Social Security not a cause of, and not a solution to, national debt

It’s not, or at least it shouldn’t be, about Social Security.

Social Security is neither the cause of nor the solution to our nation’s financial problems.

Nonetheless, a bipartisan presidential commission looking for ways to reduce our national debt is making noises about dragging Social Security into the squabble. The Republican co-chair of the commission, former U.S. Sen. Alan Simpson, fed that impression in an email last month when he referred to Social Security as “a milk cow with 310 million tits.” Simpson also argued in that email that Social Security is in trouble unless it can be made sustainable and solvent over the long term.

Fortunately, that is an exaggeration of the program’s condition. The facts are as follows:

1.) With no changes in taxes or benefits, Social Security can continue to pay 100 percent of all promised benefits between now and 2036. It can do so by tapping a $2.5 trillion trust fund created precisely to cover the retirement years of the Baby Boom generation.

2.) Beginning in 2037, and for every year thereafter, Social Security would be able to pay recipients only 76 percent of promised benefits.

3.) That post-2037 gap could be closed with relatively minor fixes. For example, raising combined SSI payroll taxes from 12.4 to 14.4 percent would cover the bill entirely. A combination of a slight payroll tax increase, applying the tax to earned income above the current tax ceiling of $106,000 and adjusting scheduled cost-of-living increases could also eliminate the gap relatively painlessly.

If those are the kind of fixes that Simpson envisions — if his goal is to fix Social Security solely for the purpose of fixing Social Security — then that’s a discussion worth having.

However, if Simpson and others are after larger game — if they hope to tap the $2.5 trillion owed to Social Security as a way to address the nation’s larger fiscal problems, for example — they’re going to have an all-out fight on their hands.

v70n3p111_chart03-1

Take a look at the chart above, from Stephen Goss, the chief actuary of the Social Security Administration. It documents, as a percentage of GDP, the amount of money collected each year in Social Security taxes above and beyond what Social Security paid out that year.

Note the year 1983. That year, a commission appointed by President Ronald Reagan recommended significant increases in Social Security payroll taxes in order to make the program actuarially sound. The idea, embraced by Congress, was that the additional revenue would be used to build a surplus in the Social Security Trust Fund so that when the Baby Boom generation began to reach retirement age, the money would be there.

Today, that surplus would amount to $2.5 trillion. But notice that word “would.” For more than 25 years, while working people were told that they were paying extra taxes to ensure their retirement security, that surplus tax revenue was actually being siphoned off to run general government operations. In effect, higher Social Security taxes were being used to offset revenue that had been lost to the government when Reagan cut income and corporate taxes, disguising the true fiscal impact of those cuts.

Today, technically, a surplus of $2.5 trillion now sits in the trust fund, ready to be used for Social Security. In reality, the trust fund contains government IOUs that taxpayers today and tomorrow will have to redeem, probably through payeing higher taxes. So here’s the question now before the body politic:

Will taxpayers — and politicians — honor the $2.5 trillion debt that is owed to Social Security and those who paid into it? Or, will they breach that trust by claiming that the debt is too big to be repaid in its entirety, and that benefit cuts will be required?

There’s no question that the nation’s longterm financial crisis is serious. Eventually, it will have to be addressed both through cuts in spending — including entitlements — and through tax increases. However, as long as it is made actuarially sound, Social Security ought to be exempt because it has been and continues to be a self-funding program, requiring no input from the general treasury other than repayment of what the treasury has borrowed.

To repeat, Social Security is not to blame for our financial problems. And it should not be treated as a piggy bank to be raided and not repaid, at the expense of those who count upon it.

670 comments Add your comment

N-GA

September 7th, 2010
11:02 am

Just like blaming CRA for the financial industry meltdown, there are many who will lie about Social Security in order to support their agenda

TaxPayer

September 7th, 2010
11:05 am

But what about the tax cuts for the wealthy. Don’t you even care about the wealthy, Jay. And what about wars and the DoD. Don’t you care about wars and the DoD, Jay. And what about…

joe matarotz

September 7th, 2010
11:08 am

The famous Clinton surplus was actually a result of including Social Security money in the federal budget. Democrapic smoke and mirrors.

larry

September 7th, 2010
11:08 am

combination of a slight payroll tax increase, applying the tax to earned income above the current tax ceiling of $106,000 and adjusting scheduled cost-of-living increases could also eliminate the gap relatively painlessly.

Increase the current tax ceiling from the first $106,000 to the first $1 million and you would not have to adjust cost of living increases.

jewcowboy

September 7th, 2010
11:09 am

“In reality, the trust fund contains government IOUs that taxpayers today and tomorrow will have to redeem, probably through payeing higher taxes.”

As the boomer reach retirement age, it is the perfect time to ensure they have their benefits intact as their children shoulder what should have been their parents burden. Perfect, that is, if you are a boomer.

Jackie

September 7th, 2010
11:09 am

Those that purport to be American patriots and supporters of the Constitution will do and say anything to further their agenda, even if it means refusing to accept documented evidence that stares them squarely in the face.

larry

September 7th, 2010
11:09 am

And also you would not have to increase the retirement age to 70.

Scout

September 7th, 2010
11:10 am

Franklin Roosevelt, a Democrat, introduced the Social
Security (FICA) Program. He promised:

1.) That participation in the Program would be
Completely voluntary,

No longer Voluntary

2.) That the participants would only have to pay
1% of the first $1,400 of their annual
Incomes into the Program,

Now 7.65%
on the first $90,000

3.) That the money the participants elected to put
into the Program would be deductible from
their income for tax purposes each year,

No longer tax deductible

4.) That the money the participants put into the
independent ‘Trust Fund’ rather than into the
general operating fund, and therefore, would
only be used to fund the Social Security
Retirement Program, and no other
Government program, and,

Under Johnson the money was moved to
The General Fund and Spent

5.) That the annuity payments to the retirees would never be taxed as income.

Under Clinton & Gore
Up to 85% of your Social Security can be Taxed

Since many of us have paid into FICA for years and are
now receiving a Social Security check every month —
and then finding that we are getting taxed on 85% of
the money we paid to the Federal government to ‘put
away’ — you may be interested in the following:

———— ——— ——— ——— ——— ——— —-

Q: Which Political Party took Social Security from the
independent ‘Trust Fund’ and put it into the
general fund so that Congress could spend it?

A: It was Lyndon Johnson and the democratically
controlled House and Senate.

———— ——— ——— ——— ——— ——— ——— —

Q: Which Political Party eliminated the income tax
deduction for Social Security (FICA) withholding?

A: The Democratic Party.

———— ——— ——— ——— ——— ——— ——— —–

Q: Which Political Party started taxing Social
Security annuities?

A: The Democratic Party, with Al Gore casting the
‘tie-breaking’ deciding vote as President of the
Senate, while he was Vice President of the US

———— ——— ——— ——— ——— ——— ——— –

Q: Which Political Party decided to start
giving annuity payments to immigrants?

AND MY FAVORITE:

A: That’s right!

Jimmy Carter and the Democratic Party.
Immigrants moved into this country, and at age 65,
began to receive Social Security payments! The
Democratic Party gave these payments to them,
even though they never paid a dime into it!

———— — ———— ——— —– ———— ——— ———

Then, after violating the original contract (FICA),
the Democrats turn around and tell you that the Republicans want to take your Social Security away!

And the worst part about it is uninformed citizens believe it!

Carlosgvv

September 7th, 2010
11:13 am

The Republicans have been against Social Security from the beginning. Like the Roe V Wade opponents, they will not stop unitl they have overturned Socia Security. Deep down, the Republican philosophy is “every man for himself” and is some don’t make it, well, that’s life.

jewcowboy

September 7th, 2010
11:13 am

Scout @ 11.10,

Perhaps you should read this about your cut and paste email:

http://www.snopes.com/politics/socialsecurity/changes.asp

USinUK

September 7th, 2010
11:15 am

Scout – before you cut and paste that crap AGAIN (what is this? the 3rd time, at least), would you please do a little research??

http://www.snopes.com/politics/socialsecurity/changes.asp

USinUK

September 7th, 2010
11:15 am

JCB – JINX! I owe you a coke

Jay

September 7th, 2010
11:16 am

In other words, Jewcowboy, the only part of Scout’s post that was 100 percent accurate was this:

“And the worst part about it is uninformed citizens believe it!”

Paul

September 7th, 2010
11:17 am

Technically correct. It’s not to blame. But, in the minds of many, it’s jut one more burgeoning bill we have to pay, or more correctly, have slimed off onto the younger generation. And the party in power gets the heat.

Wasn’t part of Simpson’s point that people talk a good game about financial responsibility, until it affects them?

I’d also add to the list of SS fixes extending the retirement age and not just adjusting cost of living increases, but redefining how they’re calculated. ‘Course, the biggest fix could be ‘Congress will no longer write IOUs”…. but then our financial mess would seem even worse, correct? And Democrats have waaay too many problems come November to even think about doing that.

Matti

September 7th, 2010
11:17 am

Snopes is your friend.

jewcowboy

September 7th, 2010
11:18 am

Jackie

September 7th, 2010
11:19 am

If nothing were done about the perceived Social Security deficit, the current dollars in the “trust fund” would continue to pay all recipients at a 100% rate until the year 2037; even then, the payout rate would be 70% of the requirement.

Increasing the ceiling for payment of the Social Security taxes from the current $106,000 to $500,000 yearly would be more than enough to handle future obligations.

jewcowboy

September 7th, 2010
11:19 am

Jay,

“In other words, Jewcowboy, the only part of Scout’s post that was 100 percent accurate was this:”

Bingo!

jewcowboy

September 7th, 2010
11:19 am

Matti,

“Snopes is your friend.”

And the truth is rarely Scout’s friend….

TaxPayer

September 7th, 2010
11:21 am

The famous Clinton surplus was actually a result of including Social Security money in the federal budget. Democrapic smoke and mirrors.

And the Bush/Republican legacy was the spending of all that and more on things like tax cuts for the wealthy and two wars and a prescription drug company benefit and an ag bill. But bestest of all, we gots us’s more de-regulations. I like… eggs.

USinUK

September 7th, 2010
11:22 am

JCB – 11:19 – I would go so far as to say that I don’t think they’re even on speaking terms …

Scout

September 7th, 2010
11:25 am

#1) Snopes is not the final word on anything as they have been wrong before.

#2) Throw out the false and opine about the truth.

#3) The last thing libs. should be talking about is truth.

Deep throat

September 7th, 2010
11:27 am

Dumdacrats stirring the pot again, twist and spin

larry

September 7th, 2010
11:27 am

Yep , blame everything on Democrats but when the truth is known, blame the same website you cut and pasted from .

oy

TaxPayer

September 7th, 2010
11:28 am

#1) Scout is not the final word on anything as he has been wrong before.

There. Fixed that #1 of yours for ya. No need to thank me.

USinUK

September 7th, 2010
11:30 am

Scout – “Throw out the false and opine about the truth”

that’s exactly what we’re doing. showing your cut-and-paste for the BS it is (which, frankly, demeans bulls everywhere)

Redneck Convert (R--and proud of it)

September 7th, 2010
11:30 am

Well, I say get rid of SS total. But only after I draw mine and then die. This spending’s got to stop. Except maybe for war. And I don’t count Tax Cuts. They don’t cost nothing.

And keep the guvmint’s hands off of my Medicare.

Have a good dinner everybody.

Scout

September 7th, 2010
11:31 am

Sure I have been wrong before – no one’s perfect.

The difference between me and most liberals is that I will admit it.

Mick

September 7th, 2010
11:32 am

Social security, a great program that works. I’m glad its the third rail of politics and it should be strengthened to the point that people could retire at age 60 with full benefits.

Scout

September 7th, 2010
11:32 am

USinUK:

Put yourself in that bucket while you’re at it.

Jay

September 7th, 2010
11:33 am

You didn’t admit it, Scout.

You turned it into an attack on those who called you on it.

Deep throat

September 7th, 2010
11:34 am

Scout, Libs are always right in their on mind, but their usually wrong in everyone elses mind.

Granny Godzilla

September 7th, 2010
11:35 am

Social Security!

Been paying in for a lotta years, and am proud to call it ONE of the
plans we count on for our retirement.

Thanks Democrats for keeping safe from the GOP!

thomas

September 7th, 2010
11:35 am

Why do we have to wait to raise the tax from 12.4 to 14.4?

To help manage our fiscal problems would teh best solution not be to go ahead and raise the taxes? After all it is those who will be collecting under the 12.4 bracket system who will be the ones who force the increase of the 2%?

Why would they (congress) not go ahead and make the adjustment now instead of later?

Oh yeah votes!

TaxPayer

September 7th, 2010
11:35 am

Is hypocriting (I luvs how one can make nouns into verbs these days) a generally acceptable pasttime for Christians these days. Just wonderin’.

N-GA

September 7th, 2010
11:36 am

Good morning, Paul.

The COLA adjustment for Social Security is largely based upon CPI. Whether that is “fair” depends on who you ask. There are those that feel that retirees are not as susceptible to price increases since they are not out there spending lots of money on appliances, housing, etc. Then again many seniors complain that the increases fall short of the increases in the cost of supplemental health care plans, driveway re-pavers, roofing repairmen, extended warranty salesmen, TV evangelists, etc.

stands for decibels

September 7th, 2010
11:38 am

Scout – before you cut and paste that crap AGAIN (what is this? the 3rd time, at least)

I really wish Jay would take it down, so that we could discuss Jay’s post, instead of getting waylaid once again over whether Scout is merely delusional, or a pants-on-fire liar.

thomas

September 7th, 2010
11:38 am

TaxPayer

September 7th, 2010
11:35 am

I would say it is a pastime for all, but I know how you hate christians and judge all of them by some, so I understand!

TaxPayer

September 7th, 2010
11:39 am

TV evangelists, etc.

You mean like the promoters of antique gold coins.

DP

September 7th, 2010
11:39 am

Jay, with regard to your previous blog, how do you think Barack Obama stacks up on the authenticity scale?

Jackie

September 7th, 2010
11:40 am

The topic of today’s blog is a clear indication of the way the Repubs have framed the political argument by using half-truths and innuendos about “kitchen table” subjects.

Social Security, in no way shape or form, affects the national debt. Social Security is paid for by those who work, yet, the money is used by the politicians to fund many of their projects. Then we are told we are going broke because of Social Security entitlements.

Paulo977

September 7th, 2010
11:41 am

Jackie @11:09am I , I am not being facetious here,but I being really serious … they have not been taught to COMPREHEND just to CALL WORDS!!!

USinUK

September 7th, 2010
11:42 am

“Libs are always right in their on mind, but their usually wrong in everyone elses mind”

it’s called being reality-based rather than faith-based.

give it a try.

“Put yourself in that bucket while you’re at it.”

um. nope. I’ll put up my batting average against yours any day of the week (and twice on Sundays) … unlike you, I at least take the time to check my facts before posting

TaxPayer

September 7th, 2010
11:44 am

I would say it is a pastime for all, but I know how you hate christians and judge all of them by some, so I understand!

I know you think you know me well enough to know in your mind that I hate but do feel free to tell me what you really know about me, anonymously of course. By the way, I referred to the “Christians” with my question. Who are these “christians” that you refer to.

stands for decibels

September 7th, 2010
11:44 am

Anyway, just so it’s clear, when you hear Very Serious and Responsible people going on about “entitlement reform,” what they really mean is “let’s screw the workers who thought they were actually providing for their futures all those years.”

And Jay, call the “bipartisan presidential commission looking for ways to reduce our national debt” by the name known to those who are actually looking at what they’ve been up to.

It’s the Catfood Commission. Featuring these lovely fellows.

N-GA

September 7th, 2010
11:44 am

Too many people view Social Security just as a form of retirement when it is really much more than that. It also provides disability payments for people unable to work and survivor’s benefits for wives and children of individuals who die before reaching retirement age.

The problem is not Social Security itself…it is failing to properly fund it….it is failing to minimize disability fraud…it is spending far too much to administer it. These are things that can be fixed by involving politicians from both sides of the aisle. Oh well…..

JohnnyReb

September 7th, 2010
11:46 am

Finally!! A Jay post on which I totally agree. In fact, if the government does not honor the SS pledge, all will see what JohnnyReb looks like when I make the nightly news protesting in DC – it won’t be a pretty sight.

godless heathen

September 7th, 2010
11:47 am

“Perfect, that is, if you are a boomer.”

Take 14% of my income my entire working career and if i live long enough I get a pittance of that back every month until I die. And when i die the Govt. keeps the balance. Yes, perfect!

N-GA

September 7th, 2010
11:47 am

JohnnyReb – Be sure to cover up your buttcrack!

JohnnyReb

September 7th, 2010
11:48 am

N-GA — I am not a plumber!

TaxPayer

September 7th, 2010
11:48 am

Jay, with regard to your previous blog, how do you think Barack Obama stacks up on the authenticity scale?

Well, I don’t know about Jay but I, for one, think he’s real, even without a long form certificate of authentication… like Beck offers with every purchase of doubloons or like comes with every Cabbage Patcher.

stands for decibels

September 7th, 2010
11:48 am

Take 14% of my income my entire working career and if i live long enough I get a pittance of that back every month until I die.

This crap again? See how well you do in the private marketplace investing in something that pays you a guaranteed annuity for the rest of your life.

Deep throat

September 7th, 2010
11:50 am

Saw a great bumper sticker today, it read ( Educate a Democrat today, it will make for a better tomorrow. )

Paul

September 7th, 2010
11:54 am

Mick

“it should be strengthened to the point that people could retire at age 60 with full benefits.”

Okay, I’ll bite: who’s gonna pay? And before you say ‘raise the earnings cap’ you might want to check and see if that would cover it.

Hello, N-GA!

My understanding is, SS COLAs are determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is representative of about a third of the population (certain workers, but specifically excludes retirees) and results in a higher COLA calculation than the broader CPI-U, which covers most of the population.

godless heathen

September 7th, 2010
11:55 am

“This crap again? See how well you do in the private marketplace investing in something that pays you a guaranteed annuity for the rest of your life.”

That should tell you it’s a bad idea. But what’s crap about the facts? SS is a bad deal for most workers.

USinUK

September 7th, 2010
11:56 am

dB – “This crap again?” yep. this crap ALWAYS. right up there with the CRA and the grassy knoll.

USinUK

September 7th, 2010
11:57 am

“SS is a bad deal for most workers.”

a regular guaranteed annuity to supplement your own retirement savings?

oooooo … yeah … bad idea …

TaxPayer

September 7th, 2010
11:57 am

Educate a Democrat today, it will make for a better tomorrow

It seems as though it was only yesterday that I read words from bloggers, whom presumably are not Democrats based on my own interpretation of their expressions (then again, “impressions” might be more descriptive) of themselves, that would lead one to believe that they would prefer to have more uneducated Democrats in their midst. Then again, perhaps they were referring strictly to the liberals in that subset of the unwashed.

Paul

September 7th, 2010
11:58 am

Jackie 11:40

“Social Security, in no way shape or form, affects the national debt.”

Absolute statement.

” Social Security is paid for by those who work, yet, the money is used by the politicians to fund many of their projects.”

So… if SS funds were not used to pay for those projects then, absent higher tax collections, we’d have to issue more debt to cover those projects.

So, Social Security, in some way or form, does affect the national debt.

getalife

September 7th, 2010
11:58 am

Take it off the table.

Paul

September 7th, 2010
12:00 pm

stands for decibels

“what they really mean is “let’s screw the workers who thought they were actually providing for their futures all those years.””

Actually, people qualify to receive benefits by their work and wage history. That can be changed at any time. What they pay over the years is not to pay for their retirement, but for current retirees.

stands for decibels

September 7th, 2010
12:01 pm

Godless @ 11.55, if you really think that you can do better investing privately in an annuity that will pay as well in guaranteed income for the rest of your life, as you’ve done through your to-date contributions to SS, go ahead. Enlighten us.

Show your work; I’d love to see just what you come up with.

Doggone/GA

September 7th, 2010
12:02 pm

“So, Social Security, in some way or form, does affect the national debt”

Actually, no it doesn’t. The money was borrowed to pay for tax cuts, but SS *itself* is self-supporting. That stupid policiticians shoe-horned it into the budget process does not indict the SS system and does not make it part of the budget. The budget problems were only hidden by the borrowing, but were not affected by the SS system.

USinUK

September 7th, 2010
12:02 pm

“Educate a Democrat today, it will make for a better tomorrow”

:lol:

why I believe it was just last week that @@ nearly had an aneurism because I said I was surprised that a conservative on this blog was able to even spell the word “compromise”, much less understand the meaning. she accused liberals of being condescending and elitist and all sorts of other atrocities.

I’m sure she’ll be equally excoriating of Deep Throat’s post …

TaxPayer

September 7th, 2010
12:02 pm

Has anyone seen my lock box. When Gore and Bush were on the campaign trail, how did Bush counter Gore’s “lock box” talk. Did he promise to chase bin Laden to the Gates of Hell. No. Wait a minute. Wrong campaign promiser.

Paul

September 7th, 2010
12:03 pm

N-GA

“Too many people view Social Security just as a form of retirement when it is really much more than that. It also provides disability payments for people unable to work and survivor’s benefits for wives and children of individuals who die before reaching retirement age.”

Bingo!

So, what we have is a mandatory participation in a disability and life insurance program.

Which is the answer to health care reform critics who say “government cannot, and has never, mandated participation in an insurance scheme. Auto insurance applies only if you have a car.”

stands for decibels

September 7th, 2010
12:04 pm

What they pay over the years is not to pay for their retirement, but for current retirees.

Well, to a certain extent, yes. however. What’s being spoken of as somehow on the table is for the Catfood Commission to excuse, is that money paid into the treasury, which was supposed to be available to people who’d been paying in surplus going back to ‘83.

You tell all these people “oop, sorry, we spent it!” and you are stealing from them, plain and simple.

Paul

September 7th, 2010
12:05 pm

Doggone/GA

“Actually, no it doesn’t. The money was borrowed to pay for tax cuts”

Whether it ‘paid for’ tax cuts or funded new programs or funded existing programs or funded special programs is irrelevant.

Absent SS receipts to draw on for meeting general revenue obligations, holding other receipts constant, the national debt would have increased.

Jackie

September 7th, 2010
12:06 pm

@Paulo977

I’m glad someone noticed the way the Repubs handle things.

@Paul

The key to your 11:58 post is the word “if.”

Paul

September 7th, 2010
12:08 pm

sfd

No argument there. But discussing what should have been, rather than what is, just makes blood pressure go higher. There’s a problem, current and looming. Maybe one fix would be to make sure past practices (funding general obligations with SS receipts) doesn’t continue?

Neither party will touch that.

Doggone/GA

September 7th, 2010
12:10 pm

“Absent SS receipts to draw on for meeting general revenue obligations, holding other receipts constant, the national debt would have increased”

You’re saying the same thing I just said: “The budget problems were only hidden by the borrowing, but were not affected by the SS system”

The SS system did not cause the budget problems and is not part of the budget problems, it just made it easier for the politicians to lie to the public about the effect of their tax cuts.

TaxPayer

September 7th, 2010
12:11 pm

Absent SS receipts to draw on for meeting general revenue obligations, holding other receipts constant, the national debt would have increased

OR, the absence of said money to draw on (lock it away in a lock box) could have resulted in less spending in order to keep the debt down.

Paul

September 7th, 2010
12:11 pm

Jackie

“So… since SS receipts were used to pay for those projects, we have seemingly lower debt than we would have had.

So, Social Security, in some way or form, does affect the national debt.”

Care to reengage?

Jackie

September 7th, 2010
12:12 pm

@godless heathen

You only pay 6.2% percent Social Security income tax, the employer pays the other 6.2%.
Secondly, in rare cases is it proven that someone who reaches retirement does not get all, if not more than their total contribution to Social Security.

Jackie

September 7th, 2010
12:14 pm

@Paul

Technically, you are correct in your statement. The money in the Social Security trust fund is used by the politicians to pay for projects, therefore, the national debt is affected.

Mick

September 7th, 2010
12:14 pm

paul

I’m thinking if they offered something like social security plus where you elect that choice and can collect benefits starting at age 60. Of course if you voluntarily elect that option, you would be paying more into it. I think a lot people would consider it. An added benefit would be to get some of the boomers off the job market and into retirement. That would create some badly needed job openings. By the way, social security still should always be the safety net in addition to 401’s or some other investments and not the complete retirement plan.

Paul

September 7th, 2010
12:15 pm

Doggone/GA

I didn’t read it that way when I wrote ““So, Social Security, in some way or form, does affect the national debt” and you responded “Actually, no it doesn’t.”

Thanks for the clarification. As I said in my first post to Jay, it’s technically correct. But continuing current practices means there’s one more debt crisis we have to deal with and people are fed up with politicians saying “we have a problem” and then shrugging their shoulders.

Saw Larry Sabato of Univ of VA this weekend. I’ll have to reconsider an assumption which was that there’s a general anti-incumbency mood out there. He said no, the anger is being directed at the party in power and so Nov’s going to be worse for Democrats than they now see.

Doggone/GA

September 7th, 2010
12:17 pm

“The money in the Social Security trust fund is used by the politicians to pay for projects, therefore, the national debt is affected.”

And I still don’t agree. The politician would have found another way to spend the money if SS had been put in that “lockbox” – they just wouldn’t have been able to disguise that spending behind SS. SS was not the cause of the spending, it was only a wall to hide behind.

Paul

September 7th, 2010
12:17 pm

Jackie

But it’s easy money to divert, and there’s so darn much of it, and any problems will be waaay after the politicians leave office (well, maybe not with our career Congress, but you get the idea).

godless heathen

September 7th, 2010
12:17 pm

If SS is such a good deal, make it voluntary and see how it does.

PinkoNeoConLibertarian

September 7th, 2010
12:18 pm

Maybe changing the military over to a defined contribution instead of defined benefits might help as well. $55B and change “borrowed” from the Treasury last year to keep it afloat. And the rules…20 years is 50% no matter how young you are when you hit the 20 years? Sweet!

actuary.defense.gov/cfo2009.pdf

Bruno

September 7th, 2010
12:18 pm

“And the Bush/Republican legacy was the spending of all that and more on things like tax cuts for the wealthy and two wars and a prescription drug company benefit and an ag bill.”

TaxPayer–Thanks for confirming that you were “John McCain” last night.

godless heathen

September 7th, 2010
12:19 pm

“You only pay 6.2% percent Social Security income tax, the employer pays the other 6.2%.”

I pay it all as does everyone. Half of it just doesn’t show up on the pay stub.

Bruno

September 7th, 2010
12:20 pm

And to all–Thanks for your well wishes in the job search, and sorry for any unnecessary anger in the meantime. I just spoke with the office manager of my new prospective employer and was told to expect some good news by the end of the week.

Paul

September 7th, 2010
12:20 pm

Mick

Good point about the safety net. It’s not the be all and end all, but for too many people, sadly, that’s just where it ends up. I’d read on Sen Leahy’s website that SS is all that keeps 40 percent of seniors above the poverty level.

Doggone/GA

September 7th, 2010
12:22 pm

“SS is all that keeps 40 percent of seniors above the poverty level.”

Then it is working as it was intended to work.

stands for decibels

September 7th, 2010
12:22 pm

Maybe one fix would be to make sure past practices (funding general obligations with SS receipts) doesn’t continue?

A lockbox? Fine with me, but given that this is revenue we’re talking about, those “general obligations” will just get called something else. But, okie doak. I think I agree on principle.

Beyond that, this blood-pressure raising political discussion really doe matter. A lot of this is cloaked in mystery, but here’s what I do know. People who should know better are BSing us by lumping a responsibly funded program that took the utterly unprecedented step decades ago to actually account for future shortfalls by funding THEM, as well, with every other Federal program in varying degrees of very real fiscal crisis (not to mention the patchwork quilt of State budgets in terrible shape, affected by all this).

Guys like Alan Simpson should be ashamed. Well, they really should be drawn and quarterd, but I’ll settle for ashamed.

Anyway, gotta run. Have fun batting down some of the crazier IT R A PONZEE SKEEM!!!! stuff that’s sure to arrive.

Paul

September 7th, 2010
12:23 pm

Doggone/GA

Seems to me you’re focusing on the ’cause’ of the spending and I’m focusing on the ‘effect.’

As in, “SS didn’t cause gov’t spending.” True.

And, ‘the effect of using SS funds to cover general revenue obligations means, absent SS and keeping other revenue constant, the national debt would be higher.” Also true.

TaxPayer

September 7th, 2010
12:23 pm

If I start drawing social security benefits at age 62, I will deplete the principal (assuming I add no more to it between now and then) that was paid in over the years by myself and my previous employers in eight years.

stands for decibels

September 7th, 2010
12:24 pm

Also:

If funding the DoD is such a good deal, make it voluntary and see how it does.

Brett

September 7th, 2010
12:25 pm

Simpson has always been one disgusting, nasty SOB. Such cretins never change – not even in old-age.

Jimmy62

September 7th, 2010
12:25 pm

So even you admit that the $2.5 trillion isn’t really there. Somehow I suspect that $2.5 trillion does have an effect on the national debt. But even if that money were really there, SS makes little sense with our current demography. Sure, when there were 25 workers for every retiree it made sense. But now it’s a lot closer to 1:1. So instead of making kids pay for parents, maybe parents should pay for parents and kids can pay for kids, and we can end this forced generational transfer of wealth.

Jackie

September 7th, 2010
12:26 pm

Doggone/GA

September 7th, 2010
12:27 pm

“And, ‘the effect of using SS funds to cover general revenue obligations means, absent SS and keeping other revenue constant, the national debt would be higher.” Also true”

No, it isn’t. If SS was in a “lockbox” but the politicians still spent the same amount of money, the debt would be EXACTLY the same…it would not be higher.

Bubba Bob

September 7th, 2010
12:28 pm

Are there or are there not just IOUs left in the SS fund? The 2037 date is considered correct only if the IOUs are paid back. It’s $2.5T to pay back. That money has to come from somewhere and it’s going to add to our debt.

So, in reality, SS is not solvent until 2037.

Bubba Bob

September 7th, 2010
12:29 pm

Doggone/GA

September 7th, 2010
12:30 pm

“in reality, SS is not solvent until 2037″

Actually, SS is solvent…it’s the general budget that is insolvent

Jackie

September 7th, 2010
12:31 pm

@Paul

There is a huge pile of money that just sits there and the politicians “borrow” from it to fund their projects.

I an understand not using the money in the open markets as this would skew the actual free market activity. I think I would offer the money to the governments of the world, including our own, at a higher interest rate than is currently received from the Treasury bonds.

Bruno

September 7th, 2010
12:31 pm

Paul–I forgot to acknowledge it, but really enjoyed the Kelley’s Hero clip. They don’t make ‘em like they used to, that’s for sure.

Mick–From last night, you’re cool in my book, whatever our political differences are.

Jackie

September 7th, 2010
12:32 pm

@DoggoneGA

The words should have been partially insolvent beginning in 2037.