By law Social Security cannot and does not contribute to the debt

[BoyNextDoor]

if by law Social Security cannot and does not contribute to the debt, then why is it even in the discussion about the so-called "fiscal cliff'? It is not anything other than a solvent, earned benefit for Americans.

And if you say different you are a liar, and if you believe different then you have been lied to and you bought it.

The only discussion is who to tax, and by how much we cut War spending. End of discussion.

 

[BoyNextDoor]

While the relationship of Social Security to the debt of the United States is a source of misunderstanding and confusion, it is not a matter of conjecture or opinion. By law, when Social Security has a surplus, it must invest that surplus in the safest investment on Earth – interest-bearing Treasury obligations backed by the full faith and credit of the United States. Including last year’s surplus, Social Security currently has an accumulated reserve of $2.7 trillion.

 

[eyer]

Santa's not stopping by your place this year, huh?

 

[LadyVer]

Interesting. Wish I could contribute something about the subject, but I tend to stick to non-fiscal issues.

 

[njlauren]

Social security by law was supposed to be a trust fund where inputs i.e ss taxes, were paid out as benefits. In the 1980's SS started running surpluses when they upped the SS tax (to create a 'bubble' to pay for the bump when the baby boom started retiring), so SS instead of pay as you go started build up surpluses. What happened was the government, to pay for the ballooning deficits that started in the 1980's, started using SS to mask the budgets deficits, they took the surpluses in SS and replaced the with IOU's (treasury securities). So each year hundreds of billions of dollars were borrowed from SS (and when they report budget deficits, folks, that is after they have borrowed from SS) and continued to be for the past 30 years.

Now comes the tricky part, in a sense SS does contribute to the debt, but not because of SS directly. SS is a creditor of the federal government (as someone pointed out, 2.7trillion dollars worth), and that collects interest that goes to the SS fund. That interest is part of the federal budget, and the interest on that debt (prob roughly 60 billion a year for 2.7 trillion approx) is part of the full federal budget, so it leads to debt because in a sense we are borrowing money to pay the interest on older debt. The real problem is as the baby boom comes into play the collections for SS may not match the outgoing disbursements and SS may need to borrow money to make up the difference, since those payments need to be made.

 

[4est_4est_Gump]

That is right Lauren.

 

[4est_4est_Gump]

Social Security is a pay-as-you-go system, which means that payments collected today are immediately used to pay benefits. Until recently, more payments were collected than were needed for benefits. So Social Security loaned the money to the U.S. government, which used it for other things, which in effect masked the overall size of the federal budget deficit. In exchange, Social Security received interest-bearing Treasury securities, which now total more than $2.7 trillion.

As we have repeatedly explained, the bonds held by Social Security are backed by the full faith and credit of the U.S. government. The bonds are a real asset to Social Security, but — here’s where it gets complicated — they also represent an obligation by the rest of the government. Like any entity that issues debt, such as a corporation, the government will have to make good on its obligations, generally by taking the money out of revenue, reducing expenses or issuing new debt.

So what is happening today? The Congressional Budget Office tracks the flow of money in and out of the Social Security fund, and below is a summary of the data for fiscal 2013. To keep things simple, we will include transfers made for the payroll tax holiday as part of “other income.”

Social Security Income (in billions of dollars)

Revenues 675
Interest 110
Other income 70
Total income 854
Outgo
Total outgo 819

This looks like surplus, worth about $36 billion after rounding.

But notice that fully $110 billion of the income was interest on Treasury securities. But that interest is simply paid with new Treasury bonds. So when that money is subtracted, the actual cash flow (what the CBO document calls “primary surplus/deficit”) is negative — and getting worse.

In 2012, the cash flow deficit was $58 billion. In 2013, it will be negative $75 billion — and then negative $82 billion in 2014. By 2016, the trust fund for disability insurance will be exhausted, so in theory, full disability benefits could not be paid.

As we noted before, this is partly a matter of theology. Democrats look at those trust funds and see actual assets, built up over time, that must be honored.

In their view, the general fund — which is now making payments to Social Security to cover the cash flow shortfall — has benefitted greatly over the past 30 years from annual Social Security trust fund surpluses that were invested in Treasury securities. In other words, Social Security has helped finance deficit spending in the rest of government – rather than contributing to those deficits. So any cash flow problem should be viewed as a deficit in the general fund rather than in Social Security.

The counter-argument is that this is just paper-shuffling among different parts of the U.S. government.

Ultimately, those bonds are part of the overall U.S. national debt. In other words, it doesn’t matter what happened in the past with Social Security monies; what matters is whether Social Security is generating enough money today to pay for its bills on its own. The plain fact is that it is not, and thus it adds to government’s overall fiscal imbalance.

For instance, the White House budget documents (see Table S-4) show that on an annual basis, Social Security outlays exceed Social Security payroll taxes, thus boosting the bottom line federal deficit. (Indeed, President Obama is often careful to say that Social Security is “not the primary driver” of deficits and the debt, suggesting that he understands it does play some role.)

“We come down somewhat in the middle on this debate,” we wrote last year. “The fact that the system is running a negative cash flow now — and the foreseeable future — is an important warning sign of fiscal imbalance.”

Durbin’s office declined to comment.

The Pinocchio Test

We try to avoid ruling on opinions, and to some extent this is a matter of opinion. But given the further decline in Social Security’s cash flow position in the past year, we are going to revise our ruling in this case and deem this “not one penny” talking point worthy of a Pinocchio.

Democrats are relying on sleight of hand to potentially mislead voters about the long-term financing of Social Security. To some extent, they are trying to wall off discussion of Social Security from a debate over solving the “fiscal cliff.” That may be appropriate, but that does not excuse this language.

Some readers might question why we are only giving One Pinocchio, which is for “selective telling of the truth” but “no outright falsehoods.” In part, that is because Durbin in his speech did immediately warn the issue could not be pushed aside and ignored—and even proposed action that could be taken. The ruling might be harsher in another context.

http://www.washingtonpost.com/blogs...cd3e8aa-3a68-11e2-8a97-363b0f9a0ab3_blog.html

 

[PoppingTom]

Merry Xmas, Copypastecat!

 

[4est_4est_Gump]

* The Social Security program has an independent budget that is separate from the rest of the federal government.[89]

* Social Security's sources of income include its dedicated taxes (payroll taxes and taxes on Social Security benefits), interest on the Social Security Trust Fund, and transfers from the general fund of the Treasury (like those required under the 2011 and 2012 payroll tax holidays).[90] [91]

* When Social Security's sources of income exceed its expenses, the resultant surpluses must be loaned to the general fund of the U.S. Treasury. By law, the Treasury must pay this money back to the Social Security program with interest. [92] [93] [94]

* The money owed by the Treasury to the Social Security program is referred to as the "Social Security Trust Fund," and at the close of 2011, it had a balance of $2.7 trillion.[95]

* This $2.7 trillion debt that the Treasury owes to Social Security amounts to $8,734 for every person living in the U.S. or $23,046 for every household in the U.S.[96] (Facts about the ability of the Treasury to service this debt are detailed below in the section entitled Impact on National Debt.)

* From 1985 through 2009, Social Security's dedicated taxes exceeded its expenses. In 2010, this situation reversed, and expenses exceeded dedicated taxes.[97] This state of affairs continued in 2011 and is projected to continue every year into the foreseeable future.[98]

* Despite the interest payments that Social Security receives on the Trust Fund, the Social Security Administration projects that the Trust Fund will start declining in value in 2013, which is six years earlier than what was projected in 2011 and eight years earlier than what was projected in 2010.[99] [100] [101] (As explained in the Introductory Notes, all future dollar figures are indexed for inflation. If inflation is not considered, the Trust Fund is projected to begin declining in 2021.[102])

* After 2013, the Social Security Trust Fund is projected to decline by a greater amount each year until becoming exhausted in 2033.[103])

* After 2033, Social Security is projected to run deficits every year into the foreseeable future.[107] To cover these deficits, it is projected that payroll taxes would need to be increased by 32.8% starting in 2033, rising to a 36.4% increase by 2086.[108] These shortfalls could also be covered by reducing benefits by 23.6% starting in 2033, rising to a 25.3% reduction by 2086.[109]

* There are several other ways to quantify Social Security's projected deficits. The measure commonly cited by the Social Administration[110] and the press[111] involves calculating how much money must be immediately added to the Trust Fund so that the principle and interest would cover projected shortfalls for the next 75 years. This is referred to as the "75-year open group unfunded obligation," and it currently amounts to $8.6 trillion.[112] [113] This is equivalent to 10.7 times the total income for Social Security in 2011 or an additional $54,500 from every person who paid Social Security payroll taxes in 2011.[114] [115]

* According to the U.S. Treasury's "Financial Report of the United States Government," the 75-year open group unfunded obligation "understates financial needs by capturing relatively more of the revenues from current and future workers and not capturing all of the benefits that are scheduled to be paid to them."[116] A measure that accounts for this is called the "closed group unfunded obligation." This involves calculating how much money must be immediately added to the Trust Fund to cover the projected shortfalls for all current taxpayers and beneficiaries in the Social Security program.[117] As of January 1, 2012, this amounts to $21.6 trillion or an additional $136,900 from every person who paid Social Security payroll taxes in 2011.[118] [119] This measure approximates the method by which publicly traded companies are required by law to report the finances of their pension and retirement plans.[120] [121] [122]

* Another way to quantify the projected deficits of Social Security is to calculate the total debt the program will accumulate if corrective action is not taken and money is borrowed to cover the shortfalls of the next 75 years. This debt (including interest) would amount to $65 trillion or an additional $276,000 (in 2012 dollars) for every person expected to be paying Social Security taxes in 2086.[123] [124]

* According to the Social Security Trustees' report, relying too heavily on a 75-year projection "can lead to incorrect perceptions and policies that fail to address financial sustainability for the more distant future." To address this shortcoming, the Trustees Report calculates how much money must be placed in the Social Security Trust Fund right now in order to finance projected deficits for the infinite horizon. This amounts to $20.5 trillion, which is comprised of 8.6 trillion to cover the shortfalls from 2012-2086 (as explained above) and another 11.9 trillion to cover the shortfalls for 2087 and beyond.[125]

http://www.justfacts.com/socialsecurity.asp

 

[4est_4est_Gump]

Dearest Popper,

It is Christmas, not Kwanza. You do not say Malcolm Christ, you say Malcolm X.

hugs & kisses,
A_J, the Atheist


PS - Just "facts;" not what I "know" or "feel" to be true.

 

[4est_4est_Gump]

if by law Social Security cannot and does not contribute to the debt, then why is it even in the discussion about the so-called "fiscal cliff'? It is not anything other than a solvent, earned benefit for Americans.

And if you say different you are a liar, and if you believe different then you have been lied to and you bought it.

The only discussion is who to tax, and by how much we cut War spending. End of discussion.

What we see, is that according to the government's own numbers, that this is a factual position only if we are using past, not so much present and certainly not future, tense. In order to make it true across all tenses, we must demand massive tax increases on the Middle Class.

 

[JAMESBJOHNSON]

What we see, is that according to the government's own numbers, that this is a factual position only if we are using past, not so much present and certainly not future, tense. In order to make it true across all tenses, we must demand massive tax increases on the Middle Class.

Sooner or later the king and nobles will try and flee to Austria for protection, once the nation is bankrupt and the middleclass is starving, and our Napoleon will come.

 

[mercury14]

PS - Just "facts;" not what I "know" or "feel" to be true.

Unless you're talking about Death Panels. Then you think it's okay to go off what you "feel" and ignore fact.

 

[PoppingTom]

Happy Xmas, Sgt Mercury Weisenheimer

 

[bcassidy123]

Happy Xmas, Sgt Mercury Weisenheimer

Using X as shorthand for Christ goes back to the very early Christians. Being hunted and persecuted for their belief in Christ, they used the Greek symbol X, pronounced Chi in public. In order to show other believers where services were being held, they would mark the location with an X. Hence the origin of X marks the spot.

But, that's just my opinion, I could be wrong.

 

[PoppingTom]

Merry Christmas to you and your opinion, too