Next in Line for a Bailout: Social Security

[Subdivisions]

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.

...snip...

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

...snip...

http://finance.yahoo.com/focus-retirement/article/108747/next-in-line-for-a-bailout-social-security?mod=fidelity-readytoretire



Now, you may come away from this article with a nagging feeling that you remember something about this wasn't supposed to happen until 2017 or so. Well, turns out that's not the case, according to the author of this article. Social Security, he concludes, will go into the red this fiscal year.

Hoo-boy...

[Hannah Bell]

1. What a bunch of absolute garbage. Lies, absolute lies. SS will not be $28 billion in the hole this

year, or any year soon. It won't be "in the red." And it's not in need of a fucking bailout.

The lies here are deliberate, too.

[Subdivisions]

2. Take it up with the CBO and Yahoo! Finance News. n/t

[Hannah Bell]

4. You posted it here, so I'll take it up here. The CBO didn't say SS is "in the red".

That's the writer's conclusion which he reaches only by deeming $100 billion in interest payments to the SS Trust Fund to be meaningless.

It's a fucking pack of lies printed to scare people & soften them up so the ownership class can once again "save" SS by STEALING FROM THE PEOPLE.

[Subdivisions]

8. Fine. And it wouldn't surprise me one bit that it's a bunch of BS. n/t

[Hannah Bell]

10. The writer states clearly that he chooses to ignore $100 billion in interest because

it's "of no significance."

This will be news to many.


"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."


"People like him" = lying fascist sons-of-bitches.


and no, though the recession has reduced expected collections this year, the gap is not so large as to turn the forecast of deficit in 2016-17 to one in 2009. The Trust Fund is still growing.

[Suich]

14. ...

:thumbsup: :thumbsup:

[OHdem10]

3. How many IOUs are there starting with Reagan borrowing from

SS for Defense Buildup???

Our Party with their paygo borrows from one place
to give out something. Good old SS Fund.

Both Parties raid SS. Of course now they cannot pay it back.

This Post tells you there are many more unemployed than
they are admitting; People without jobs do not pay taxes.
This also is a pretty good indication they expect large
large numbers to be uemployed for a long long time. In
other words they cannot count on these people paying
taxes for a long long time.

Are we Japan or are Zimbabwe????

[Subdivisions]

5. The last number I saw was 8.4 million jobs lost since 2007. That

means that FICA has taken and very hard hit. But is it enough to bring SS down into the red? I have no idea.

[Hannah Bell]

9. No. SS isn't "in the red." This is the author's creative accounting.

[OHdem10]

15. They only count the people receiving Uemployment Ins. There

are 17 million if you count the unemployed who can no longer
receive Unemployment but have not found work.

Recently an economist had an article at Huffpo in which he
pointed out the real number is closer to 30 million unemployed.

[Hannah Bell]

6. It's not a question of "raiding" SS. By law, any excess collections MUST be borrowed into

the general budget in exchange for government securities.

The theft came when the OWNERSHIP class decided to overtax workers for thirty-plus years, then STEAL the excess collections in the form of TAX CUTS FOR THE TOP 1%.

Rescind Bush's tax cuts & pay down the $2.5 trillion the top 1% stole. Returning income taxes on the top 1% to Clinton era levels pays off half the TF in 10 years.

[OHdem10]

12. It does not help that Congress"borrows" from SS Fund to fund

other programs.

[Hannah Bell]

16. They're REQUIRED to do so by the terms of the original SS legislation. It's

ALWAYS been true.

What CHANGED was the decision to collect SS in EXCESS OF NEED (to fund retirees) FOR THIRTY YEARS.

"Raiding the Trust Fund" is a red herring. That's not the root cause. The root cause is the 1983 "reform" that hiked SS taxation above funding requirements to generate a surplus that could be borrowed --- & when it came time to repay, the OWNERSHIP CLASS could say "Oh, there's noooooo money."

Because THEY TOOK IT, IN THE FORM OF TAX CUTS, WHICH THEY USED TO MAKE MONEY FOR THEMSELVES ON THE BUBBLE ECONOMY -- & THEY DON'T WANT TO PAY IT BACK.

[inna]

18. Raising the cap on SS tax would seem to be an obvious solution....

...And something that Obama campaigned on, interestingly: http://www.ontheissues.org/2008/barack_obama_social_security.htm

(Fascinating read, btw.)

[Hannah Bell]

20. No, it's only "obvious" because that's the "solution" the OWNERSHIP CLASS WANTS YOU TO WANT.

Thus the propaganda drumbeat guiding you to that "opinion".

It conveniently allows them to avoid repaying the money they got in tax cuts.

SOCIAL SECURITY IS A TAX ON LABOR. IT DOESN'T TAX CAPITAL INCOME.

INCOME TAX IS A TAX ON CAPITAL INCOME. THE TOP 5% PAY 60% OF INCOME TAX.


Raising the cap on SS = increasing taxes on wage income (something the superrich can avoid altogether).

[inna]

21. There is no need for condescension, and I most certainly do NOT follow "the propaganda drumbeat."

The SS tax is HUGELY regressive because of the taxability ceiling ($106,800 for 2010).

Yes, it is a payroll (not income) tax, but that fact does not make it any less regressive.

Eliminating (or at least raising) the cap would remove this huge discrepancy, when top earners contribute only a tiny fraction of their income to SS.

I agree with you completely on your point about rescinding/repaying Bush's tax cuts for the rich, but I don't understand your objection to raising/eliminating the SS tax cap. That alone, btw, would solve any "projected shortfall".

[Hannah Bell]

23. My remarks weren't personal & not intended to be condescending.

SS tax is (when looked at outside the total tax picture) regressive; however, the payout is progressive.

When looked at in terms of income tax + social security tax, it's people from about the middle of the top 20th percentile to below the top 1% making most of their income from wages who get hit the hardest.

They're taxed at higher rates overall than those in the top 1-5% who get the majority of their income from capital.

I have no problem with progressive taxes. I have a big problem with high-income wage workers paying dramatically higher rates than super-rich capitalists.

I won't go through the calculations again, but uncapping SS taxes so as to cover 100% of wage income would:

1. Increase the differential between high-income wage-earners & high-income capitalists - i.e. further shift the total tax burden to labor v. capital. The truly rich can just adjust their compensation strategy to avoid taking their income in wages; WORKERS CAN'T.

2. Continue the generation of large Trust Fund surpluses that must (by law) be borrowed into the general budget -- again, relieving CAPITAL of some of the tax burden which should properly be its own -

3. Further balloon the Trust Fund (already 2.5 trillion), making its future repayment even MORE of a political & economic problem -

4. Shift the funding formula for SS so that the top 20% of workers would be funding about 60% of it without getting anything commensurate in return = "welfare" = a political problem for its future stability -

5. Further institutionalize the general principle of over-taxing wage earning "workers" while undertaxing corporations & capital (& yes, even people earning very large salaries are WORKERS, if that's where the majority of their income comes from. If they lost their job, they'd be as SOL as you once they ran through their savings.)

6. Further institutionalize the principle of maintaining a bloated Trust Fund (one year's outgo is what's required by law; there's currently nearly 5 times that.)


There's currently no need to do ANYTHING about social security but lift the Bush income tax cuts on the top 5% & use the new funds to start paying off the Trust Fund as the bills come due. That = about 25 years worth of income. Twenty years from now there will still be plenty of time to reevaluate SS's finances with new information & make any changes that seem warranted.

Why anyone wants to give the sick SOBs MORE money to "borrow," I'll never understand. YOU CAN'T PREFUND SOCIAL SECURITY.

Regardless of the financial games they play to confuse the people, SS ALWAYS COMES OUT OF CURRENT WORKERS' PRODUCTION & WAGES. THERE'S NO OTHER PLACE IT CAN POSSIBLY COME FROM. THUS, THERE'S NO WAY TO "SAVE UP" SS FOR THE FUTURE. IT'S BAIT & SWITCH.

[stopbush]

11. SS is owed TRILLIONS of dollars by the Feds, $ that has been borrowed from SS for decades.

Every single dollar borrowed from SS is backed by the "full faith and credit" of the Federal government in the form of Treasury Notes.

Of course, our government has no intention of ever paying back the trillions owed to SS. On the other hand, they can't afford to let the program die because it's the cash cow that funds bush's wars and the bridges to nowhere, even though the money is supposedly earmarked for our retirements.

[Subdivisions]

13. There's a lively discussion of this over at TickerForum...

http://tickerforum.org/cgi-ticker/akcs-www?post=127138

[Hannah Bell]

17. There's no 'debate' except the phoney one. Anyone who understands SS knows what happened.

Those people DON'T.

[leftstreet]

7. What bullshit! They're really cranking up the propaganda on SS

Outrageous!

[Political Heretic]

19. TOTAL BULLSHIT.

[Bitwit1234]

22. If the federal government just paid HALF

the money they have taken from social security since Reagan started the trend there would be absolute no worries about social security.

And think of all those IOU's piling up and being hidden. If the money had been earning interest instead of being put in "special projects" and balancing budgets wouldn't social security have a big old pot.

[Hannah Bell]

24. we (wage workers) actually "bailed out" the top 1% over the bush years to the tune of nearly

$1 trillion dollars.

in unnecessary social security collections that turned into bush's tax cut to the top 1%.

that's the spare cash they used to game the housing market to make even more billions.

now, having taken their profits & laid you off, plus got the government to make good their losses, they also want to fuck you on social security by never having to repay the trust fund.

[Hannah Bell]

25. Here's one of the most knowlegeable SS blogger's comments on this article:

Bruce Webb said...
Sloan is being hacktacular here.

First like the AEI guys he has discounted the interest being credited to the Trust Fund to zero. The dollars he is talking about represent the cash flow the General Fund has been happy to borrow from Social Security, only to realize out of horror that it may have to start paying it back. Sloan is just playing another version of the Phony IOU game.

Social Security combined cash surpluses were projected to run out in 2019, that date has been moved back to 2017 but that fact does not materially effect anything. And if you take DI and OAS separately, as they legally are, DI went cash flow negative in 2006, the current deterioration just reflects some faster deterioration due to two years of sub-standard collections due to high unemployment.

Plus it is too bad for Mr. Sloan that the CBO just released its new scoring for SSA and essentially blows his boo-hooing out of the water for the crocodile tears it is. The CBO release got literally zero MSM coverage (as of a few days ago), probably because it doesn't support the 'Oh my God, the recession is killing Social Security!' meme these guys are trying to float.

http://angrybear.blogspot.com/2009/08/cbos-long-term-projections-for-social.html

The long term outlook for Social Security is essentially unchanged with a total fix scored at either 2% of payroll (SSA) or 1.3% of payroll (CBO) and those increases could be phased in over a near twenty year fix if we liked.

We have worked up a spreadsheet showing that a 0.20% increase in 2010 and a 0.10% increase in 2011 fixes Social Security until another set of roughly 0.20% fixes kicks in in 2026.

It works to about $1.50 per week by year two in take-home by a couple earning the median family income. All the rest is pure smoke being blown by Sloane.

(And I did see this when it came out, I didn't consider it worth commenting on.)

http://bruceweb.blogspot.com/2008/08/angry-bear-social-security-series.html