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.
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.
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670 comments Add your comment
Bubba Bob
September 7th, 2010
12:33 pm
Plus, the David Walker of the Peterson Foundation makes it clear that SS isn’t really solvent and that our national debt is really $61.9T. $61.9T!!!
Walker is well-known and non-political. He served under many administrations on the left and right. He is very well respected. Watch I.O.U.S.A. for the real details.
SS is not solvent.
Paul
September 7th, 2010
12:34 pm
Lots of disparagement of Sen Simpson here. Doesn’t say much about Pres Obama’s judgment, does it?
Bubba Bob
September 7th, 2010
12:35 pm
Doggone,
They are the same thing. If we don’t have money in Pot A to give to Pot B then Pot B is no solvent.
Do you run your household finances with the same logic you apply to the national debt?
Bubba Bob
September 7th, 2010
12:36 pm
Here’s the link for the Peterson Foundation – http://www.pgpf.org
Deep throat
September 7th, 2010
12:38 pm
I’m surprised that no one really sees the big picture. We can talk about how SS has been handled Iin the past, you can acuse one party or the other for managing, mismanaging and so forth, but the point we all should focus on is this clown in Washington who doing nothing to incourage small business today, many can’t make it today, they are unemployed and Oblamer does not care, screw SS people need to work now,all these stats are worthless, they don’t consider 10 percent unemployment. Oblunder wants to spend another 50 Billion stimulus when the first did not work. We should be out raged, I just hope to make it to the age of retirement, Oblamer is an Idiot and his croonies are giving bad advise, I can’t wait till Nov. we can get rid of some of those politicos who only serve them selves.
Bubba Bob
September 7th, 2010
12:38 pm
Here is Walker’s 08/19/2010 summation of the CBO report:
” “Despite the above optimistic assumptions, the CBO estimates that within 10 years the federal government will spend more on interest costs than it will for non-defense discretionary spending which includes essential public programs, such as education, research and development, infrastructure, and the environment, that are vital to people today and our economy tomorrow.”
“When considering budgetary action, policymakers need to focus carefully on ways to guide us through this difficult economic time, while not compounding our longer-term structural deficit and debt challenges that threaten the future of our country and our families. Developing a plan now to address those challenges once the economy recovers would reduce some of the current uncertainty and provide needed reassurance.” “
Bruno
September 7th, 2010
12:41 pm
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.
Jackie–Just my opinion, but the “creative accounting” which the government employs by “merging” SS money with that of the general fund makes Big Business look honest when the quarterly earnings reports come out.
Sure, when there were 25 workers for every retiree it made sense. But now it’s a lot closer to 1:1.
Jimmy, another large part of the problem is that today’s retirees are drawing out waaaay more than they ever put in. And given the voting strength of the AARP, that’s never going to change.
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.
Paul–Hate to spill the beans, but an individual can reduce their contribution by setting up a corporation, then declare a significant % of the money they receive as “corporate earnings” rather than “personal income”.
Doggone/GA
September 7th, 2010
12:42 pm
“If we don’t have money in Pot A to give to Pot B then Pot B is no solvent.”
In this case, though, what matters most is which gets paid back first. The budget owes the money to SS…it is SS that gets the money first. So SS is solvent, but the budget will not be. But as long as the policiticians can keep borrowing from China and from SS they can continue to lie about the TRUE state of the budget obligations of the US.
barking frog
September 7th, 2010
12:42 pm
The US government does not issue IOUs. All instruments
issued are negotiable. The ‘dollar’ in your pocket could be
called an IOU as it is a Federal Reserve Note.
Mick
September 7th, 2010
12:43 pm
Paul
@
September 7th, 2010
12:34 pm
No, it doesn’t. As much as I disliked the previous administration, they were very good at having like minded people in key positions and also keeping their party in lockstep agreement.
Bruno
September 7th, 2010
12:45 pm
Oblunder wants to spend another 50 Billion stimulus when the first did not work.
Deep Throat–In some positive news, the AJC announced a little while ago that:
“WASHINGTON — President Barack Obama will call on Congress to pass new tax breaks that would allow businesses to write off 100 percent of their new capital investments through 2011, the latest in a series of proposals the White House is rolling out in hopes of showing action on the economy ahead of the November elections.”
http://www.ajc.com/business/official-obama-to-back-607961.html
I’m not sure if it’s just a political ploy, or maybe Obama finally woke up to the fact that Business, whether large or small isn’t the enemy.
Paul
September 7th, 2010
12:46 pm
Doggone/GA
“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.”
I’ve been referring to debt owed to nonfederal entities and debt owed to all entities, including federal, without explicitly distinguishing between them. Thought it was implied.
If the SS funds wouldn’t have been available to the fed spenders in the form of bonds, then SS would be in much better shape, their outlook would be more than stable, the ‘fixes’ we’ve done wouldn’t have been necessary because the fixers wouldn’t have been able to borrow from it, while the rest of the debt owed to nonfederal entities would have increased. So the debt level would have been the same, but, I think the anger we see (that doesn’t exist because TPers are astroturf and it’s a fake issue and Democrats’ll do fine in Nov) would’ve hit critical mass years ago. Yes the level has been masked – it’s back to the owed to federal entities vs nonfederal.
You’re saying that
Jefferson
September 7th, 2010
12:46 pm
A lot of the GOP supporter would be hungry if not for SS. AND, so will many of the current supporters who think they can do better themselves.
Jack
September 7th, 2010
12:47 pm
Social Security would be sound if things like EIC were discontinued.
Peadawg
September 7th, 2010
12:48 pm
You’re right…it isn’t the cause or THE solution. It’s PART OF the solution. Raising the age to 67 would be a good idea.
“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.”
That can be said about every entitlement program.
Mick
September 7th, 2010
12:50 pm
bruno
It’s the music man, the international language. Jay really started something transcendant and entertaining, the sky’s the limit with that format.
Bubba Bob
September 7th, 2010
12:50 pm
Doggone,
Who gets paid back first? I can tell you who that is. That’s the people we owe money to. Our creditors…China, etc. If we don’t pay them back first then we can’t borrow more to do anything with. Then what do we do?
$61.9T in debt…the real debt, right now.
Granny Godzilla
September 7th, 2010
12:50 pm
David Walker and the Peterson Foundation!Oh!NOES!
My favorite line “David Walker and the Peterson Foundation have been out on a tour which she calls the Pete Peterson Austerity Pimp Revue where they’re trying to convince all of us that we need to be more worried about our national debt than getting our economy back on track.”
barking frog
September 7th, 2010
12:52 pm
What the US owes is actually not able to be calculated.
Predicted pensioners may not live. Politicians may
renege on promises. Other governments may not pay
debts. Corporations may fail. All statistics are guesses.
Granny Godzilla
September 7th, 2010
12:52 pm
Peterson Fdtn. Head Nostalgic for Debtor’s Prison; Is Indentured Servitude Next?
What a guy!
Deep throat
September 7th, 2010
12:53 pm
Bruno 12:45, one can only hope, perhaps he’s feeling the pressure, but I’m afraid its just another political ploy , saying cut taxes here and gouging here, and why has it taken so long to react, the average person has known for several months the economy continues to drop. Just cheap politics leading up to Nov. elections.
Mick
September 7th, 2010
12:53 pm
**Our creditors…China, etc. If we don’t pay them back first then we can’t borrow more to do anything with.**
We write the rules of this game, so I’m sure we can think of something to keep them in second position.
Jackie
September 7th, 2010
12:54 pm
@Deep throat
I hope you don’t mind my disagreeing with you about the competence of the Obama Administration. If anything, they did not ask for enough money to re-invigorate the economy. You do realize the numbers showing the amount of cash on the balance sheets of corporations is at record levels; the productivity rate of workers is at record levels; the interest is at record low rates; inflation is under control; the demand side of the equation is at levels where economic activity could be robust; the number of jobs created during the recovery is at a greater pace than at any time since the Great Depression. The total number of jobs lost during the last 10 years is more than 8 million.
You make the statement that the small business requirements have not been handled by the Obama Administration in an adequate manner. You may want to look at the package the Repubs have blocked concerning the small banks and making loans to small business.
barking frog
September 7th, 2010
12:55 pm
Bubba Bob 12:50 And if we don’t pay? No more quality
chinese products.
Tychus Findlay
September 7th, 2010
12:56 pm
Social Security exists solely for people that are too foolish and stupid to budget for their own retirement. I could do a lot more with the 6-odd percent that the government seizes from me every pay period through private investment than the government could ever hope to do through its bloat and corruption.
Bubba Bob
September 7th, 2010
12:59 pm
Granny,
David Walker served respectfully under multiple presidents of both sides of the aisle. You will be hard-pressed to find a dem or repub with bad word to say about him. He is also very non-political. He doesn’t campaign for anyone in any way.
However, he does preach fiscal wisdom. Why does this bother you?
Barking,
If we don’t pay we get junk bond status. Then we cannot meet SS needs.
Jackie
September 7th, 2010
1:00 pm
@Bruno
The creative accounting the government uses is accounted for, outside the DoD. Big business uses derivatives, creative default swaps, write-offs and other tax avoidance gimmicks to mask their actual worth.
Getting back to Glass-Stegall and Generally Accepted Accounting Procedures that are transparent would go a long way toward putting our financial house in a position where we could begin to understand what is what.
TaxPayer
September 7th, 2010
1:02 pm
How many fifty year olds out there have a retirement fund. How many do not.
Bosch
September 7th, 2010
1:03 pm
“they’re going to have an all-out RIOT on their hands.”
There, Jay, fixed that typo — you can send me a gift card for a steak dinner later. No need for it now. Thanks.
Bruno
September 7th, 2010
1:03 pm
“It’s the music man, the international language. Jay really started something transcendant and entertaining, the sky’s the limit with that format.”
Mick–You’re absolutely right about that. If it weren’t for our music connection, AmVet and I would have torn each other to shreds by now over politics.
BTW, I parlayed your good luck in finding that cash the other night into a 2nd place finish in a poker tourney on Sunday night. I would have won the sucker if my opponent didn’t hit runner-runner to make a straight while heads-up.
Deep throat
September 7th, 2010
1:03 pm
Jackie 12:54THE NUMBER OF JOBS CREATED DURING THE RECOVERY IS AT A GREATER PACE THAN AT ANYTIME SINCE THE GREAT DEPRESSION.
Wow, I would love to see where you get your info, obviously you don’t get out much or listen to the news or talk to the neighbors or listen in on conversations at the grocery, Wow , I’mblown away by your lack of knowledge.
Kamchak
September 7th, 2010
1:03 pm
Granny Godzilla
I think the ultimate goal of people like David Walker is the return of feudalism, where we serfs owe fealty to our Lord of the Manner and are lucky just to get the crumbs that trickle down from his plate
barking frog
September 7th, 2010
1:05 pm
The Supplemental Security Income program which is
administered by the Social Security Administration
is on budget and affects the deficit an debt. It is a copy
of SS except it is not direct tax funded and is need
qualified. Old, Blind, Disabled and never paid into
social security,you get money as long as you are
poor enough.
Bubba Bob
September 7th, 2010
1:05 pm
Kamchak,
Where does David Walker say anything like that? I am ready right now to denounce him if you can show me where he says anything that would lead someone to that conclusion.
Disgusted
September 7th, 2010
1:06 pm
At the same time that Social Security taxes were being “borrowed” to pay for general budget items, a tax on 50% of Social Security benefits above a certain amount of earned income went into effect. In other words, the government started taxing current recipients on the proportion of payments attributable to the employer’s tax contribution.
So not only is the government pretending that it has no obligation to repay the huge amount it borrowed and continues to borrow from the SS trust fund. Not only are opponents of SS claiming that the fund is insolvent (i.e., sorry, we borrowed so much from you that you’re broke and need to go into bankruptcy.) But also the government is piling a tax on a tax.
Can life get any better?
Bruno
September 7th, 2010
1:06 pm
You do realize the numbers showing the amount of cash on the balance sheets of corporations is at record levels; the productivity rate of workers is at record levels; the interest is at record low rates; inflation is under control
Jackie–With all of these positives, what is your theory as to why Big Business isn’t expanding?? Just plain meanness on their part, or could the slew of regulatory changes under Obama have created an uncertain atmosphere?? Several business owners have gone on record as saying as much. I hope things will turn around in January when the Democratic stranglehold is broken.
Mick
September 7th, 2010
1:10 pm
bruno
Always happy to share the luck, everybody could use a break every now and then.
Bruno
September 7th, 2010
1:10 pm
why has it taken so long to react
Deep Throat–Which is my biggest criticism of the Obama Admin. During the campaign, they acknowledged that the sour economy was paramount in people’s list of priorities, then they’ve spent 1 1/2 years passing their pet legislation that they’ve been sitting on for 30 years, e.g. health care reform.
popeye
September 7th, 2010
1:12 pm
Scout…I get that stupid Social Security BS in my email about 5 times a year….Sent by you guessed people like you.
It’s easily debunked, perhaps a little more research into what you post,
unless you think we are stoopid.
Bruno
September 7th, 2010
1:12 pm
There, Jay, fixed that typo
Bosch–Just my blog opinion, but I think changing other people’s words around is annoying, even in jest. Just Bruno talking though, so carry on.
Matti
September 7th, 2010
1:14 pm
maybe Obama finally woke up to the fact that Business, whether large or small isn’t the enemy.
In many ways, big business has become the enemy of small business. Then they point the finger and say, “Look! The Gub’mint is crushing you!” True competition does not exist where monopolies have taken over. “Free market” principles really only work when the little guy has a fighting chance at a piece of the market, and that happens less and less now that giant, multi-national corporations have more rights than average citizens, and essentially own our legislators and write whatever “regulations” they enact.
Granny Godzilla
September 7th, 2010
1:15 pm
Bubba Bob
He preaches piffle……He has every right to.
popeye
September 7th, 2010
1:18 pm
Paul
September 7th, 2010
12:34 pm
Lots of disparagement of Sen Simpson here. Doesn’t say much about Pres Obama’s judgment, does it?
No it doesn’t. Especially when this knucklehead comes out with comments
like this. “Simpson, the Republican co-chair of the President’s Deficit Commission, who at one time chaired the Senate Veterans’ Affairs Committee, complained in an interview that veterans receiving disability payments for illnesses associated with their exposure to Agent Orange during their service in the Vietnam War run “contrary to efforts to control federal spending.”
Deep throat
September 7th, 2010
1:18 pm
Bruno, 1:10, they have ignored the majority and only focused on their personal agendas, Oblamer does not care about the majority, he mannipulated the majority to get elected, the proof is on the wall the economy is the biggest problem we have faced and he has neglected to focus on it.
Granny Godzilla
September 7th, 2010
1:21 pm
“the economy is the biggest problem we have faced and he has neglected to focus on it.”
Piffle
TaxPayer
September 7th, 2010
1:22 pm
Lots of disparagement of Sen Simpson here. Doesn’t say much about Pres Obama’s judgment, does it?
How much can one appointment say about a person. I suppose it has to do with whether that person was overly biased in his selection of if he tried to make sure that everyone had a say. That sort of thing.
Paul
September 7th, 2010
1:24 pm
popeye
Has there ever been a politician of national prominence who hasn’t come out with an occasional boneheaded comment?
Deep throat
September 7th, 2010
1:25 pm
Granny If theres anything Oblamer has done to improve the economy please enlighten us.
Bruno
September 7th, 2010
1:26 pm
True competition does not exist where monopolies have taken over.
Matti–The government has been fairly vigilant in prosecuting cases in which “predatory pricing” or other illegal business practices can be proven. Wal-Mart has been hit with several lawsuits like that. In general, though, they succeed by offering a larger selection and better (legitimate) prices than Mom-and-Pop can. It’s hard for me to say that shouldn’t be legal. Personally, I shop with smaller retailers when quality is an issue. For single-use items, I shop based on price only.
In some instances, such as utility companies, a monopoly makes sense. That is with everyone but Comcast. They definitely gouge the consumer.
Kamchak
September 7th, 2010
1:26 pm
Where does David Walker say anything like that?
Where did I say that he did say that, sport? I expressed an opinion.
If he is advocating debtor’s prison, then it’s clear to me that he is walking backwards through the centuries. Trickle-down feudalism is back there.
Bosch
September 7th, 2010
1:26 pm
Bruno,
Well, now that you’ve said that, you know that I’m just gonna do it more — to annoy you.
popeye
September 7th, 2010
1:32 pm
“Has there ever been a politician of national prominence who hasn’t come out with an occasional boneheaded comment”?
In all truthiness Paul…I wouldn’t know. But, in case you missed it I was agreeing with your post on Alan Simpson.
Harry Callahan
September 7th, 2010
1:34 pm
Social Security, like all liberal government programs, is a totally awesome deal for working people. Pay in 12.4% of your income, every week for 50 years, retire, and then get a monthly check that is just about big enough to pay rent on a double-wide somewhere off Bankhead Hwy. Totally awesome!!!
Bubba Bob
September 7th, 2010
1:34 pm
Kamchak,
David Walker has never advocated debtor’s prison. You need to check your facts, that was someone else.
Granny,
He’s preaching the same thing he was preaching when Clinton was praising him. Was it piffle then? He wants us to be out of debt and to be fiscally responsible. How is that bad?
jconservative
September 7th, 2010
1:34 pm
Nice column.
You can add the Medicare Trust Fund into the mix. Treasury borrowed that per Reagan in the mid 1980s. I believe Treasury has the authority to borrow up to $5 trillion from the Medicare Trust Fund.
Harry Callahan
September 7th, 2010
1:35 pm
Well, totally awesome I guess if your life’s ambition was to live in a trailer somewhere off Bankhead Hwy.
Bruno
September 7th, 2010
1:35 pm
Well, now that you’ve said that, you know that I’m just gonna do it more — to annoy you.
I wouldn’t have expected any less from you, Bosch.
Bruno
September 7th, 2010
1:38 pm
Oblamer does not care about the majority, he mannipulated the majority to get elected, the proof is on the wall the economy is the biggest problem we have faced and he has neglected to focus on it.
I STILL keep asking the Libs why they picked Obama over Hillary, but can’t get a straight answer. All personal baggage aside, she likely would have made a better leader. Following the bush travesties, it was almost a shoe-in that the Democratic candidate was going to win.
Would even ONE Obama supporter come out of the woodwork and explain your thinking??? Pretty please with sugar on top!!!
TaxPayer
September 7th, 2010
1:41 pm
Actually, a lot of retired people live in small trailers on little lots. That’s about all that their social security checks will cover and they don’t exactly have any other savings to draw on. Some even live in campers. There are entire communities of just such folks up here in North Georgia as well as in other places all over these fifty states. Well, I don’t know about Alaska and Hawaii. I hear it’s kinda hard to drive your mobile home to those places.
DEM
September 7th, 2010
1:44 pm
Let me see if I have this straight:
A government program that currently has a $2.5 TRILLION dollar unfunded liability is not a “cause of” any national debt. So if the unfunded liability is not a debt, then what is it? How would you classify it on the federal balance sheet, Jay?
jm
September 7th, 2010
1:44 pm
Jay, as I pointed out regarding a previous post of yours about social security, you’ve now engaged in hypocrisy. Social Security is not a savings account. Furthermore, it is a huge part of the solution to budget problem, as Peter Orzag points out today in the NY Times (http://www.nytimes.com/2010/09/07/opinion/07orszag.html?ref=contributors). Finally, Medicare is a big part of the problem as well and will have to undergo further cuts, somehow.
Jay, I find this just irresponsible to delude people into thinking Social Security is ok. The facts don’t bear this out. I get hacked when Republicans engage in manipulation of the facts, and I just can’t say that this column is anything other than extremely irresponsible. Social Security is a slush fund moving money from one generation to the retired generation. There are no assets held by the trust fund. Social Security is breaking even now and will incur monumental deficits in the future. The only way to cover those deficits will be to borrow more money from the public. This will increase the deficits, the debt to GDP ratio, and risk causing a monumental financial crisis.
I for one hope the deficit / debt commission suggests a wholesale revision of social security so that in the long run it operates similar to the Chicago school of thought / the Chilean model. Good grief, I feel like a Republican today now.
Deep throat
September 7th, 2010
1:44 pm
Bruno, can you imagine how Hillary feels, everyday waking up knowing she lost to Oblamer ? Not a Hillary fan but I do have more respect for her than some one who lies, and blames every one else because he is an idiot.
Kamchak
September 7th, 2010
1:46 pm
David Walker has never advocated debtor’s prison.
That’s why I used the phrase, “If he is advocating debtor’s prison… Geez.
Notice the first word is “if,” the same word in the FDL article that Granny Godzilla linked—On CNBC’s “Squawk Box” recently, Walker seemed to long for a return to debtor’s prisons. If he’s nostalgic for debtor’s prison, the next step is to advocate the return of debt bondage, or perhaps people being sold into indentured servitude.
I emphasized the words “seemed” and “if” just so you would understand that FDL was also expressing an opinion.
Just ONE Obama supporter
September 7th, 2010
1:46 pm
Hillary wanted an even larger healthcare reform than Obama and Democrats just could not go for that. Besides, Hillary would not have stood a chance against McCain’s VP selection. That Sarah would have torn poor Hillary to pieces once she found out about Hillary’s pallin’ around with terrorist Koreans and such. I’m just so thankful that we were spared the horror.
Kamchak
September 7th, 2010
1:47 pm
I STILL keep asking the Libs why they picked Obama over Hillary, but can’t get a straight answer.
Because she’s unelectable.
jm
September 7th, 2010
1:48 pm
Um, Jay, the government spent the “trust fund”. There are nothing but a bunch of “debt IOU’s” sitting there. Furthermore, I hope that they reform the definition of the IOU’s. In the event of a likely financial crisis triggered by the extreme deficits, they will have to prioritize the debt owed by the US gov’t. The first to not be paid should be social security.
G.W.
September 7th, 2010
1:48 pm
Not a Hillary fan but I do have more respect for her than some one who lies, and blames every one else because he is an idiot.
But will you still respect me in the morning.
Harry Callahan
September 7th, 2010
1:48 pm
I’m a math geek, so I whipped up a little Excel spreadsheet just now just for fun. If you make $40,000 per year (roughly the mediam income in the U.S.) every year from age 20 to age 65, took 12.4% of that amount (your SS contribution plus your employer’s contribution) and invested that amount somewhere earning 5% interest, at age 65 you would have $832,000 in your account. At that same 5% assumed return, you could withdraw $41,000 per year to live on (roughly double what SS will pay you) and never touoch the principal amount, leaving you $832,000 to pass on to your heirs.
But liberals prefer the government plan. HMMMMMMMMMMMMM….
Maybe they live in trailers because they’re stupid? You decide…
Bubba Bob
September 7th, 2010
1:49 pm
Kamchak,
You didn’t use the word ‘if’ in your first post that attacked him.
Granny Godzilla
September 7th, 2010
1:49 pm
Deep Throat
I can give you data, enlightenment….that comes much more difficultly…
From Bloomberg News:
Obama Defies Pessimists as Rising Economy Converges With Stocks
By Mike Dorning – March 10, 2010 00:01 EST Email Share Share Business Exchange Twitter Delicious Digg Facebook LinkedIn Newsvine Propeller Yahoo! Buzz Print
U.S. President Barack Obama
March 10 (Bloomberg) — The political consensus may be that President Barack Obama’s handling of the economy has been weak. The judgment of money in all its forms has been overwhelmingly positive, and that may be the more lasting appraisal.
One year after U.S stocks hit their post-financial-crisis low on March 9, 2009, the benchmark Standard & Poor’s 500 Index has risen more than 68 percent, and it’s up more than 41 percent since Obama took office. Credit spreads have narrowed. Commodity prices have surged. Housing prices have stabilized.
“We’ve had a phenomenal run in asset classes across the board,” said Dan Greenhaus, chief economic strategist for Miller Tabak & Co. in New York. “If he was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the president.”
The economy has also strengthened beyond expectations at the time Obama took office. The gross domestic product grew at a 5.9 percent annual pace in the fourth quarter, compared with a median forecast of 2.0 percent in a Bloomberg survey of economists a week before Obama’s Jan. 20, 2009, inauguration. The median forecast for GDP growth this year is 3.0 percent, according to Bloomberg’s February survey of economists, versus 2.1 percent for 2010 in the survey taken 13 months earlier.
“You have to give them — along with the Federal Reserve – - a lot of credit,” said Joseph Carson, director of economic research at AllianceBernstein LP in New York. “A year ago, there was panic, as well as concern. And a lot of the expectations were not only that we were going to have declines in activity but they would stretch all the way to 2010, if not 2011.”
Job Losses Ease
Since then, monthly job losses have abated, from 779,000 during the month Obama took office to 36,000 last month. Corporate profits have grown; among 491 companies in the S&P 500 that reported fourth-quarter earnings, profits rose 180 percent from a year ago, according to Bloomberg data. Durable goods orders in January were up 9.3 percent from a year earlier. Inflation is tame, and long-term interest rates remain low.
Still, the economy has become a political burden for Obama. Voters give his administration little credit for its performance, while the unemployment rate remains high, at 9.7 percent in February.
Public opinion of Obama’s handling of the economy has gone from 59 percent approval in February 2009 to 61 percent disapproval this February, according to Gallup polls.
Critical of Deficit
The budget deficits the administration has run up have stirred criticism from investment managers and economists, as well as voters. The Congressional Budget Office projects Obama’s spending proposals would produce a record $1.5 trillion budget deficit this year and a $1.3 trillion deficit in 2011.
The investment returns and economic data don’t impress some Obama critics.
“Coming off a level that was ridiculously low isn’t much to boast about,” said Dean Baker, co-director of the Washington-based Center for Economic and Policy Research. “What most people care about is the economy creating jobs. It’s still not.”
Mark Zandi, chief economist at Moody’s Economy.com, said the public’s opinion of the economy is likely to improve as the gains companies have made begin to translate into more jobs and higher wages.
“Businesses are doing very well but households have yet to benefit,” Zandi said. “Households will eventually benefit, but they’ll have to see it before they believe it.”
300,000 Jobs Seen
The U.S. may add as many as 300,000 jobs in March, the most in four years, David Greenlaw, chief fixed-income economist at Morgan Stanley in New York, said in a Bloomberg Radio interview.
Zandi said the economic rebound is largely a result of the policies of the White House and Federal Reserve. He cited the bank bailout, the Fed’s low-interest-rate policy and support for credit markets, and the Obama administration’s stimulus plan, bank stress tests and backing of Fannie Mae and Freddie Mac.
“When you take it all together, the response was massive and unprecedented and ultimately successful,” Zandi said.
Phil Swagel, who was assistant Treasury secretary for economic policy in George W. Bush’s administration, considers himself a critic of Obama, though he said the White House policies were crucial.
“They could have done a better job, but their economic policies, including the stimulus, have helped move the economy in the right direction,” said Swagel, now an economics professor at Georgetown University’s McDonough School of Business.
Productivity Gains
While jobs have been slow to come back even as GDP is growing, the gains in productivity during the past year will strengthen the economy, said Greenhaus of Miller Tabak. Productivity grew at a 6.9 percent annual pace in the fourth quarter, capping the biggest one-year gain since 2002.
While small businesses still have difficulty getting loans, credit markets have thawed. Spreads on investment-grade corporate bonds have narrowed from 5.13 percentage points on the day Obama took office to 1.63 percentage points on March 8, according to Barclays Capital.
Rates on 30-year fixed mortgages have dropped from an average 5.20 percent on Inauguration Day to 5.03 percent on March 8, according to Bankrate.com.
Housing prices, which dropped since 2007 and proved a drag on the economy, have firmed. The median sales price for existing homes in January was the same as a year earlier.
International currency markets are bullish on the dollar, which has rallied more than 8 percent since Nov. 25, according to the Intercontinental Exchange’s Dollar Index. And commodity prices are up more than 32 percent since Obama took office, according to the UBS Bloomberg Commodity Index.
“There’s definitely legs in this recovery,” said John Silvia, chief economist for Wells Fargo Securities. “There’s progress being made at the national level. But in their own situations, a lot of people are still struggling.”
To contact the reporter on this story: Mike Dorning in Washington at mdorning@bloomberg.net.
jm
September 7th, 2010
1:50 pm
Social Security should be for the destitute only. Think of it as it should be, welfare 2.0 for the most needy and utterly penniless.
Bubba Bob
September 7th, 2010
1:50 pm
Harry,
Don’t use math. It blurs the real issue….power.
Harry Callahan
September 7th, 2010
1:50 pm
Granny…
piffle
godless heathen
September 7th, 2010
1:51 pm
@jackie
“Seems that you have your facts wrong.”
Not at all. My employment comes at a certain cost to the employer. If the employer didn’t pay that 6.2% to FICA, he would give it to me, so I pay the full amount.
G.W.
September 7th, 2010
1:51 pm
I still can’t figure out why the cons picked me. Then again, they also picked McCain so maybe it’s our good looks — like that Kennedy guy that got elected that time.
Kamchak
September 7th, 2010
1:54 pm
You didn’t use the word ‘if’ in your first post that attacked him.
Absolutely correct.
But I imagined the words “I think” would have been a tip-off to the fact that I was expressing an opinion.
Obviously I was wrong to think that comprehension was one of your strengths.
@@
September 7th, 2010
1:54 pm
USUK:
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 …
Do you need me to be excoriating???
aneurism??? Try aneurysm.
Thanks for thinking about me. Haven’t given you ANY thought until I read your comment, that is. No “aneurism” here.
_________________________________________________________
jay, the government, most certainly, needs to honor their commitment to the baby boomers.
BUT…..the baby boom has ended thanks to encouragement from the left. The pool is draining fast. Why, pray tell, should taxpayers have to replace what was stolen by politicians? So they can do it again?
I don’t think so.
Harry Callahan
September 7th, 2010
1:56 pm
Kamchak, speaking of comprehension, did you comprehend my simple “yes” or “no” question regarding whether or not you oppose socialism?
G.W.
September 7th, 2010
1:56 pm
If the employer didn’t pay that 6.2% to FICA, he would give it to me, so I pay the full amount.
HAHAHA. Is Tuesday “stand up comedy” day or what! That sounds a lot like that joke about companies charging less for their products if we get rid of their taxes and start paying 23 percent at the point of sale. The punch line there is that POS does not refer to Point of Sale. I’ll leave it to your imaginations since this may be a PG comedy show.
Deep throat
September 7th, 2010
1:56 pm
Harry, libs want everyone broke an needing Goverment hand outs, if you’re not assocated with the arts or belong to a Union they want you to support those who do. they do not like honest wage earners.
G.W.
September 7th, 2010
1:57 pm
I think everyone needs more socialism. It is just wrong to stay cooped up and alone all day by yourself.
Kamchak
September 7th, 2010
1:57 pm
Kamchak, speaking of comprehension, did you comprehend my simple “yes” or “no” question regarding whether or not you oppose socialism?
Yep.
jm
September 7th, 2010
1:58 pm
Jay, if you want to engage in criticizing the deficit commission. Otherwise you’re just hollering from the peanut gallery.
Since you apparently don’t believe in changing social security, here’s what you in essence suggest in some part or all:
1. A doubling of taxes paid
2. A permanent shutdown of the US military in its entirety, phased in over the next 10 years
3. An end to any discretionary spending.
The concept that nothing must be done to fix social security is so absurd as to be unbelievable. I need a beer. I may have just become a Republican voter in November after reading this absurdity.
godless heathen
September 7th, 2010
1:59 pm
“At that same 5% assumed return, you could withdraw $41,000 per year to live on (roughly double what SS will pay you) and never touoch the principal amount, leaving you $832,000 to pass on to your heirs.”
Exactly. But libs think they are getting a good deal.
Bruno
September 7th, 2010
2:02 pm
Hillary wanted an even larger healthcare reform than Obama and Democrats just could not go for that.
I don’t believe that for an instant. Socialized medicine is every Libs’ dream. Pelosi just didn’t have the cojones to propose it. So, instead, we get all the drawbacks of socialized medicine, with none of the benefits.
Because she’s unelectable.
I appreciate that honest answer, Kam. To be honest in return, I was surprised that McCain did as well as he did given his poor campaign, lack of personal charisma, and disastrous choice of a running mate.
Jay
September 7th, 2010
2:03 pm
jm, nowhere in the linked piece does Orzag say Social Security is a big part of the solution. He actually concludes that Social Security cuts CAN’T be part of the solution:
“Even if we reform Social Security, which we should, any plausible plan would phase in benefit changes to avoid harming current beneficiaries — and so would generate little savings over the next five years. The health reform act included substantial savings in Medicare and Medicaid, so there aren’t further big reductions available there in our time frame. ”
Again, that is precisely opposite of what you claim.
Furthermore, if, as you claim, there are no assets in the trust fund, then China and Japan and a whole lot of people who bought T-bills also have no assets, because the debt we own those creditors is just as real as the debt we owe Social Security. People have been paying extra to SS for more than 25 years, and now you and others want to pretend that it never happened.
Except that it did.
Jackie
September 7th, 2010
2:03 pm
@Bruno
Your 1:46 posed the question as to why I think business is not moving in a positive direction.
I believe there are those who have the same attitude as the Tea Party; I want mine now, regardless of how it will affect the future.
Check out the Chamber of Commerce and any other conservative web site. They have more-or-less indicated they are trying to destroy the Obama Administration before America is destroyed. What nonsense!
Doggone/GA
September 7th, 2010
2:04 pm
“I STILL keep asking the Libs why they picked Obama over Hillary, but can’t get a straight answer.”
And you keep ignoring the answer some of us give: NOT ALL OF US DID choose Obama over Hillary.
Bruno
September 7th, 2010
2:05 pm
I may have just become a Republican voter in November after reading this absurdity.
Welcome to the Big Tent, jm.
Deep throat
September 7th, 2010
2:05 pm
Granny, lol you help make our point of how little Oblunder has done to improve the economy. You must have a scrap book with every article ever writen about your idiot Obozo.
jm
September 7th, 2010
2:06 pm
Jay, yes, you’re correct. But the key point that he also acknowledges is that something must be done to fix the giant long term hole. I’m fine with phasing the changes in over 5 or 10 years, but you can’t let this sit and fester on without reforms put in place. If you do, the US literally goes to belly up.
Again, to the problem is a long term problem, but it has to be fixed now, not when US debt starts trading at a 14% yield.
Paul
September 7th, 2010
2:06 pm
popeye 1:32
I did miss that – thanks for the clarification.
Harry Callahan
“At that same 5% assumed return, you could withdraw $41,000 per year to live on (roughly double what SS will pay you) and never touoch the principal amount, leaving you $832,000 to pass on to your heirs.
But liberals prefer the government plan. HMMMMMMMMMMMMM….”
Oh, I dunno… maybe liberals understand future values and discounting –
Then there’s that part of social security dealing with survivor’s benefits and all that -
Jackie
September 7th, 2010
2:07 pm
@godless heathen
You prove my point. People like you purport to know what you are speaking of, pontificate this foolishness about your employer giving you 6.2% he paid into Social Security and you keep putting this foolishness out where other people can read it with some believing it. Does it give you a headache to keep telling things that are not true?
godless heathen
September 7th, 2010
2:09 pm
@G.W.
“HAHAHA. Is Tuesday “stand up comedy” day or what! That sounds a lot like that joke about companies charging less for their products if we get rid of their taxes and start paying 23 percent at the point of sale.”
Ever done any management G.W.? I didn’t think so.
jm
September 7th, 2010
2:10 pm
To your second point – It happened, and yes, the SS IOU’s are treated the same as other debt. The problem is, its money we owe to ourselves so some people have a hard time understanding it. To “pay that IOU debt back”, we have to issue public debt. Therein lies the problem.
If all my assets are jointly owned with my wife, and I loan her $100k, but she’s not making any money, and then I ask her to pay me back (but she can’t because she doesn’t make money), so she pays me back by borrowing $100k from a credit card company, I then have a huge problem. That, in analogous form, is what is going on with SS.
RW-(the original)
September 7th, 2010
2:10 pm
Jackie,
Here’s the Chamber of Commerce website. Would you mind pointing me to the part where they describe the mission to destroy the Obama administration, please? Thank you in advance.
G.W.
September 7th, 2010
2:13 pm
“At that same 5% assumed return, you could withdraw $41,000 per year to live on (roughly double what SS will pay you) and never touoch the principal amount, leaving you $832,000 to pass on to your heirs.”
Exactly. But libs think they are getting a good deal.
How long does it take to get that principal stashed away assuming you take 6.2% of your current earnings and stash it away while earning a whopping risk-free average annual yield of let’s say 5%, just for fun. Shall we do the numbers.
Disgusted
September 7th, 2010
2:15 pm
At that same 5% assumed return, you could withdraw $41,000 per year to live on (roughly double what SS will pay you) and never touoch the principal amount, leaving you $832,000 to pass on to your heirs.
Evidently, few people have seen the formula that SS uses to calculate payments to beneficiaries. I have, and anyone who takes a decent pre-retirement seminar can do likewise. It’s heavily skewed toward low-income workers, who draw payments much higher than strict reliance on their contributions would provide. Medium and high earners don’t get anywhere close to SS payments commensurate with their contributions. In this sense, it’s not strictly an insurance program, although it functions as one. Thus, people who talk about “getting my money back” are delusional. It was never intended as strictly a savings program.
godless heathen
September 7th, 2010
2:15 pm
@Jackie,
Your knowledge of business is the foolishness. The employers FICA contribution is part of the cost of hiring the employee. If the employer doesn’t pay it to FICA, he can give it to employee to invest as the employee sees fit. That allows the business to better compensate employees while making the same or more profit than if they sent a % to FICA. You are confusing employee compensation with welfare.
Granny Godzilla
September 7th, 2010
2:16 pm
Deep Throat
uber piffle