Social Security built on “funny money”
posted at 2:55 pm on August 10, 2010 by Ed Morrissey
Yesterday, the chief actuary of Medicare explained why the entitlement program has no future. Today, Fortune senior editor Allen Sloan explains why the Social Security trust fund has no present. It doesn’t exist, Sloan explains, thanks to a generation of both Republicans and Democrats raiding it:
Today, let’s talk about one of the world’s biggest piles of funny money — the $2.54 trillion Social Security trust fund. It matters now because Social Security revealed plans last week to tap the fund for $41 billion this year and will begin tapping it on a regular basis in less than five years.
This year’s cash deficit, the first since the early 1980s and the biggest ever, means the government will have to borrow money to redeem some of the Treasury securities in the trust fund. Even at a time when Uncle Sam is borrowing $1.5 trillion a year to keep his checks from bouncing, $41 billion is real money.
Here’s why the trust fund is funny money. Let’s say I begin taking Social Security when I hit the full retirement age of 66 later this year. Because its tax revenue is below its expenses, Social Security would have to cash in about $3,400 of its trust-fund Treasurys each month to get the money to pay my wife and me. The Treasury, in turn, would have to borrow $3,400 from investors to get the money to pay Social Security. The bottom line is that the government has to borrow money to pay me, regardless of how big the trust fund is.
In other words, Social Security only holds bonds on more debt. We don’t have money in the Treasury, a rather obvious point since we run budget deficits every year. We have over $13.3 trillion in debt, which the Treasury keeps expanding thanks to Congress’ spending.
And the reason we don’t have a trust fund — the “lockbox,” as Al Gore put it — is because Congress under control of both parties and with the cooperation of Presidents of both parties have used Social Security surpluses to cover up the real annual deficits each year, replacing the excess cash with the worthless IOUs that Sloan identifies.
That’s why the SSA Trustees Report in 2009 made this declaration:
Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.
In other words, we’re at the last stages of a Ponzi scheme, one that has been created for the political protection of the party in power, both Republicans and Democrats. They skimmed Social Security off the top for decades, and the “lockbox” has been an illusion the entire time. There is no “trust fund” in any definition of reality.
In order to fix the problem, Congress has to first stop raiding Social Security. It’s impossible to overemphasize this point. Even if the heavens parted and a miracle occured where we could get real, effective reform of Social Security that would leave it financially solvent from now until forever, it’s meaningless if Congress continues skimming off the top to hide deficits. All that reform would do would be to provide Congress with more fig leaves for its fiscal irresponsibility.
The solution has to include an end to deficit spending entirely, as well as a financial model that doesn’t resemble a Ponzi scheme. Until we stop adding to our debt and start paying it down, Social Security will literally not exist except as floating debt with an illusion of substance.
Blowback
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Social Security might not exist? THAT should be the plan.
Look, I’m sorry you got lazy and didn’t plan for your retirement cuz you wanted the gubmit to look after you. It’s not fair you paid into it but it was a Ponzi scheme and that’s what happens.
Life is unfair. That’s THE conservative philosophy. Now’s the time to find out whether you can really stomach that or just like waving flags around.
The government stole your money and it isn’t there anymore, so they can’t pay you back. Ever. Just like Madoff.
The sooner we all face reality the better.
fivefeetoffury on August 10, 2010 at 3:00 PM
Using SSA funds to pay for other things and putting bonds in as IOUs started under the Johnson Administration.
Those funds in it have been spent, already.
There is no ‘Trust Fund’ just a promise to pay more out of future revenue. This is not an investment. That money is gone.
ajacksonian on August 10, 2010 at 3:01 PM
Wasn’t it LBJ who originally raided the trust fund to finance the Great Society? The “War on Poverty”? (And his quagmire war?)
Wethal on August 10, 2010 at 3:01 PM
I know, I know.
Let’s tax people more. That will solve everything.
– Ernesto, Jimbo3, crr6
angryed on August 10, 2010 at 3:01 PM
(sarcasm on)
Bah, next thing you’ll tell me is that those surpluses Clinton had in the 90′s weren’t real and the only reason we had imaginary surpluses was because we raided SS to end up with pretend surpluses.
(sarcasm off)
Dave_d on August 10, 2010 at 3:01 PM
I recall the month before 9/11, the Dems were going to make an issue of this.
I remember Tom Daschle chanting “lockbox, lockbox” in a news clip.
Wethal on August 10, 2010 at 3:02 PM
I like how libs argue that retirement can’t be planned the average American, it’s just too hard. Americans are not SMART enough to do type of planning.
Has the government done better? It would have been better if we just had all 401(k)’s or other retirement plans. Get the government and allow us to save more in our retirements plans.
Oil Can on August 10, 2010 at 3:04 PM
2.5 trillion SS trust fund IOUs + 13.3 trillion national debt = 15.8 trillion national debt with more SS IOUs adding to it from now on.
zmdavid on August 10, 2010 at 3:04 PM
Well the Democrats started raiding the Social Security trust fund back in the 1960s to hide the cost of the Vietnam War.
taney71 on August 10, 2010 at 3:04 PM
I’m thinking Giggles should have his face on the $0 bill. Because he doesn’t look like all like any of those RAAAAAAAAAACIST white guys on all the other bills.
crazy_legs on August 10, 2010 at 3:04 PM
Don’t forget BillyJeff’s “Peace Dividend”. Laying off the military and letting our defenses rot paid off big…at least until 9/11, which was Boosh’s fault, of course.
Laura in Maryland on August 10, 2010 at 3:06 PM
They’re not dumb enough use SS for their own retirement.
zmdavid on August 10, 2010 at 3:06 PM
This just in ……..
“Obama announces bailout in the amount of $14 kazillion dollars to shore up Social Security forever. In a related story Obama announces new tax rate of 99% on everybody who still is lucky enough to have a job.”
Obamanomics 101.
fogw on August 10, 2010 at 3:06 PM
When Social Security checks stop. . . .
Skandia Recluse on August 10, 2010 at 3:07 PM
In this scheme, there are too many Madoff’s unwilling to be thrown under the bus. As a result of this lack of integrity and their lust for power and/or money, this great country will suffer the consequences.
On a more positive note, I am already stocked up on a year’s supply of food and water.
VibrioCocci on August 10, 2010 at 3:07 PM
Since SocSec is already running a deficit, there is no “top” to skim off of anymore. I do not think the “top” is going to come back evah!
WashJeff on August 10, 2010 at 3:08 PM
Couldn’t agree more. Somehow people think they are owed money and they don’t have to plan for life after career. “But I paid my money in…so I deserve it” is the most irritating argument I hear from even smart, productive people. Wish I could opt out and keep my money, since I sure won’t be reaping any benefits down the road. Kill the entitlement!
search4truth on August 10, 2010 at 3:08 PM
funny? You mean funny like “ha ha” or funny like “queer”?
ted c on August 10, 2010 at 3:08 PM
But, but… surely our elected leaders know all this?
And what of MoveOn’s straight-talk that Soc Sec has a surplus, doesn’t need to be fixed, that there is. no. crisis?
And, all you smartypantses, how do you propose to refute MoveOn’s citation of THIS “inconvenient truth,” hmm?
“The Social Security Trust Fund isn’t full of IOUs, it’s full of U.S. Treasury Bonds.”
Get it? It’s not full of IOUs (you IDIOTS), it’s full of…. IOUs!
Hieronymus on August 10, 2010 at 3:08 PM
“Heartless conservatives” will be blamed.
zmdavid on August 10, 2010 at 3:09 PM
Not only is the Social Security money all spent, the Social Security trust fund funded programs are now without funding. The house of cards is near collapse.
bopbottle on August 10, 2010 at 3:09 PM
stop raiding it? PJ O’rourke pointed out that that’s the point. SS payments are a tax, general funds, indistinguishable from any other tax.
“Blame both parties?” What?
joeindc44 on August 10, 2010 at 3:10 PM
LOCK BOX! Al Gore said so. Are you saying the Goracle would lie to us?
Monica on August 10, 2010 at 3:10 PM
It is too hard, which is why the unions demand defined benefits even if it kills productive companies or a productive country. While the rest of us are getting killed with taxes while trying to fund our own retirement plans, they are getting mega-retirement money with full health care benies even in retirement. Some of us don’t even have jobs anymore to pay for retirement savings.
WE are the stoopit ones. ;)
Laura in Maryland on August 10, 2010 at 3:10 PM
How hard would it be to assemble a montage of sound-bites of various journalists criticizing the Republicans for callng Social Security a Ponzi scheme? What was that, about six years ago?
I specifically remember hearing the words ‘Ponzi Scheme’ spoken again and again by jounalists as they tried to denounce Republican attempts to define it as such.
listens2glenn on August 10, 2010 at 3:11 PM
Bernie Madoff to Head Social Security Administration from Jail
Mervis Winter on August 10, 2010 at 3:12 PM
What do you mean “raiding it”?
There was never a trust fund there to begin with, just IOU treasury bonds.
Count to 10 on August 10, 2010 at 3:13 PM
Um, my impression is that the GOP is bound by hidden clauses in the Constitution from ever pointing out anything the democrats have done. They must accept each new, contradictory criticism like a scolded puppy.
joeindc44 on August 10, 2010 at 3:13 PM
If only someone had tried to fix the system before it failed…
… Oh, wait!
Seven Percent Solution on August 10, 2010 at 3:13 PM
(sarcasm on)
Of course it was Boosh’s fault. You remember that recession that started 1 month into his first term. (You know the one, the one that happened because of the dot.com bubble burst in 2000) Yup, that was Boosh’s fault too.
(sarcasm off))
Dave_d on August 10, 2010 at 3:14 PM
What does that even mean now that Social Security is going to be paying out more than it brings in?
Count to 10 on August 10, 2010 at 3:15 PM
So long as ANY tax fund exists, Congress WILL raid it.
Aside from a constitutional amendment that prohibits Congress from funding anything new (not going to happen), the only way to fix the problem of Congress raiding the bankrupted Social Security that doesn’t even have funds to exist, is to dismantle Social Security. Uphold whatever obligations are already made for those citizens already forced to contribute, grandfathered in, but negate anything further. GWB suggested the like.
The affect of the Great Depression on American society made people want insurance from the government to prevent another scenario of public starvation. But all the FDIC legislated preventions were removed when the oldest of the Depression Era died. And the Social Security propaganda selling it to the American public GUARANTEED a living income after retirement. Congress funded Social Security for lifetime payments to the Depression Era populace, even those who contributed only ONCE according to the US Govt. newsreel shown in elementary schools around 1960. But obviously, Congress absconded with the coerced withholding of pay with nothing to show for it but FRAUD for the children and grandchildren of the Depression Era Children.
maverick muse on August 10, 2010 at 3:15 PM
ssa.gov has a section on Ponzi schemes and how SS is different.
http://www.ssa.gov/history/ponzi.htm
If you have to say you aren’t a Ponzi scheme, you probably are.
zmdavid on August 10, 2010 at 3:15 PM
Let the inventor of the internet own that one. Algore.
maverick muse on August 10, 2010 at 3:17 PM
You know who else said SS was fine? Al Franken. In his book which should have been called “I lie about stuff(2005)” he made it sound like Bush was exaggerating how tough it would be to fix it. He talked about paying out 11 trillion dollars over the infinite horizon which would be nothing. In reality that 11 trillion dollars was how much money would have had to be added to SS in 2003 to make it stable. (Yes, you’d have to added it all in 2003) Of course if you start doing things like adjusting retirement age or needs tests you can get it to work too. (Or upping FICA taxes. The deal is the longer you wait the harder it becomes to fix. Compound interest can really get you.)
Dave_d on August 10, 2010 at 3:19 PM
Conventional wisdom is that calling your opponents a bunch of liars is bad politics. I don’t believe this, but Republican politicians do. You can’t make an effective criticism of Democrats without pointing out their lies, so the criticism ends up being muted.
zmdavid on August 10, 2010 at 3:20 PM
Dave_d on August 10, 2010 at 3:19 PM
Al Franken ranks right under Barney Frank and Maxine Waters calling inspectors liars for pointing out that Fannie/Freddie were riddled with fraud and going under. Barney must be Al’s idol.
maverick muse on August 10, 2010 at 3:21 PM
+7%
Laura in Maryland on August 10, 2010 at 3:22 PM
God, I seriously hope I don’t sound like a bircher for saying this, but… ALL PAPER MONEY IS FUNNY MONEY!!!!!
Disagree all you want, but when the reaper comes and your handing out double taxed stacks of worthless American d-marks and portfolios that carry as much debt as they do wealth, I’ll be quietly dividing my shoe boxes full of untaxed bullion coins among my heirs.
abobo on August 10, 2010 at 3:22 PM
Wow, that made my day. You scroll through the page and at the end is a one sentence “we aren’t a ponzi scheme because we say so.” Very persuasive. cue 80′s movie slow clap.
joeindc44 on August 10, 2010 at 3:23 PM
Social Security — The one thing the Fascist FDR told the truth about … He told the Supreme Court there was no trust fund, all the money went into general revenues, and the so-called benefits would be paid from general revenues.
It’s just that FDR never told the public the truth, who continues to this day to believe the lies of it’s a trust fund.
tarpon on August 10, 2010 at 3:23 PM
That’s worth sharing.
Bad dog! (whine)
maverick muse on August 10, 2010 at 3:24 PM
Hey y’all, watch this! Ya wanna talk about a ponzi scheme? Check This Out.
The Federal Reserve just announced that they will buy up US treasury debt (by printing money) and hold it until it ‘matures’. The Fed will then ‘deem’ it to be paid off, and that debt instrument evaporates into the memory hole. The Fed then prints more money, and buys more debt. Itsa miracle. We’re saved!
Skandia Recluse on August 10, 2010 at 3:28 PM
It’s not just Boosh, those funds were supposed to remain frozen. Blame global warming :D
Laura in Maryland on August 10, 2010 at 3:29 PM
If we could just get 20 million or so illegals to work on phony ssi numbers and then leave without being eligible for benefits…. Or did Mcqueeg vote to give them benefits?
Fire McQueeg McCain
dhunter on August 10, 2010 at 3:29 PM
Breaking: Congress has decided to release Bernie Madoff early on the condition that he will show them how to hide this better! / sarc
U.S. Congress the envy of organized crime around the world.
bluemarlin on August 10, 2010 at 3:31 PM
Hear, hear!
Inkblots on August 10, 2010 at 3:32 PM
My understanding is that its worse then IOU’s, they are treasuries with interest so the government in theory has to pay back the money and then some.
rob verdi on August 10, 2010 at 3:32 PM
From the SocSec web-site Ponzi scheme comparison introduced on this thread.
Except that the Supreme court has already said that “promise” is only political and can be disregarded at congress’s will. See Flemming v. Nestor.
WashJeff on August 10, 2010 at 3:33 PM
Fire McQueeg McCain
dhunter on August 10, 2010 at 3:29 PM
and can his girlfriend, Miss Lindsay too.
Laura in Maryland on August 10, 2010 at 3:37 PM
I beg to differ on this “Blame both parties” crap; who the h*ll set up Social Security in the first place, and championed this Government slush-fund for the last six decades?
I blame FDR, the closet Communist…..
dmh0667 on August 10, 2010 at 3:38 PM
No kidding. “The crack-up boom has arrived.”
maverick muse on August 10, 2010 at 3:38 PM
A good site for tracking our debt is National Debt Clocks and Savings Clocks
I often disagree with their opinions but their numbers are easy to grasp. The total US debt is $13.4 trillion compose of $8.8 trillion held by the public, here and abroad, and $4.6 trillion in various trust funds of which SS is the largest.
Sorry, Friend Ed, but this will require reform because there exists no other mechanism for storing the
disappearingexcess trust fund contributions. The Treasury could allocate this money to retiring outstanding debt but this would be a futile gesture since we are running huge deficits and increasing our debt.The idea of strengthening the system by increasing FICA taxes is also ridiculous since any excess generated would just go into the trust funds, i e, spent and become part of the national debt.
Perhaps the silliest notion of all is that of funny money. Excuse me, but the US dollar has been funny money since Nixon finished decoupling it from any value other than full trust and faith of the politicians in 1971. Money is supposed to represent some intrinsic value, to be the commodity of choice for trading, but, as our Betters always remind us, they can and will just print as much as needed without regard to the subsequent dilution in value of current funds.
The good news is that there is value in this country. Eventually, we will have to rethink our concept of money and come up with one that represent this value.
Laurence on August 10, 2010 at 3:42 PM
Blame both parties, but blame the Democrats more.
zmdavid on August 10, 2010 at 3:42 PM
Social Security has been run as a ponzi scheme since the days of LBJ. Indeed, if I recall correctly, not only has Congress invariably used soc. sec. funds as part of their annual budget, but it was Clinton who started including them in accounting for the budget – which explains the surpluses in the final years of the Clinton administration.
As to the charge that both parties are guilty, that is technically true. But have you so soon forgotten the Democrats clapping when they managed to stop Bush’s efforts at reform? To call this a bipartisan goat screw is only a half truth.
Wolf Howling on August 10, 2010 at 3:46 PM
Couldn’t we agree to a cut-off. Perhaps anyone born prior to 1950 would be guaranteed benefits, we’ll work out a partial plan for 1950-1964, and the rest of us are on our own.
My generation always knew that we’d never see a penny of our confiscated money. Let’s not pretent otherwise.
Laura in Maryland on August 10, 2010 at 3:50 PM
The trust funds are liabilities, not assets. Unless they just plan to stiff the recipients, but even then, they would only be 0. They should be listed as negative numbers on that chart.
zmdavid on August 10, 2010 at 3:51 PM
don’t worry Obama will fix this just like he fixed the unemployment problem!!!
right4life on August 10, 2010 at 3:52 PM
The Feds will just nationalize everyone’s 401ks.
BowHuntingTexas on August 10, 2010 at 3:53 PM
Maybe pick earlier dates, but at somepoint, we’ve got to agree to end this thing.
Laura in Maryland on August 10, 2010 at 3:54 PM
I think the convoluted leftist logic or sharing the blame between both parties is this: The GOP let themselves get rolled by the slanders, obfuscations, outright lies, and calumnies of the left and therefore fell silent and avoided the third rail of American politics. They also had the chance in 2004 but decided to abandon Bush when he fought for change.*
Therefore, the GOP is complicit. Reagan and Bush the Elder only won the cold war, created the modern American economy, and reduced taxes and regulations. But they failed to get the democrat congresses of their times to kill their bright, shiny piece of foolsgold. W failed because he failed.
*remember, what they did to Bush and Palin, they can do to anyone we nominate if we keep abandoning them to the MSM’s slanders.
joeindc44 on August 10, 2010 at 3:56 PM
IIRC The money was required to go into the general fund as per FDR’s argument to the Supremes. If it were a separate or locked box it would have been ruled unconstitutional
AlexJ on August 10, 2010 at 3:56 PM
And that’s when things will really get ugly.
txsurveyor on August 10, 2010 at 4:02 PM
That is why, the next person that mentions “Clinton’s surplus” I am going to punch right in the mouth.
Vince on August 10, 2010 at 4:04 PM
Charles Ponzi called and said he resents his name being associated with any scam as sleazy as Social Security.
Cicero43 on August 10, 2010 at 4:05 PM
That’s ok, the Supreme Court will never allow that.
joeindc44 on August 10, 2010 at 4:05 PM
If they try that the hunt is ON! They dare not leave D.C.
dhunter on August 10, 2010 at 4:06 PM
can I get a link for that clinton using SS to boost deficit numbers?
joeindc44 on August 10, 2010 at 4:06 PM
Remember, much of Congress believes there’s nothing the federal government can’t do under the Constitution.
Cicero43 on August 10, 2010 at 4:07 PM
Once upon a time, on a planet in a galaxy not so far, far away, a President showed us that the trust fund was a safe full of IOU’s in West Virginia, and he proposed that people be able to invest part of their payroll taxes for (gasp, scream, faint!!!) THEMSELVES and earn higher rates of return (translation: much more money in the long term) by investing in the (gasp, scream, faint, vomit!!!) evil institution dare-I-say-it STOCK MARKET!
Oh, the horror of it all, shouted the self-proclaimed Saviors of Social Security. We Democrats will save Social Security from the Evil Emperor–We will do…the Great, inscrutable profound wisdom of it all…NOTHING !!!
And so Social Security was “saved” from the wrath of the Evil Emperor who dared propose that (gasp, faint, vomit!!!) evil greedy TAXPAYERS could invest payroll taxes for their evil greedy SELVES on evil greedy bloodthirsty Wall Street (ARRRRRGGGHH!!! GASP!!! VOMIT!!! DIE!!!)
And in the sweetly sunny green pastures of the Saved Social Security, flowing with milk and honey from stingless bees, where purple poopless unicorns graze on pixie dust sprinkled around an empty trust fund, the trustee dares to whisper: “Pssst–Evil Emperor from Crawford–I shore wish we had dat money…”
But SHHHHhhhh!!! We dare not mention booooooossssshhhhh!
Steve Z on August 10, 2010 at 4:07 PM
it’s also funny…shouldn’t we have seen a multiplier of 1.5 times the money spent via raiding the social security surplus?
joeindc44 on August 10, 2010 at 4:21 PM
Absolutely.
Michael Savage recalled that his father warned him not to trust any government assigning citizens numbers.
Wilson and FDR certainly both loved socialism and did all they could to establish socialism in our government via bureaucracies filled with appointments that bypass congressional approval. The successful erosion of the Constitution by Obama’s administration, ideological brats who don’t know any history except Marxist revisionism, puts those Democrat-Socialist predecessors’ work to shame.
I wonder. After FDR’s 1931 Congress, how many later Congresses were actually monopolized by a Democratic Majority in both houses to keep feeding the SS monster?
On that note, when have Republicans actually rescinded a tax since WWII and Eisenhower’s election? Never? And did Eisenhower, Nixon, Ford, Reagan or either of the Bushes ever attempt to rescind Social Security? No.
Don’t say that GWB tried; he only suggested that it would help to commute new coerced pay withdrawal “contributers” out of the system and into private investments. But on these matters, prior to 9/11/01 Bush failed his first 9 months in office with monopoly on Republican Congressional Majorities, to attempt uniting Republicans in both houses to pass his supposed agenda to solve Social Security with privatization and to clean the Freddie/Fannie financial fraud. And once obligating a military war on terror, Bush was completely preoccupied, to be kind. But in reality, GWBush’s own Treasury Secretary MADE the global economy falter with his Goldman Sachs fraudulent sales of the WORST mortgages for global investors to buy. So GWB not only made the global economy cough blood, but then executive ordered the world’s greatest criminal Paulson to be untouchable, unconstitutionally made into an autocrat beholden to NO ONE, particularly not beholden to Congress, never to be obligated to answer for his fraud. Also, GWB made TARP happen for Goldman Sachs to pocket, NOT to secure the economy for American citizens. Without mentioning Bush’s wars, THOSE Republican expenditures would certainly have salvaged Social Security.
Republicans themselves hold some blame for having lost their convictions for smaller government, cut spending and lower taxes. Smaller government? When have we heard Republicans espouse the elimination of any federal project, bureaucracy, or war? No, they only feign to “cut taxes” as they augment government bureaucracies and infringements on the Constitution, creating projects and unconstitutionally designed power structures that are ripe for plunder from Marxist political thugs. The Republicans have reached the point now that taxes were only TEMPORARILY lowered, not rescinded or permanently lowered at least. GWB offered rebate gimmicks that cost the government to send out and then re-collect the money just sent out. No solution, just postponements while augmenting federal spending on pet projects. Republicans since WWII have failed consistently to secure our nation’s borders, as well.
For me, there is no trust in the Republican Party any more than in the Democrat Party. Politicians are in Washington for themselves, having fought to win their elections. There are very few like Michele Bachmann who are devoted to upholding the Constitution as traditionally constructed to be the supreme law of America holding all citizens equal under the law. And she can’t even get the likes of elitist Cantor to support the Tea Party Caucus as Congress’ official representation for constitutional conservancy.
maverick muse on August 10, 2010 at 4:26 PM
You mean a link that talks about the Surplus myth? Here you go.
http://www.craigsteiner.us/articles/16
http://www.craigsteiner.us/articles/30
Dave_d on August 10, 2010 at 4:29 PM
Like I pointed out yesterday, social security was not designed, nor was it sold, as a pension plan, but as a whole life insurance policy. Even disounting all of the theft that has occurred by congress after congress, there was never enough money to fund retirements from the plan. Anyone who planned on living on social security is a fool, and anyone under the age of 50 who still expects to get anything resembling their money ‘back’ is dreaming. The most likely outcome of the current crisis is that the program becomes means-tested, so that anyone with personal savings, a 401(K), or a private pension will be excluded from getting social security benefits, and only those who didn’t bother to save anything during their working years will receive benefits.
Vashta.Nerada on August 10, 2010 at 4:32 PM
It’s booooshes fault… oh wait… didn’t he try to propose some changes to the system and got his head handed to him over it.
Hummer53 on August 10, 2010 at 4:35 PM
Social Security is the very last thing the US Government should default on. Long before that has to happen, let’s see a 10% salary cut for all federal employees, and a serious haircut for federal pensions now being paid, and to be paid in the future. Any government pension under $30K/yr stays, anything over that cut 10%, anything over $100K/yr cut 20%. Set COLAs on pensions to realistic levels. Then freeze federal salaries for five years.
End all healthcare benefits for retired government employees. Kick them into Medicare.
The difference is, people paid social security premiums to the government which cover those benefits in an actuarial sense. Government employees pay a trivial amount if anything towards their own pensions compared to the lavish payout.
slickwillie2001 on August 10, 2010 at 4:48 PM
Yeah but for some reason, the governments always go for the “well, ooops, we need to furlough cops, teachers, water service, and firefighters” to cover the budget shortfalls. And no one ever says, hey what about the $300K no-show jobs for the mayor’s BFF and the mayor’s mistress?
joeindc44 on August 10, 2010 at 4:59 PM
Bump that. DC will become a game preserve. Easy pickings for the first couple of hours, then the hunt is really on.
Phil-351 on August 10, 2010 at 5:12 PM
really, it makes me wonder how long they think they can ride the Blame Bush gravy train…
joeindc44 on August 10, 2010 at 5:14 PM
Part of the problem is it’s virtually impossible for the government to “save” money. Since SS is required to invest its “surplus” in government bonds, it was guaranteed to effectively top-up government operating expenses.
As for savings, given the mega-trillions involved, it isn’t like the government goes down to the local credit union, opens a savings account, and deposits cash. It could establish a sovereign wealth fund, but I’m not so sure I want the government to start building one out of stocks or whatever, because it would allow Congress to monkey around directly with companies using “our” stock holdings. See CalPERS and other “activist” pension funds for details, and multiply it by at least 10x.
SS probably needs to become a true pay-go system with an individually-managed component, which would become a de facto sovereign wealth fund, but with millions of “managers” instead of one, there’s be far less chance for Congress to get nasty with it.
foobarista on August 10, 2010 at 5:18 PM
Show of hands – is there anybody in this room who hasn’t seen this coming for the last quarter century???
Didn’t think so.
oakland on August 10, 2010 at 5:21 PM
JoeinDC:
This one is relatively clear and doesn’t get too deep into the weeds:
http://liberalforum.org/liberalforum/index.php?/topic/75807-the-clinton-budget-surplus-myth/
and also
http://www.allbusiness.com/government/employment-regulations/1130813-1.html
My recollection is that Clinton changed the accounting method. That may be incorrect as I can’t find the cite for it. Regardless, it is beyond contention that the Clinton surplus came on the back of using SS fundes to reduce the debt, thus giving the illusion of a surplus while the amounts paid down were still owed to Soc. Sec.
Wolf Howling on August 10, 2010 at 5:37 PM
Somebody, please tell me why the federal government couldn’t have done what many other pension plans do, and that is a board of trustees that manages a portfolio of investments in all manner of concerns (stocks, municipal bonds, real estate, precious metals, mutual funds, etc.)? Why couldn’t this approach have been used until the inevitable “break even”?
It might be worth noting that Bush II wanted to have folks invest SS revenues for themselves. The majority party at the time shot that down.
oakland on August 10, 2010 at 5:43 PM
The government will never voluntarily get out of our back pockets. They will do everything they can think of to stay in power for as long as they can. Our slide began 100 years ago and is almost complete. We can stave it off and make it better for awhile, but we won’t ever live in the country we grew up in again. Enjoy it while we have it and learn how to home brew.
Kissmygrits on August 10, 2010 at 5:56 PM
Social Security. Another WONDERFUL program brought to you by the government.
GarandFan on August 10, 2010 at 6:04 PM
Another problem the wan inherited from Booosssh. Oh wait…
joeindc44 on August 10, 2010 at 6:37 PM
THIS IS A MUST READ
Texas teachers do not pay into social security.
The teachers pay into the Teacher Retirement System. The TRS was established at the time that the federal social security mandate was established, using the exact same structure. In short, it was and still is the model that the original SS was at the beginning.
The difference is that every teacher has an account that is accuring interest in much the same way as an annuity. Retirement age is based in the number of years worked and the teachers age. The retirement benifit is based on the amount of money paid into the retirement fund. Teachers can put more in or buy years to increase the retirement benifit.
Unlike SS retirees, teachers do not have to worry about there being nothing there when they retire. If the need arises that they become disabled they can take a medical retirement. Unlike SS it does not payout to people who have not paid into it or who worked one day and qualify for the minimal payment, or who never worked but get it as an entitlement.
Unfortunately the federal government does not like for someone to op-out of paying into SS. We have been punished for doing so. TRS retirees are not entitled to “any” benifits from SS other than having that all important goverment ID, the social security card. If the TRS member has paid into to SS, that money is lost. If the teacher has a second job that collects SS, they still have to pay it, but can not recieve any benifits of SS. Worse if a TRS retiree has a spouse that retires, the spouse is also barred for any SS benifits unless the TRS member gives up those benifits.
TRS shows that it is possible to have a workable retirement system that does not require individual annuites or other forms of future returning investments managed by the individual. We all know how well that will work out for most is not virtually all people. We do not need additional laws aside from one that prevents congress or anyone else from accessing the funds. The only way to do that would be with an admendment to the constitution, well in theory anyway.
No way to fix what has been done. The government will just have to pay the IOUs as entitlement funds. That would be possible by removing all but the basic entilements that are now being paid, the ones that drained it to start with.
For those entering the labor market they should have a seperate system set up on the original SS or the TRS. Those that do not pay in have no benifit. Medical retirements would be provided with reduced benifit based on years paid in. Opting for a reduced monthly benifit option would extend the retirement payment to a spouse or to children.
The other option is to scrap SS and create a goverment pension system paid for by high taxes that would take 60-70% or an individal’s income to be redistributed to the needs of the government.
Franklyn on August 10, 2010 at 6:59 PM
The solution has to include an end to deficit spending entirely, as well as a financial model that doesn’t resemble a Ponzi scheme. Until we stop adding to our debt and start paying it down, Social Security will literally not exist except as floating debt with an illusion of substance.
— Ed Morrissey
The real solution to America’s Social Security problem and several other serious American problems.
Basil Fawlty on August 10, 2010 at 7:12 PM
Is anybody here of an age to collect social security? You all seem to hate it and hate anybody who collects it, but I don’t know where I’d be today without it. At my age, I can’t work enough, can’t make enough to live on. And I DID plan for my retirement! And I have seen all three of my retirement accounts tank — big time, thanks to BO & Co. I never had the pleasure of working for a place that provided a pension. I have some savings and some investments to draw on — enough capital to last me for about 10 more years; dividends and interest are no longer in my vocabulary.
I just hope and pray the doomsday scenarios are wrong and that, under the right leadership, the economy will come back. I know SS will not be there for my children or grandchildren, but I hope that by the time I check out, I will be able to leave my family something to help them along.
winfield on August 10, 2010 at 10:10 PM
Anyone who’s been paying attention should have known this for the last decade. Those skunks took a worthwhile institution that the American people wanted and raided it to fund their private projects.
Combined with the recent economic crunch, this means there will BE no retirement as we used to know it any longer. The only ‘retirement plan’ will be to slave away at junk jobs until you’re physically unable. Hopefully by then you’ll have enough to not live on dog food and haven’t gotten seriously ill.
Dark-Star on August 11, 2010 at 9:12 AM
And this is news NOW how exactly?
Amendment X on August 11, 2010 at 10:06 AM