Fight the Social Security Fear Mongers!

[alberg]

Today separate headlines on CNN

http://money.cnn.com/2010/08/05/news/economy/social_security_trustees_report/index.htm?hpt=T2

and CBS

http://www.cbsnews.com/stories/2010/08/05/politics/main6746131.shtml?tag=stack

further the myth that the collapse of Social Security is imminent.

This is part of a coordinated attempt to erode support for Social Security, particularly among younger workers.

The truth is that Social Security is the most successful program ever implemented by the US government. Check out the article on Huffington Post for a more balanced assessment - http://www.huffingtonpost.com/2010/08/05/medicare-gets-new-lease-o_n_671936.html

Here are the 5 biggest myths being promoted by the MSM and the facts to rebut them. Pass it along.

Top 5 Social Security Myths

Myth #1: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever. After 2037, it'll still be able to pay out 75% of scheduled benefits—and again, that's without any changes. The program started preparing for the Baby Boomers' retirement decades ago. Anyone who insists Social Security is broke probably wants to break it themselves.

Myth #2: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago. What's more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half. But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth #3: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come. Right now, high earners only pay Social Security taxes on the first $106,000 of their income. But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth #4: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States. The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth #5: Social Security adds to the deficit

Reality: It's not just wrong—it's impossible! By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.

Defeating these myths is a powerful step to stopping Social Security cuts.

Share this list with your network.

[DJ13]

1. Who would unrec this?

[alberg]

2. Beats me.

[NoNothing]

9. People who understand the issue

The CBS article is 100% accurate. Social Security is paying out more than it collects, and the difference has to be made up from general revenues. This is a fact.

[alberg]

15. The point is not the facts, it's how the facts are manipulated to create fear.

If I tell you that your local bank doesn't have all the money it would need to cover all the bank deposits of it's depositors, what I'm saying is technically "correct" - but the implication that I might not be able to get my money if I want it is false.

The headlines in the MSM are continually structured in such a way as to create fear in people and eventually support for policies that are not necessary and not in peoples self interest. This what we are currently seeing with regard to Social Security.

As an example, here's the headline from the news story on the Huffington Post. The story is reporting on the same "news" as the CBS and CNN articles but notice the difference

"Medicare Gets New Lease On Life; Social Security Remains Healthy" - Huffington Post

"Social Security: More going out than coming in" - CNN

"Soc. Security in Red for 1st Time, Report Shows" - CBS

All three articles are based on the same facts, so why are they so different?

The answer is that there are people and organizations out there who have made it their purpose to destroy Social Security. This is what the "spin" and "framing" are all about.

[mmonk]

36. Are you saying all the years of surplus money in the trust fund is gone?

There's no money for anything else if you want to play that game because no other expenditutre has a dedicated tax and a trust fund with $2 trillion worth of treasuries. I say eliminate tax cuts for multinational corporations and the predators that control the American populace with propaganda.

[NoNothing]

38. Yes, of course it's gone

Social Security benefits are paid for with taxes and borrowing, just like everything else. Financially, it would make no difference whatsoever if the trust fund did not exist.

[girl gone mad]

48. Technically, taxes don't pay for anything..

even SS.

[Hannah Bell]

55. so is the money in your bank account, in that case. that money's been "spent" too.

cat food for you.

[sendero]

42. We're saying....

.... that SS will get in line with all other needs and the idea that it is sacrosanct is ludicrous. That is what we are saying.

And just wait a few years, you will see.

[Hannah Bell]

56. is that a threat?

considering workers have already thrown in about 2 trillion they didn't get back, the ptb better damn well have the idea it's sancrosact. it will cost them dearly if they choose to fund their war, tax cuts & bankster bullshit by stealing from social security.

[sendero]

88. Threat?

I have no control over it, I'm merely making a prediction based on past events.

Hell, the government just stole several trillion dollars and gave them to the banksters, and Americans by and large did NOTHING.

[Hannah Bell]

37. so what? the Trust Fund was built up with exactly that plan; to draw down funds (redeem from

general funds) when the boomers started retiring.

This is not a crisis; it was planned since 1983.

So it's laughable to see the social security hawks screaming the sky is falling.

Ending the bush tax cuts on the top 1% ALONE brings in nearly $1 trillion in new revenue in 10 years, enough to redeem nearly half the TF. Over the 30 years of the boomers retirement there's no problem whatsoever.

[NoNothing]

39. The so what is that this is on top of the already bad state of government finance

They are inextricably intertwined.

[Hannah Bell]

46. recession (caused by banksters), bush tax cuts & war are the cause of the gov't finance problem, not

ss.

$1 trillion in new revenue from the bush cuts on the top 1% alone.

[NoNothing]

68. Over 10 years

A whopping $100 billion a year, less than 10% the annual deficit.

[laughingliberal]

71. Perhaps if you don't count the $4.6 trillion in secret loans the Fed made to banks and WS. nt

[Hannah Bell]

78. we're not funding the deficit, we're repaying money borrowed from social security.

and that will be more than enough.

SOCIAL SECURITY IS NOT THE CAUSE OF THE DEFICIT. BAD POLICY IS. FIX THE FUCKING POLICIES & QUIT TRYING TO STEAL FOOD FROM THE MOUTHS OF OLD PEOPLE.

[laughingliberal]

41. They used our FICA taxes to cover tax cuts for the rich. Time to pay us back. Anthing else is theft

They knew the bill would come due and it has.

[pa28]

60. You've forgotten the multi-trillion savings SS has accumulated.

Over simplified statements like the one you've made walk hand in hand with right wing disinformation on the subject. You don't want to be willing tool in the de-construction of SS do you?

[glitch]

90. Neocons/Neolibs

you asked.

[BrklynLiberal]

3. Excellent info...Should be on front page all the time so we can access it on a moments' notice.

It has been posted before..but deserves a repost every week

[alberg]

5. I agree.

The facts need to be continually repeated and shared to counteract the well funded misinformation campaign that is being waged by the PTB.

[OHdem10]

4. One problem: Congress has raided SS to pay for other things

and left IOUs in the SS Trust Fund Books.

You are correct the SS should be a separate fund. It does
not affect the Deficit. Is this just another way of raiding
the fund to pay for Deficit Reduction.

Raise the cap at which the rich pay into the fund. Oh, no,
we cannot ask the elites to pay one penny for entitlements.
The attitude is let the Middle Class pay for them--Regan.

[ret5hd]

7. So you agree with the R-wing meme that treasury bonds are worthless IOU's?

[NoNothing]

10. They are worthless to the government

For the same reason that if you write a check for $100, it is worth $100 to everyone except yourself.

[alberg]

20. But not worthless to the people who hold the debt - that's us by the way.

If you honestly believe that it's OK for the US government to start defaulting on it's debt, then my vote is we start with China. Their collateral is no different than ours, we're both holding Treasury Bonds. So let's start by defaulting on China's debt and see how it goes.

[NoNothing]

22. What are you on about?

Nobody is talking about defaulting on bonds, we're talking about the fact that the "trust fund" is filled with debts! So people who point out that there are no ASSETS in the trust fund are 100% correct. Debts aren't assets!

[alberg]

30. See post #28

[Hannah Bell]

50. if a private party holds a government bond, it's an ASSET.

somehow you make different rules for the SS trust fund -- why is that?

The general budget of the us OWES the Trust Fund.

SS taxes: paid by workers.

Income taxes: paid by capital.

See how it works?

[NoNothing]

65. It is because the SSA is an agency of the same entity that issued the bond

It is exactly like writing yourself a check for $100. If you give it to anybody else, they have a $100 asset and you have a $100 liability, so they end up ahead $100 and you are down $100. If you keep it for yourself, you own both the asset and the liability and they cancel each other out, and you have nothing.

[Hannah Bell]

77. no, it's not "exactly like writing myself a check". It's more like "borrowing" the money your

wife set aside (out of her own paycheck) to pay for the kids' college.

And then spending it on prostitutes & drugs.

And then saying, "Hey, we're married, it all comes out of the same pot anyway, it's like writing a check to myself!"

WORKERS pay fica.

CAPITAL pays (most of) income tax.

the gov told workers they needed to pay more fica to build up a nice savings account for their retirement.

then they "borrowed" it & simultaneously gave big tax cuts to capital.

who spent the extra money on the equivalent of whores & drugs.

tough titty, time to pay it back.

Rescinding the Bush tax cuts on the top 1% alone raises about one trillion over 10 years. That'll do nicely.

[NoNothing]

80. Fine, take your scenario

The money is still gone. Assigning blame does not change the fact that the money has to be earned a second time, and that means that the household will have to spend less, borrow more, or increase their income.

[Hannah Bell]

82. I don't need any stupid scenarios. I UNDERSTAND THE REALITY.

The reality is, in 1983 the President & a bipartisan Congress jacked up fica rates in excess of what was needed to fund Social Security over the next 30 years.

They did it DELIBERATELY, to create an ever-increasing surplus, in violation of previous practice & the original social security legislation, & sold it to the populace as a neat plan to "save" for the boomers retirement and save SS "forever" as Reagan told us.

Then they borrowed the surpluses & gave massive income tax cuts to the rich for the next 30 years.

Now the same liars -- and their chat room apologists -- are trying to convince us that it's impossible to come up with the money to redeem the Trust Fund.

BULLSHIT ON THAT.

Rescinding the Bush tax cuts will cover it nicely. Raising them to the levels of the early Reagan years would be even better, as would taxing capital gains like ordinary income.

The top 1% takes 23% of national income. The bottom 50% takes only 13%. The fuckers could be taxed double what they are now and wouldn't miss it.

If you think people are going to sit still while they're robbed, think again.

[alberg]

91. Is the money we borrowed from China gone?.

Great! Then we don't need to pay the Trillion Dollars back to China - right? So our National Debt just got a'lot smaller so the US is not in as bad financial shape as some are saying and so we don't need to do any crazy Shock Capitalism stuff - right?

Your logic is flawed but you keep persisting in it.

The Federal Government owes the Social Security Trust Fund Trillions of Dollars which it is required to pay back OVER TIME.

The debt is not negotiable. It is a real debt, just like any other debt that is backed by Treasury Bonds. It is, in fact, backed by Treasure Bonds.

There is no need to panic right now.

We have the next few decades to work out the deficit and get to a more balanced economy.

We can start by significantly cutting the defense budget and repealing the Bush tax cuts.

[NoNothing]

92. Of course the money we borrowed from China is gone

We spent it. That's why we borrowed it in the first place, you know?

[alberg]

11. The term "IOU" is a "trick" - using the term supports Myth #4

The term "IOU" is a trick and a manipulation designed to make people think that the money is not really available.

Here's the deal:

The US government owes China 1 Trillion dollars - this is considered a real obligation that must be satisfied. There is no option not to pay it. The form of the debt is Treasury Bonds.

The US government owes the Social Security Trust Fund Trillions of dollars - this is a real obligation that must be satisfied. There is no option not to pay it. The form of the debt is Treasury Bonds.

The elites that are trying to destroy social security cannot have it both ways. If the debt to Social Security is not real, then the debt to China isn't either - in which case the US deficit immediately becomes a lot smaller. But if the debt to China is real, then the debt to the Social Security Trust Fund is just as real a must be honored.

[NoNothing]

17. The debt is real

Nobody is denying that. What we are saying is that it is a debt that has to be paid out of general revenues, not a trust fund that can pay for future obligations all by itself.

[alberg]

25. OK, so let's first acknowledge that SS is not in danger of imminent collapse

Then, lets talk about the fact that it's running a surplus until 2024.

The program will need to start spending from its trust fund in 2025, with that fund becoming exhausted in 2037, which is consistent with last year's estimate. But at a press conference Thursday, Social Security Commissioner Michael J. Astrue, one of the government trustees releasing the report, begged reporters not to scare the public by exaggerating the significance of trust fund exhaustion

"That does not mean that there will be no money left," Astrue said. At that point, even if Congress took no action, Social Security could still pay out 78 percent of expected benefits from annual revenues. "That would be a bad result, but it is a far cry from having no benefits at all," he said.

Inaccurate reporting on the topic tends to "make young people despair about Social Security," he said.

The point I'm trying to make with this post is that the climate of fear being generated in the population regarding Social Security is out of all proportion to whatever adjustment may need to be made to the program in the future.

The people who are generating the climate of fear want to destroy SS because the program runs counter to their political philosophy. They hate the "New Deal" and the principles of the Democratic Party.

[NoNothing]

26. It is projected to run a surplus, true

But it is not now and it won't if the economy doesn't recover in a big way.

It is not a "crisis" to be sure but I won't play along and pretend everything is hunky-dory. Government finances right now are bad and this only adds to the problem.

[alberg]

28. If your issue is the overall state of government finance, I share your concern.

So let's start by cutting the defense budget.

Second, let's stop the emergency war spending that has been approved (this is in addition to the baseline operational defense budget) and bring home the troops.

I'm all for a general discussion of how we can cut federal spending - I just don't want to start by cutting SS. There are plenty of other places where we can make cuts.

Want additional federal without raising Income Taxes? Legalize marijuana.

[NoNothing]

32. Sensible measures

But I don't know if you fully appreciate the magnitude of the problem.

Consider: even if income taxes were jacked up to 90% for everyone earning over $200,000 in 2008, it wouldn't even cover this year's deficit.

Or: even if you completely eliminated all defense and war spending from the budget, we'd STILL be running a deficit.

[alberg]

33. We are not going to pay off the deficit in one or two years.

Eventually, the economy will recover and tax revenuee will rise. We need to stop the periodic raids on the treasurey that result in these deficit spikes (see Iraq war, Bush Tax cuts etc - remember the trillion dollar surplus that existed when Clinton left office?).

My reason for posting is to counteract the fear mongering that is going on that is being used as a smoke screen to implement the far right's agenda of dismantling the New Deal.

The US can solve it's fiscal problems over the coming decades. The challenge is to not end up with a solution that destroys the middleclass and the quality of life for most Americans.

If you eliminated all defense spending and war spending you would, over time, be able to pay down the deficit and balance the budget. The underlying problem is not economic - it is social and political.

[NoNothing]

34. I said "deficit," not "debt"

That means that even if we completely eliminated defense and war spending, we'd still be spending more this year than we collect in tax revenue. And that's just this year! To even get anywhere close to a balanced budget, tax revenues don't just have to increase, they have to explode. Nobody, not the CBO, not Congress, not even Obama, is predicting this will happen. That is what is worrying.

[girl gone mad]

51. We don't need to run a balanced budget.

Deficits simply represent private sector savings.

There is no crisis here.

[Hannah Bell]

57. good, because we haven't for most of the history of the us. if the deficit hawks were right,

the country would have collapsed a long time ago.

[NoNothing]

66. Correct, so long as the economy grows faster than the debt

However, that is not currently the case and doesn't look likely to be the case any time soon.

[Hannah Bell]

61. it doesn't have to cover this year's deficit. in fact, if it did it would be recessionary.

est. deficit for 2010 is about 1.1 trillion. us gdp = 14.6 trillion

deficit = about 7% of gdp, not a big deal in a recession.

[NoNothing]

67. It's actually been revised up to 1.4 trillion

But whatever. It's justifiable in a recession, but is only sustainable for so long.

[Hannah Bell]

70. so what? you think that extra billion makes a difference? The US has run deficits

on most of its budgets for most of its existence. And the years it didn't were followed shortly after by DEPRESSION.

If it's been sustainable for 300 years, it's bloody sustainable for a few hundred more.

Money doesn't have some independent life. Governments CREATE it.

[NoNothing]

73. Sure, money isn't finite.

But wealth is. You cannot arbitrarily create more wealth by printing more money, you just reduce the worth of the money that way. Wealth has to be created by actual productive labor.

EDIT: P.S. We have continuously run deficits smaller than the rate of growth. We most certainly have not continuously run deficits the size they are now. We can afford to do so for a few years, but not indefinitely.

[Hannah Bell]

75. Yes, & it's people with money in hand that creates the DEMAND for productive labor.

at least in a capitalist economy.

in fact, in a recession-cum-depression, putting money into the economy creates demand, which creates jobs that use productive labor to create "wealthy" -- i.e. housing, food, clothing, etc.

[Hannah Bell]

59. Yes, out of future revenues: entirely as planned. The Trust Fund has assets of 2.5 trillion.

The government owes the Trust Fund $2.5 trillion.

The government routinely redeems TF securities. every fucking day.

They could print them out of thin air as sovereign debt & it wouldn't cost them a dime, nor would it goose inflation (hint: we're in a depression, massive undercapacity & underdemand).

But if you don't like that plan, rescinding the bush tax cuts on the top 1% = $1 trillion over ten years, which covers the portion needed to be redeemed in the same period more than adequately.

[Hannah Bell]

47. congress didn't "raid" SS. Congress didn't do anything to SS except raise levies in 1983

in order to create unprecedented continuing surpluses for 30 years.

Any surplus collections, per the original SS legislation, are SUPPOSED TO be borrowed by the government in exchange for US securities.

This genius plan (continuing surpluses, growing Trust Fund) was supposed to make SS secure for the baby boomers and the future.

Now you're trying to sell the fraud that just when the boomers start to retire, we need to collect MORE SS taxes -- so the Trust Fund can CONTINUE growing, and the government can CONTINUE borrowing workers' money?

BULLSHIT.

Rescind the bush income tax cuts & let the bastards pay back what they already "borrowed".

[NoNothing]

72. No, you've got it wrong

It's not that the SSA needs to collect more FICA taxes to add to the trust fund, it's that the Treasury needs to allocate more general revenue to purchasing those bonds back out of the SSA fund. Fundamentally, there's no *financial* difference between SSA collecting the taxes to pay out as benefits and the IRS collecting the taxes to give to Treasury to buy the bonds to pay the benefits. Either way, every dollar that SSA needs to pay out that it doesn't simultaneously collect is going to show up on the government balance sheet.

[Hannah Bell]

76. no, i've got it right. no "special legislation" is required.

"Fundamentally, there's no *financial* difference between SSA collecting the taxes to pay out as benefits and the IRS collecting the taxes to give to Treasury to buy the bonds to pay the benefits."

There's are a couple of huge difference: one takes money from CAPITAL, the other from LABOR. One RETIRES the Trust Fund debt; the other INCREASES IT. One is equivalent to repayment of a debt; the other to THEFT, a transfer to the RICH from the not-so-rich & poor.

[NoNothing]

79. Imagine there was no trust fund at all

So this year SSA collects $1000 (imaginary numbers for the sake of example) but it has to pay out $1100. So what happens? SSA runs a deficit. Of course, SSA, as a government agency, is funded by the federal government. Their deficit of $100 consequently shows up as an outlay on the government balance sheet, which has to be accounted for by revenues or bonding.

Okay, now consider the situation with the trust fund. SSA collects $1000 but has to pay out $1100. So it takes $100 worth of these bonds it has and sells it back to the Treasury for $100. The Treasury, in order to buy the bond, has to come up with $100, so it adds $100 to its annual outlays, which, because it is a government agency, shows up as a $100 outlay on the government balance sheet, which has to be accounted for by revenues or bonding.

You see? Financially, the existence of the trust fund makes no difference whatsoever. The $100 SSA deficit shows up as $100 of spending on the government's books in either case. *How* the government accounts for that, by issuing more bonds or by raising taxes or by cutting spending somewhere else, is a separate issue.

[Hannah Bell]

81. I don't have to imagine any such stupid scenario. I understand the reality perfectly well.

The government borrowed money it forced workers to save in trust (money not needed to fund current retirees) & funneled the surplus collections to the super-rich in the form of tax cuts.

Now they need to pay it back.

Rescinding the Bush tax cuts on the top 1% alone will do it.

Those tax cuts are also the #1 cause of the recession and deficit budgeting as well.

[NoNothing]

83. Yes, that would pay for it

But then we still have trillion+ deficits on top of that. Everything is competing for the same pool of revenue, is the fundamental point here. I am relatively optimistic that the economy will recover and we will be able to grow our way out of these deficits. I certainly am not advocating reneging on social security obligations.

However, I do think it is important for people to understand that ultimately everything is competing for the same revenues. The existence of the SSA trust fund DOES NOT mean that social security shortfalls do not have to be financed just like everything else government does. I think you understand that, but i believe many people do not, they think the trust fund is like a bank account that can be drawn upon without affecting the rest of the government's finances.

This is an important thing to understand, that's why I'm being so stubborn about it.

[Hannah Bell]

85. Pay off the Trust Fund & return to the original pay-go financing arrangement.

I don't give a damn about the deficit. Deficit budgets AREN'T PROBLEMATIC IN A RECESSION.

This is an important thing to understand, that's why i'm being so stubborn about it.

The Treasury could print up a couple of billion tomorrow if it chose to. With 10% unemployed & something like 75% capacity utilization, it could only help. Economic activity is still spiraling downward, in case you hadn't noticed: unemployment claims, intended layoffs, bankruptcies, foreclosures up, new housing starts down.

[girl gone mad]

49. It would make absolutely no sense for the government to "save" money in an SS fund.

We have a sovereign fiat currency.

It would be the height of foolishness for the government to store up money for SS while borrowing to spend for other programs.

[BeFree]

6. well. you're not gonna like this...

...but it takes several (4, 5, or 6?) workers to support one SS payment to an individual each month.

And yes, the money is all in bonds and if the bond market crashes, kiss it all goodbye. IOW, there is no cash laying around. What comes in from each worker goes out to the SS recipients each month.

[alberg]

18. You're gonna like this - because it's good news that is being suppressed- SS runs a surplus

Social Security, according to its annual report, is expected to pay out slightly more in benefits than it receives in payroll tax this year, for the first time since changes were made in 1983. But payroll taxes are only one source of income for the program, and with the others -- including interest income on its $2.5 trillion trust fund, held in special issue U.S. Treasury securities -- the program is expected to continue to run a surplus until 2024

[NoNothing]

23. And where does the interest income come from?

[girl gone mad]

52. We print it from thin air.

Like every other sovereign currency regime.

[NoNothing]

69. No, it shows up on the government balance sheet

It is paid for by tax receipts or bond sales. It's only monetized if the Fed decides to buy the bonds.

[laughingliberal]

43. +1000 nt

[Hannah Bell]

58. the fact that you have to write 4,5,6 tells me you have no idea how many workers it takes to support

one ss payment.

average ss check = a little over $1000.

it takes 6.5 minimum wage workers, or 2 $50K workers, or less than one $106.k worker, to fund that average SS recipient's check. (12.4% employee & employer portions).

50K = about median wage so correct answer = about 2.

currently about 13% of the population is over 65 and we're in fine shape. In 2020, about 17% of the population will be, & we'll still be in fine shape. at that point the % will start to level off (people born in 1955 will turn 65 in 2020, those born in 1946 will be 74 & into the high death years).

and the fact that you talk about cash lying around tells me you think money = dollar bills & coins.

[BrklynLiberal]

8. posted previously...once a week is not enough

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=8866924\

Myth: Social Security adds to the deficit

Reality: It's not just wrong -- it's impossible! By law, Social Security funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.


Myth: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.3 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it'll still be able to pay out 75% of scheduled benefits--and again, that's without any changes. The program started preparing for the Baby Boomers retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.

Myth: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than did 70 years ago.3 What's more, what gains there have been are distributed very unevenly--since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market--which would have been disastrous--but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

links for sources at post.

[Bozita]

12. +1

[Jazzgirl]

19. Well, let's not let reality get in the way of a good myth!

Thanks for all the good posts in this thread on the reality of SS. I remember when *shrub was trying to tell everybody that the paper he was holding up for the picture (treasury bonds) was a bunch of IOU's. People that work for SS knew it was a lie and said it was probably the most solvent government program ever. They were being told to lie to people and tell them SS was on it's last leg and they were refusing to do it. This is getting sickening.

[alberg]

21. Yep! That's how the big lie works, you just keep repeating it till folks start accepting it as true.

There's even a bunch of folks on this board that have swallowed that malarkey and keep posting it like it is fact.

[Altoid_Cyclist]

13. I received the email a few days ago and saved it so that I can have a handy reference guide.

Once again we're being treated to the old a lie isn't a lie if you repeat it often enough.

Thanks for keeping this front and center.

[ItNerd4life]

14. The myths you site are more factual than your realities.

#4 especially. U.S. Treasury bonds are IOUs. You can't borrow $10,000 from your self and then write an IOU and say you are solvent. The IOU doesn't cancel the $10,000 shortage. The government is borrowing from itself. It's illegal for people to do it, but not for the government?

[alberg]

16. See post #11.

The Federal Government doesn't owe the money to "itself" - it owes it to the citizens of the US. That's who the money was borrowed from. That's the reality. That's how the money got into the trust fund. People put it there during the years when SS was running a surplus.

The term "IOU" is a trick and a manipulation designed to make people think that the money is not really available.

Here's the deal:

The US government owes China 1 Trillion dollars - this is considered a real obligation that must be satisfied. There is no option not to pay it. The form of the debt is Treasury Bonds.

The US government owes the Social Security Trust Fund Trillions of dollars - this is a real obligation that must be satisfied. There is no option not to pay it. The form of the debt is Treasury Bonds.

The elites that are trying to destroy social security cannot have it both ways. If the debt to Social Security is not real, then the debt to China isn't either - in which case the US deficit immediately becomes a lot smaller. But if the debt to China is real, then the debt to the Social Security Trust Fund is just as real a must be honored.

[NoNothing]

24. You are incorrect

As to specifically the the bonds held by the SSA in the "trust fund," that most certainly is money that the government owes to itself. It holds both the asset and the liability. The only way it can convert this into CASH to pay out as benefits, is from general revenues.

[alberg]

27. You are confusing the mechanics of the payment with who the money is owed to

How will the government pay the debt it owes to China? Since the government has the same type of obligation to the SS Trust Fund, let's just use the same proceedure. A debt is a debt. The US government has at least as much resposibility to make good on it's obligations to it's own citizens as it does a foreign government. Wouldn't you agree?

[NoNothing]

29. The point is it is nonsensical to talk of the U.S. government's obligation to the SSA

Because they are the same organization, so default is not the only way to avoid payment. The government could simply order the SSA to burn its bonds in a fire and declare them void, or have the SSA donate them back to the Treasury as a gift. In point of fact, the bonds the SSA holds are different than the kind the government sells for this very reason. You keep saying that this is a debt the government owes its own citizens, but this is not true. The citizens do not own the bonds, the government does.

[alberg]

35. The point is, the debt that the bonds cover, is a debt to the receipients of Social Security

i.e., the Citizens of the United States. If the Government owed the money to itself, it would not need to pay it back. You've skipped over the underlying reason why the bonds were issued in the first place. They were issued to cover a loan made from the SS Trust Fund to the gevernment. The Trust Fund belongs to the American People - you and me.

[NoNothing]

40. Not it isn't

You keep saying that but it is not true. I mean, it might be true in a political or moral sense, but NOT in a financial sense. The only entity with a legal claim against the government for those funds is the government. Legally, the trust fund does NOT belong to you and me. It belongs to the government.

[Hannah Bell]

84. It is in a POLITICAL sense, & that's the sense that matters.

LEGALLY, the government belongs to the people, & if government office-holders push them too far, they will pay.

So quit trying to justify the robbery & impoverishment of US workers & old people.

The top 1% takes 23% of national income.

The bottom 50% takes only 13%.

In 1986 it was 11% v. 17%.

THAT'S THE CAUSE OF THE RECESSION, THE BUBBLE, THE DEFICIT, & MOST OF THE ILLS OF THE COUNTRY.

[Hannah Bell]

62. they *could*. but they won't. why are you repeating standard right-wing talking points?

[Better Believe It]

31. Thanks. K & R

[laughingliberal]

44. K & R nt

[Yo_Mama]

45. Sorry, it is a crisis

Let me first state that I don't believe we should default on our OASDI debt, and I also don't buy into this strange and deluded idea that delaying the retirement age is appropriate or will even produce good results. For anyone.

But still, the income to the fund (wages taxes plus taxes on benefits) is now less than the outlay (benefits plus admin costs plus RR payments), and it will continue to be short over time.

The trust funds represent a moral debt, but they are not a source of funding. This means that new legislation has to be passed to raise revenues coming into the program, and so I believe trying to convince people that there isn't a near-term Social Security crisis is self-defeating (for those who want to sustain the program).

It is true that in 2014-2015 revenues may exceed outlays by a little, but they also may not. In any case, we'll be in red consistently from now on if you look at totals. And that means we need to raise revenue. And any revenue we raise should be invested in real assets, not some bogus trust fund that doesn't exist.

If you raised money and put the revenue out as deposits in banks (insured by FDIC), you'd have some money later on to actually pay benefits with. Also, it would tend to inject money into the system.

Another thing to consider is that sharply raising the wage limit is really just an income tax increase, unless of course you raise those individuals' Social Security incomes proportionally - which does not really get us there. We need to be realistic about this, because we are going to raise income taxes on people making what would be about 75K now to cover other budget shortfalls. Only the top 10% of the households have > 100K in income, and the Social Security wage limit is currently $106,800 (so many of these households aren't even reaching that limit).

For a single, the tax bracket is 28% right now with a wage of 150K, and set to go up in 2011. Anyway, if you raise the Social Security wage base for the employee only, and raise the income tax rate, the marginal rate will go up to about 39%. Then start adding in state tax, and you are in trouble.

Also, you can't raise the wage base for SS all the way - you can only do it on the employee's half. Because if the employer has to pay out an additional 6.2%, the employer will just cut the wage or stop raises to compensate, which will actually cost the general fund more than Social Security gains. It does not make sense to give up 33% to get 6.2% on each dollar.

I would go to tax-shielded incomes such as munis and IRA/401K's after an annual tax free earnings limit such as 5-10K. That would raise more money from people with high assets who can most afford to pay extra taxes. But regardless of HOW you do it, we have to do it. Because right now we are just going to be borrowing to pay for this program, and when we can't any more, then every retiree is going to get hit. And according to the latest CBO report, we won't be able to borrow any more around 2020.

It's cash flow that counts, and this program is now in near-term cash flow trouble. The only way to continue it is to raise dedicated income sources and then protect them from the rest of the federal debacle.

[Hannah Bell]

64. 1. "This means that new legislation has to be passed to raise revenues coming into the program,"

No, it doesn't. It means that the government continue to redeem Trust Fund bonds, as they do on a quarterly or even daily basis.

2. "If you raised money and put the revenue out as deposits in banks (insured by FDIC), you'd have some money coming into the system"

Ridiculous for multiple reasons:

a. There's no reason to prefund SS in the first place except for the one-year cushion mandated in the original legislation. The idiotic idea of prefunding is how we got $2.5 trillion in trust fund securities all the "democrats" on this thread are now telling us represent a "crisis".

b. There's basically no difference in putting any surplus collection into a bank (which loans it out) loaning it to the us government. In both cases, the surplus collections flow into the economy. Since the government is the ultimate guarantor of fdic, your recommendation to deposit surpluses in a bank is stupid -- especially in these times. Excess handling fees & money loaned out to float bubbles.

c. etc. i'm too bored to go on.

3. "we'll be in red consistently from now on if you look at totals." false. try reading one of the Trustees reports.

4. "raising the wage limit is really just an income tax increase". no, it's not. it's a fica increase. fica is paid by workers, income tax is paid by capital. There *needs* to be an income tax increase at the top, not a fica increase.

5. "the tax bracket is 28% right now with a wage of 150K, and set to go up in 2011. Anyway, if you raise the Social Security wage base for the employee only, and raise the income tax rate, the marginal rate will go up to about 39%."

no clue what you're even saying.

6. " Also, you can't raise the wage base for SS all the way - you can only do it on the employee's half. Because if the employer has to pay out an additional 6.2%, the employer will just cut the wage"

wtf?

7. "would go to tax-shielded incomes such as munis and IRA/401K's after an annual tax free earnings limit such as 5-10K."

wtf?

8. " But regardless of HOW you do it, we have to do it."

DO WHAT?

Most of your post is unparseable, but I get the sense you don't know much about SS funding.

[SugarShack]

53. Top 5 Social Security Myths

Myth #1: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it'll still be able to pay out 75% of scheduled benefits—and again, that's without any changes. The program started preparing for the Baby Boomers' retirement decades ago.2 Anyone who insists Social Security is broke probably wants to break it themselves.

Myth #2: We have to raise the retirement age because people are living longer.

Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago.3 What's more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth #3: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6 But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth #4: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth #5: Social Security adds to the deficit

Reality: It's not just wrong—it's impossible! By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.8

Defeating these myths is the first step to stopping Social Security cuts. Can you share this list now?

Thanks for all you do.

[bettyellen]

54. "a coordinated attempt to erode support for Social Security, particularly among younger workers."

[laughingliberal]

74. Yes. And it's working on many, some right here in this thread. nt

[unkachuck]

63. K&R....n/t

[Greyhound]

86. K&R. Ignore the myth-spinners.

The level of dumb, and willingness to let the few fuck over everybody again, regarding this issue is simply astounding.
:kick: & R

[raouldukelives]

87. K&R

[glitch]

89. The pusch is on, even KPFA's Free Speech Radio News had a puff piece on the "bi-partisan deficit com

mission" yesterday :puke: