!

WashJeff on February 4, 2010 at 2:27 PM

Second look at Dennis Kucinich and his plan to push more sixty year olds into retirement, making room for cheaper folks to take their place, and ‘solve’ the unemployment problem.

Vashta.Nerada on February 4, 2010 at 2:27 PM

I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.

– Thomas Jefferson

WashJeff on February 4, 2010 at 2:28 PM

Keep chucking that ficken Obama.

MarkTheGreat on February 4, 2010 at 2:29 PM

And if we had “invested” Social Security funds in the stock market as was proposed under Bush’s plan, things would probably have been significantly worse than they now are.

Jimbo3 on February 4, 2010 at 2:03 PM

My portfolio entails more risk than the Bush plan, and it is back in the green as of January. That is certainly better than social security is now, considering that it is facing bankruptcy.

Vashta.Nerada on February 4, 2010 at 2:30 PM

I wish I could remember the names of the various liberals that I debated back in 2005 who told me over and over again that SocSec was basically sound…

MarkTheGreat on February 4, 2010 at 2:23 PM

I know those guys. They are Imbecile, Know-it-All, Dumbass and Shite-for-Brains.

RepubChica on February 4, 2010 at 2:31 PM

Vashta.Nerada on February 4, 2010 at 2:30 PM

Don’t go on drudge report today then, not looking good…

gator70 on February 4, 2010 at 2:33 PM

So who’s left to bail out government?

MNHawk on February 4, 2010 at 2:17 PM

Underwear gnomes

ya2daup on February 4, 2010 at 2:34 PM

not looking good…

gator70 on February 4, 2010 at 2:33 PM

A good piece of advice: Never buy a stock unless you plan to hold it at least five years.

Vashta.Nerada on February 4, 2010 at 2:35 PM

Stop with this stock market crap. Being in the stock market would not be required of anyone. An option for a low interest CD type of account would have been available to anyone.

Anyways, like investing in government Treasuries is a good idea like the SocSec funds are currently?

WashJeff on February 4, 2010 at 2:05 PM

Even with the recent problems, investing in the stock market would have left you more money than SS is going to be able to pay out.

MarkTheGreat on February 4, 2010 at 2:36 PM

Knucklehead on February 4, 2010 at 2:10 PM

just imagine what msdnc would sayt if the (r)s did that to dear leader…holy cow

cmsinaz on February 4, 2010 at 2:39 PM

Vashta.Nerada on February 4, 2010 at 2:27 PM

(Yawn.) Early retirement to drive down unemployment, you say.

Just the latest example of a government ponzi scheme that doesn’t work. They never do in the long run.

But ya’ll knew that.

IlikedAUH2O on February 4, 2010 at 2:39 PM

OK, I’m no financial wizard, so maybe I’m not understanding the terms here. The trust fund will earn $120 billion. Why is that being subtracted from the surplus instead of added?

Obviously I’m missing something.

taznar on February 4, 2010 at 2:10 PM

The reason we are having the deficits even though there is a profit is because the government takes the profits from Social Security and spends it on other bills. Here is a video that explains it better than I can.

If we would have saved every penny since Social Security began and put it in an interest bearing “lockbox” we most likely wouldn’t even have a problem. The problem is that both sides of the aisle like spending money and its the peons like us that get squeezed.

If you have time I HIGHLY suggest the documentary IOUSA. It came out a few years ago and things have only gotten worse. If you are in need of a good buzzkill this movie will give it to you. It is funny though that the Democrats in the movie are railing against the Bush deficits.

txaggie on February 4, 2010 at 2:39 PM

Even with the recent problems, investing in the stock market would have left you more money than SS is going to be able to pay out.

MarkTheGreat on February 4, 2010 at 2:36 PM

I agree. My own portfolio is evidence of such a claim.

But the stock market is not for all. Not much gets me angry on these threads, but that issue does. No one would have been forced into the stock market. I would guess if Bush created a bill, there would have been a wealth\income threshold before you could start putting money into the market (not making a statement that I support this limitation).

WashJeff on February 4, 2010 at 2:40 PM

GarandFan on February 4, 2010 at 2:23 PM

you can find it on page 1 of this thread

cmsinaz on February 4, 2010 at 2:40 PM

The steps could have been less dramatic, 10 years ago, but the Democrats convinced their f’ing (Rahm)ed voters to not worry, be happy.

Tomorrow is now.

MNHawk on February 4, 2010 at 2:15 PM

Back in the 1980′s, when the last of the SS tax increases went into affect, some friends and I were writting every congresscritter we could get an address for, urging them to start raising the SS retirement age by 1 month per year.

If such a plan had been started then, SS would still be solidly in the black, even with the current bad economy.

Some Republicans were interested, the Democrats, to a man told us not to worry because SS had just been rescued and it would never need another fix.

MarkTheGreat on February 4, 2010 at 2:41 PM

So who’s left to bail out government?

MNHawk on February 4, 2010 at 2:17 PM

The taxpayer.

MarkTheGreat on February 4, 2010 at 2:41 PM

Vashta.Nerada on February 4, 2010 at 2:35 PM

With this whole situation, just not buying a stock may be a good idea. Except maybe a new stock for an AR-15…

IlikedAUH2O on February 4, 2010 at 2:42 PM

–And if we had “invested” Social Security funds in the stock market as was proposed under Bush’s plan, things would probably have been significantly worse than they now are.

Jimbo3 on February 4, 2010 at 2:03 PM

That was always the risk which is why the proposal was to put just a portion of SS into the market, not the whole thing.

BTW I just got my 401k statement in the mail and to my utter amazement, as bad as 2008 and 2009 were from an investment perspective, my 1 year (2009) rate of return was 27%!! It was the best investment year I’ve had in ages!

glennbo on February 4, 2010 at 2:46 PM

If we would have saved every penny since Social Security began and put it in an interest bearing “lockbox” we most likely wouldn’t even have a problem. The problem is that both sides of the aisle like spending money and its the peons like us that get squeezed.

txaggie on February 4, 2010 at 2:39 PM

The lockbox idea wouldn’t have made any difference because the interest would still be owed by the government. They would have had to report much higher budget deficits and that might have helped limit spending some, but there wouldn’t actually have been any more money to spend.

zmdavid on February 4, 2010 at 2:46 PM

Great job FDR ! This is like some sort to computer virus that isn’t activated until years down the road.

You folks who are 60+? You’re going to taste pretty good when we decide to start limiting SS.

BowHuntingTexas on February 4, 2010 at 2:49 PM

I think some here are missing a very large point. Social Security surpluses have been financing a significant portion of the Fed expansion for the last 25 years. They were a “stealth” tax that we were promised was being “put away” and guaranteed by the US government for our retirement. Now that there are no surpluses, the money to finance anything new, or just a continuation of current spending levels for the Fed has to come from new taxes, and those taxes will be significant. I suspect a VAT will be making an appearance soon.

Johnnyreb on February 4, 2010 at 2:51 PM

I blame George W Bush.

bitsy on February 4, 2010 at 2:52 PM

zmdavid on February 4, 2010 at 2:46 PM

That is true. I was under the idiotic assumption that the government would have put the money in a bank. Man, what was in that sandwich?

txaggie on February 4, 2010 at 2:52 PM

The taxpayer.

MarkTheGreat on February 4, 2010 at 2:41 PM

Good luck with that. As of right now, every tax we pay, would have to be upped by 50%, just to keep up with spending. Nevermind the economy crashing if that happens. Nevermind that next year, tax rates would have to go up again, as fewer yet working people are supporting more yet retired people.

The bubble is popping. The first little pop was a couple of years ago, when that California city declared bankruptcy, to get away from pension obligations.

Inflation (and more than 10% a year) is inevitable.

MNHawk on February 4, 2010 at 2:59 PM

I think some here are missing a very large point. Social Security surpluses have been financing a significant portion of the Fed expansion for the last 25 years. They were a “stealth” tax that we were promised was being “put away” and guaranteed by the US government for our retirement. Now that there are no surpluses, the money to finance anything new, or just a continuation of current spending levels for the Fed has to come from new taxes, and those taxes will be significant. I suspect a VAT will be making an appearance soon.

Johnnyreb on February 4, 2010 at 2:51 PM

Yep. The money I paid into SS for myself and employees all those years got whisked away, never to be seen again. Now, the butcher’s bill comes due.

a capella on February 4, 2010 at 3:02 PM

In a related story, many illegal aliens, like Hussein’s Aunt Zeituni receive SS, thus contributing to it’s bloated demise.

BTW She’s in a “secret hearing” today in Boston trying to get “asylum”. She still lives on the dole, getting welfare, food stamps, free health insurance and lives (like Obama) in public housing, on Flaherty Way in Southie if anyone is interested in standing outside her door to protest.

And Michael Graham says she donated donated $260 to Barry’s campaign for president – which is also against the law because she’s not a U.S. citizen. Didn’t Obama make a stink about foreigners money influencing U.S. elections in his SOTU</strike> Blame Bush speech?

Alden Pyle on February 4, 2010 at 3:02 PM

Stop with this stock market crap. Being in the stock market would not be required of anyone. An option for a low interest CD type of account would have been available to anyone.

Anyways, like investing in government Treasuries is a good idea like the SocSec funds are currently?

WashJeff on February 4, 2010 at 2:05 PM

—Here’s the way it was described:

How would individual accounts work? The accounts would be modeled on the Thrift Savings Plan — a 401-k type program that is already available to government employees — and centrally administered by the government.

Workers would have a choice of five broadly diversified index funds and a lifecycle fund, in which the portfolio grows more conservative as the investor nears retirement.

“We will make sure there are good options to protect your investments from sudden market swings on the eve of your retirement,” the president said in his speech.
Specifically, when a worker turns 47 the account will automatically be invested in the lifecycle fund unless the worker and his or her spouse sign a waiver opting out.

In terms of fees, the Social Security Administration estimates the administrative cost per account will be 0.3 percentage points.

Money in the accounts could not be taken out or borrowed before retirement. At retirement, it’s likely workers would have to annuitize a portion and only take out a lump sum if doing so would not result in the worker moving below the poverty line. Any unused portion of the account could be left to heirs.

Jimbo3 on February 4, 2010 at 3:04 PM

Hey, I know! Let’s have these guys run our healthcare system too.

bitsy on February 4, 2010 at 3:08 PM

Has Anybody heard about the Far-left National Socialist Democrats wanting to seize people’s 401k’s to prop up Soc Sec?

Chainsaw56 on February 4, 2010 at 3:09 PM

Gee, I’m sure glad I was forced to pay into this boondoggle for the last 35 years and haven’t touched a dime of it and won’t be able to for another 7 years at the very least, should it (or I) even be around then. And there have been several articles lately blaming old people for causing this mess when they’re the ones who paid for it all these years. How is it their fault that the government screwed it up beyond repair? How is it their fault the government couldn’t come up with a way to avoid this problem in the almost 50 years it’s been in existence? I know, they’ll blame Bush, but he tried to warn them about this, repeatedly.

scalleywag on February 4, 2010 at 3:14 PM

WashJeff on February 4, 2010 at 2:26 PM

For the little old lady who told that the only reason I vote Republican was that I hadn’t lived through the Great Depression: The gravy train’s comin’ to an end, grandma! Tell me how my Republican azz tastes when you pull the lever for an R because your SS check bounced.

Kafir on February 4, 2010 at 3:16 PM

Of course the democrats will blame Boooooooooooooooosh!

darwin on February 4, 2010 at 3:18 PM

Jimbo3 on February 4, 2010 at 3:04 PM

It just seems to get messier the longer the government is involved in individual’s lives, doesn’t it? Maybe there’s a clue in there somewhere…

DarkCurrent on February 4, 2010 at 3:18 PM

The gravy train’s comin’ to an end, grandma! Tell me how my Republican azz tastes when you pull the lever for an R because your SS check bounced.

Kafir on February 4, 2010 at 3:16 PM

How in the world do you call this a gravy train? People like me have paid into the system for almost 35 years now, not by choice, mind you, but as a required tax. That’s no government handout, to say it is is ridiculous and insulting.

scalleywag on February 4, 2010 at 3:22 PM

And there have been several articles lately blaming old people for causing this mess when they’re the ones who paid for it all these years. scalleywag on February 4, 2010 at 3:14 PM

Got a few blamers on HA. I don’t fault them. I felt the same at their age. I suspect 40 years of paying into a forced program may leave them feeling a bit differently at the end, if we last that long.

a capella on February 4, 2010 at 3:28 PM

Jimbo3 on February 4, 2010 at 3:04 PM

That was a description of a plan that was never ever put into the form of a bill…too much resistence. Do you not think that choice would have been offered to assuage the concerns of people like you that might fear the market even at a young age?

My 401(k) has life cycle funds. I can choose to act like I am near retirement and choose the conservative one if I want to. It figures SocSec reform would have provided choice.

If I was was executive and legislature of this country, and I could not get rid of the income tax, I would implement a deduction up to 20K of savings per year. This would replace IRA, 401k, 529, etc. Encourage people to save. Regarding SocSec, I would create a 50 year phase out program. Anyone under 30 would NOT get socsec and have lower taxes. Anyone could voluntarily opt out in return for lower taxes (no benefits).

WashJeff on February 4, 2010 at 3:32 PM

Has Anybody heard about the Far-left National Socialist Democrats wanting to seize people’s 401k’s to prop up Soc Sec?

Chainsaw56 on February 4, 2010 at 3:09 PM

–It was a request by the Treasury for suggestions on how to make distributions from 401(k) plans and employer plans more secure, such as by using annuities instead of lump sum payments. But all company pension plans already have a joint and survivior annuity as the default option, so it really doesn’t apply to most employer plans.

Jimbo3 on February 4, 2010 at 3:33 PM

How in the world do you call this a gravy train? People like me have paid into the system for almost 35 years now, not by choice, mind you, but as a required tax. That’s no government handout, to say it is is ridiculous and insulting.

scalleywag on February 4, 2010 at 3:22 PM

It’s not insulting, it’s reality. You (as in your generation) did not pay into the system, what you’re now going to take out. Just as your parents did not pay, what they took out.

It’s called a pyramid scheme. It’s used to buy the votes of the gullible, at the expense of their grandchildren. It worked.

MNHawk on February 4, 2010 at 3:34 PM

http://www.youtube.com/watch?v=6mqSXsNJzRM

Ben Hur on February 4, 2010 at 3:35 PM

That was a description of a plan that was never ever put into the form of a bill…too much resistence. Do you not think that choice would have been offered to assuage the concerns of people like you that might fear the market even at a young age?

My 401(k) has life cycle funds. I can choose to act like I am near retirement and choose the conservative one if I want to. It figures SocSec reform would have provided choice.

If I was was executive and legislature of this country, and I could not get rid of the income tax, I would implement a deduction up to 20K of savings per year. This would replace IRA, 401k, 529, etc. Encourage people to save. Regarding SocSec, I would create a 50 year phase out program. Anyone under 30 would NOT get socsec and have lower taxes. Anyone could voluntarily opt out in return for lower taxes (no benefits).

WashJeff on February 4, 2010 at 3:32 PM

–The original idea of the plan was that investments in the stock market, over a long period of time, tend to return about 1-2% more per year than investments. So it was going to be part of the way to close the Social Security funding gap. I’m not sure they would have allowed people under some age to have moved their money away from stock market-based indexes, but we’ll never know.

Jimbo3 on February 4, 2010 at 3:35 PM

Blamers and calling SS some kind of entitlement program or a handout is especially insulting when you’ve paid for it all these years. I never complained about paying all this money to go towards someone elses retirement income and health care, some of whom never worked a day in their lives or paid into the system at all! So it’s especially insulting when people make comments that we’re a bunch of freeloaders. I’m not a freeloader yet, but close to it. :)

scalleywag on February 4, 2010 at 3:36 PM

I’m getting more cynical & pessimistic everyday.

Badger40 on February 4, 2010 at 2:15 PM

It is getting tough to stay opptimistic.

WashJeff on February 4, 2010 at 2:21 PM

“And it’s not surprising then that they get bitter, they cling to guns or religion”–Obama

Quite clinging to your guns and religion and learn to love the I. O. U. way of American life. /sarc

Basil Fawlty on February 4, 2010 at 3:36 PM

How in the world do you call this a gravy train? People like me have paid into the system for almost 35 years now, not by choice, mind you, but as a required tax. That’s no government handout, to say it is is ridiculous and insulting.

scalleywag on February 4, 2010 at 3:22 PM
It’s not insulting, it’s reality. You (as in your generation) did not pay into the system, what you’re now going to take out. Just as your parents did not pay, what they took out.

It’s called a pyramid scheme. It’s used to buy the votes of the gullible, at the expense of their grandchildren. It worked.

MNHawk on February 4, 2010 at 3:34 PM

–The Social Security law automatically reduces benefits to a level consistent with the incoming payments when the fund is empty. Right now, that would reduce all benefits by about 22% and its expected to happen in 2030 something.

Jimbo3 on February 4, 2010 at 3:37 PM

And there have been several articles lately blaming old people for causing this mess when they’re the ones who paid for it all these years. How is it their fault that the government screwed it up beyond repair?

scalleywag on February 4, 2010 at 3:14 PM

It is the fault of everyone who voted for a Democrat since 1932 at least

DarkCurrent on February 4, 2010 at 3:39 PM

How in the world do you call this a gravy train? People like me have paid into the system for almost 35 years now, not by choice, mind you, but as a required tax. That’s no government handout, to say it is is ridiculous and insulting.

scalleywag on February 4, 2010 at 3:22 PM

That’s right. I’ve paid into it since 1968 and then as a business owner for 15 years matched my employee’s fica payments. There’s no gravy-train-free-ride here at all.

Also, it needs to be pointed out loud and clear that just a few years ago, when Bush was trying to fix this mess, the democrats said everything was just fine and that Bush and republicans were fear mongers.

Rod on February 4, 2010 at 3:41 PM

My daddy warned me 30 years ago that Social Security would not be available to me, and that I’d better have a back up plan for retirement or I’d have to work until the day I die. God bless him, he nailed it. I’d be screwed in 20 years were it not for that advice.

CantCureStupid on February 4, 2010 at 3:41 PM

we’ll never know.

Jimbo3 on February 4, 2010 at 3:35 PM

No we will not, because many polticians pretended that SocSec had few to any problems. Just like they ignore Freddie and Fannie. Why people trust government to solve problems like housing, retirement, health care, etc. is beyond me. Trust yourself. Trust your family. Trust your local community and organizations.

WashJeff on February 4, 2010 at 3:42 PM

I never complained about paying all this money to go towards someone elses retirement income and health care,
scalleywag on February 4, 2010 at 3:36 PM

You should have. Ponzi schemes ultimately fail.

WashJeff on February 4, 2010 at 3:44 PM

Has Anybody heard about the Far-left National Socialist Democrats wanting to seize people’s 401k’s to prop up Soc Sec?
Chainsaw56 on February 4, 2010 at 3:09 PM

–It was a request by the Treasury for suggestions on how to make distributions from 401(k) plans and employer plans more secure, such as by using annuities instead of lump sum payments. But all company pension plans already have a joint and survivor annuity as the default option, so it really doesn’t apply to most employer plans.
Jimbo3 on February 4, 2010 at 3:33 PM

IIRC, they talked about something like this during the Clinton years, It’s wouldn’t really surprise me if they were to try something like that – given the dire situation with Soc Sec and how much money people have socked away in their 401k(s).

Of course, it would mean they would have people coming at them from both sides – Soc Sec recipients who got scammed, paying into the system all these years, and people with 401ks.

Chainsaw56 on February 4, 2010 at 3:45 PM

MNHawk on February 4, 2010 at 3:34 PM

That’s true of any government program. It’s just exaggerated with SS, Medicare and Medicaid, especially if revenue ends up in the general fund and disbursements come out of the specified fund.

a capella on February 4, 2010 at 3:45 PM

Right now, that would reduce all benefits by about 22% and its expected to happen in 2030 something.

Jimbo3 on February 4, 2010 at 3:37 PM

The SS fund going into the red wasn’t supposed to happen until 2019.

MarkTheGreat on February 4, 2010 at 3:45 PM

The Social Security law automatically reduces benefits to a level consistent with the incoming payments when the fund is empty. Right now, that would reduce all benefits by about 22% and its expected to happen in 2030 something.

Jimbo3 on February 4, 2010 at 3:37 PM

I will be 65 in 2035, I think the stock market, or any investment I would have chosen, would give me a better ROI.

WashJeff on February 4, 2010 at 3:46 PM

Right now, that would reduce all benefits by about 22% and its expected to happen in 2030 something.

Jimbo3 on February 4, 2010 at 3:37 PM

Welcome to my reality, scallywag. I’ve paid into the system, at a greater percentage, and for more of my income than your generation, just as has been for all generations with this program.

I guess, in 2035 or so, I’ll be on Hot Air, complaining about the “blamers” not wanting to shell out 20%+ of their income in SS taxes to pay for what I supposedly paid for.

Yes, I seen figures upwards of 20% (each, employee AND employer) to cover SS/Med, assuming nothing changes in ages or benefit levels.

I’m not trying to pick a fight (not too much anyway ;)) with retired people. Most of my wrath would be directed towards government retirees anyway. 30 years in, pretty much full salary for life. That gravy train will have to come to an end, soon.

MNHawk on February 4, 2010 at 3:46 PM

You should have. Ponzi schemes ultimately fail.

WashJeff on February 4, 2010 at 3:44 PM

Then stop paying in. Simple as that.

a capella on February 4, 2010 at 3:49 PM

I guess, in 2035 or so, I’ll be on Hot Air, complaining about the “blamers” not wanting to shell out 20%+ of their income in SS taxes to pay for what I supposedly paid for.

MNHawk on February 4, 2010 at 3:46 PM

I vow to always fight on the side of those that want SocSec phased out no matter how old I am. I am willing to sacrifice for this POS forced upon us all if that means my kids, grandkids, etc. will have more liberty.

WashJeff on February 4, 2010 at 3:51 PM

Then stop paying in. Simple as that.

a capella on February 4, 2010 at 3:49 PM

And how pray tell do I do that and not get fined or sent to jail for tax evasion?

WashJeff on February 4, 2010 at 3:52 PM

And how pray tell do I do that and not get fined or sent to jail for tax evasion?

WashJeff on February 4, 2010 at 3:52 PM

That’s exactly how I felt 40 years ago.

a capella on February 4, 2010 at 3:55 PM

Then stop paying in. Simple as that.

a capella on February 4, 2010 at 3:49 PM

That’s right. If you’re lucky, you’re sentence will be long enough so you’ll die in prison and not have to worry about retirement.

Rod on February 4, 2010 at 3:55 PM

That’s exactly how I felt 40 years ago.

a capella on February 4, 2010 at 3:55 PM

I am plannig on feeling the same way I do today 25 years from now. This Ponzi scheme has got to be phased out. It creates an inter-generational conflict that is unhealthy for our country.

WashJeff on February 4, 2010 at 3:58 PM

WashJeff on February 4, 2010 at 3:58 PM

I agree, but it has to be done so one generation isn’t left totally holding the bag. Each new generation feels they are the ones getting screwed. Things haven’t changed in that respect, although the whole thing is about to topple now, so this time it might not be that way much longer. Things are moving fast now, pretty much out of control.

a capella on February 4, 2010 at 4:07 PM

This Ponzi scheme has got to be phased out. It creates an inter-generational conflict that is unhealthy for our country.

WashJeff on February 4, 2010 at 3:58 PM

True. And speaking of inter-gegerational conflicts:

‘But the severity of afflictions increases and the cost of preventing further deterioration increases with age: “Five years before the year of death, annual health cost is virtually the same as all annual Medicare costs per capita. By the second year before death the cost has risen by about 60 percent, and in the year of death the annual cost exceeds the average by more than four times. Indeed, expenditures on persons during their last two years of life account for 40 percent of all Medicare expenditures.”…
America’s destiny is demographic, and therefore is inexorable and predictable, which makes the nation’s fiscal mismanagement, by both parties, especially shocking.’
Georg Will

Basil Fawlty on February 4, 2010 at 4:10 PM

Which is still why I (and at least one other here) think raising the age (it’s already 67 for me) is the best way to go. Up it at least a month per year, starting now. Once upon a time, it could be fixed, gradually raising the retirement age (full benefits) to 72. We’re probably beyond that, now.

When it was set up, the average person was dead at 65. Now it’s close to 80. The result, an ever expanding pool of beneficiaries, with fewer and fewer workers supporting them. Not supportable.

MNHawk on February 4, 2010 at 4:13 PM

Forgot to say I was responding to this

I agree, but it has to be done so one generation isn’t left totally holding the bag.

MNHawk on February 4, 2010 at 4:14 PM

Inflation (and more than 10% a year) is inevitable.

MNHawk on February 4, 2010 at 2:59 PM

Try massive deflation.

We can only prop up this economy for so long with injections of funny money into the banking system (which is used to pump air into a still largely overvalued housing market). Eventually cash flow wins out, housing prices collapse, banks can’t keep hiding their losses, and deposits start disappearing.

Same with government. They can issue bonds at near-zero interest rates for a while, which drives purchases to the short end of the curve and increases the risk of rollover defaults. Eventually debt service overwhelms everything else and we either see default or incredible cuts in expenditures.

Oh, and here’s a nice line of logic to assuage your fears of hyperinflation:

1. Hyperinflation hurts the banks.

2. The banks own Congress, the Treasury, and the Federal Reserve.

3. Therefore, there will be no hyperinflation.

Besides, you need a concurrent inflation in wages to sustain a hyperinflationary scenario. I don’t see that happening. Bottom line is, we are in a debt-based Depression and there are only two ways out. Pay down the debt (hasn’t happened since Andrew Jackson…not bloody likely) or default. Both options are deflationary.

Personally, I’m liking gold, silver, lead (in convenient bullet-shaped form), and non-perishables.

TheMightyMonarch on February 4, 2010 at 4:32 PM

Comment pages: 1 2 3