This is no time to reduce Social Security benefits. Nor will it be tomorrow. Private defined benefit pension plans are disappearing. Savings devices like 401(k)s and Individual Retirement Accounts (IRAs) lose value whenever the stock market hiccups or plunges. The principal savings of most people, their own homes, decline substantially in value or are lost entirely when the market falters. These misfortunes can and do repeat themselves.
Social Security has proven to be the one program we can rely on to provide income when other income sources dry up because of job loss, age, disability or death. Most people probably didn't know or notice, but Social Security was the first program to deliver cash benefits to families who lost a wage earner in the 9/11 attack. It also is the most readily available income source to those aged 62 and over when they lose a job. It is the most readily available income source to families who lose a wage earner to death and retirement.
Some seek to trim Social Security as part of an effort to tame federal deficits and the federal debt. But Social Security has not contributed a dime, not a nickel, not a penny to them. Social Security's three income sources pay the program's way in full. Since 1937, working people and their employers have paid a modest monthly amount of their earnings to the program pursuant to the Federal Insurance Contributions Act (FICA). Since 1983, the program has derived ample support from those contributions and two other dedicated sources of revenue -- income tax on the Social Security benefits of high earners and interest credited to the Social Security Trust Fund for tens of billions of dollars that Social Security lends to the Treasury. Treasury issues interest-bearing debt obligations in return. Some disparage those obligations as "worthless IOUs." But they are regarded as among the most dependable and valued bonds in the world. Some decry the bonds in the hand of China as a source of U.S. vulnerability. That's absurd because, as a large creditor, China has a huge stake in maintaining our ability to pay interest on those bonds and repay their principal. Moreover, the Social Security surplus makes huge amounts readily available for Treasury borrowing and thereby lowers the cost of borrowing for business, consumers and state and local government.
Some pooh-pooh the value of those bonds to the Social Security Trust Fund because it is one government agency owing money to another. But Social Security stands on an equal footing with all other creditors. A default to any would discredit our economy. It's not going to happen.
But, cry the critics, Social Security is not sustainable. They claim that its revenue collections already fall below benefit payments. That conclusion ignores the trillions in interest that Treasury owes to Social Security. Critics carp that repaying those debts will require borrowing. But that would be caused, not by Social Security -- which has already paid for future benefits, but by the two Bush tax cuts and two Bush wars. Of course, we must pay what we owe, but the wherewithal should come from those who profited most -- the upper income recipients of enormous tax breaks and war contractors like Blackwater.
Some argue that Social Security is unsustainable because the Baby Boomer beneficiary population is growing faster than the working population. You've heard the litany: in 1950 there were 15 people at work for each beneficiary; that has become 3.1 workers for each person drawing benefits; that becomes 2 to 1 in the 2020s. But each successive wave of workers is better educated and equipped with improved technology. Hence, today's and tomorrow's workers will produce more, earn more and pay more FICA per capita, offsetting the relatively smaller group contributing to the program. Other demographic, economic or technological developments, possibly in nano-technology, might cancel that factor entirely. So, the "aged dependency ratio" argument lacks the decisive impact claimed for it.
Republicans threaten to demand Social Security benefit cuts as their price for agreeing to raise the federal debt limit. Hostage takers resort to terrorism when they cannot prevail on the merits. The threat to block an absolutely essential measure -- raising the debt ceiling -- is typical of hostage takers, threatening unconscionable acts against the innocent and vulnerable. The method is despicable and should be rejected for that reason alone. Moreover, the price is absurd because Social Security benefits have nothing to do with deficits.
Starting in about 2037, Social Security benefits in full may require additional funding in order to pay full benefits. But that's an easy lift, as candidate Barack Obama made clear -- just boost the amount of pay subject to FICA to its traditional level and the prospective Social Security deficit disappears. And/or, we can boost the FICA rate by 1/20th of one percent for twenty years and the shortfall dissolves. In combination, those measures would support improved benefits.
Trimming Social Security benefits by tens of billions of dollars would mean a big hit to the income of thousands of businesses from whom beneficiaries purchase goods and services. Shrinking that business income would lead to job cuts, which would further weaken consumer purchasing power, which would lead... and so on and on.
Those concerned with private enterprise and employment -- in other words, all of us -- should support an undiminished Social Security.
It's a lie to believe that the "trust fund" (that is anything but a trust fund) is collecting interest from the feds. There are no actual bonds the "trust fund" can sell on the open markets to collect their debt, only IOU's that will be paid back with taxpayers earnings.
People need to learn what a total rip social "security" is to your own wealth and your family.
It seems to me that it is precisely because of the Wall St./bank crash that lost pensions and savings for millions that Soc. Sec. is even more a lifeline than before. I have had 6 major surgeries, gosh, guess what that has done to my savings and the right says, tough luck, it's your fault. Their vicious lunatic arguments show their contempt for Americans. I worked fulltime for over three decades. Now some young, extremist newcomers in Washington want to turn our society upside-down, turn our lives upside-down. How dare they?! Not a peep out of them about the corporate tax cheats - anyone who voted for them might want to take a look at that & their support of tax cuts to the wealthy being made permanent. Folks, you aren't the ones they champion, think about it.
Great plan to have 12.6% of what you earned turned into just $1280/mo? I think not. People, you're being ripped off.
If two in the family work sometimes they can each get money on their own work record for Social Security and Medicare. Sometimes if one make less than their spouse s/he can draw half of what their spouse gets as benefits. You can go either way whichever gives you the most benefits.
Any way you calculate your SS "benefits" you'll still come out worse than if you invested your money in CD's over the same period of time.
A wise person once said: If you loan $100 to your neighbor and he can't pay it back, your neighbor must be in trouble. If you loan $100,000 to your neighbor and he can't pay it back, then YOU are in trouble.
Social Security has loaned ALL of its (i.e., our) money to a voracious free-spending borrower which is now destitute and unable to repay what it owes. Getting an attorney's opinion that the IOUs are legally valid is pretty much beside the point.
The government diverted all of the money to the general fund and spent it as general revenue. None of the money was saved or invested in anything. There are two words that can be used to describe what happened. Either the money was "borrowed" or it was "stolen" by the government. Since no provisions have been made for repayments, I think "stolen" is the most accurate word.
In a senate speach on October 9, 1990, Senator Harry Reid said, "We have been stealing money from the Social Security recipients of this country."
On March 16, 2011, Senator Tom Coburn said, “Congresses under both Republican and Democrat control, both Republican and Democrat presidents, presidencies have stolen money from social security and spent it. The money’s gone. It’s been used for another purpose.”
This is the harsh reality that America needs to wake up to. www.thebiglie.net
Who has the money? Where is it located?
Your political belief system seems to include a lot of wishful/delusional thinking. But suppose you are right and somebody is hiding a couple trillion dollars. Wouldn't it be prudent to hold off on spending that money until it is actually found and recovered?
Exactly where is the money? Who is "they"? Why can't the Treasury find it? Your belief system seems to include some wishful/delusional thinking.
But suppose you're right and someone is hiding two trillion dollars that belongs to the U.S. Treasury. Don't you think it would be prudent to find it and put it back in the Treasury before the government starts writing checks against it?
We spend money on groceries, utilities, upkeep on our homes. Some, like me, grew up in the years of the Great Depression and are used to making do or doing without. We started out on the lower rungs of business and worked toward the future - many without college or university educations.
Now we see our government taking what we worked toward - security in our senior years. The stock market is not secure - we lived through the stock market crash and even recently have seen the volatility of that market.
"scoteastman STOP calling Social Security an entitlement!!! It is paid directly into. It's not taken from "tax" dollars.
3 hours ago from ÜberSocial"
SOCIAL SECURITY IS NOT AN ENTITLEMENT - WE PAID FOR IT IN ADVANCE !!!!!!!!!!!!!!!!!!!
“From the perspective of the Government, the trust fund balances do not represent net resources. The trust fund balances are assets of the trust fund program agencies and liabilities of the Treasury, netting to zero for the government as a whole. From a cash perspective, when trust fund holdings are redeemed, to authorize the payment of benefits, the Department of the Treasury finances the expenditure in the same way as any other Federal expenditure—by using current receipts if the unified budget is in surplus, or by borrowing from the public if it is in deficit. The existence of large trust fund balances, therefore, does not, by itself, increase the government’s ability to pay benefits.”
The above quote is taken directly from the official 2011 budget document. I don't see how anyone could read this and still insist that the trust fund has $2.6 trillion in surplus money that can be used to pay full benefits until 2037. Sadly, the trust fund holds no real assets. The money is gone! Unless the government repays the money, Social Security does not have even enough money to pay full benfits in 2011. The public must face the harsh reality and demand that the government repay the money. www.thebiglie.net
I have emailed and called the White House and also my senators and representatives - now to start on the rest of the "gang" - and without letting up on any of them!
Have become so disheartened over his immediate capitulation on everything, heck, President Obama starts by taking his preferred position and cutting it in half, then going to the Repubs and they take their preferred position and double it, then they negotiate. Of course the Repubs know that all they have to do is hold the line and he'll cave. I shudder to think what's going to happen after the debt ceiling negotiations.
Republicans regard Social Security as an "unfunded liability," that is, a giveaway that is interfering with our war-making ability.
Alas, Social Security is an unfunded liability, because all the money working people put into it was stolen by Republicans and Democrats in order to pay for wars and bailouts for mega-rich bankers like Goldman Sachs.
What I am about to tell you might come as a shock, but it is the absolute truth, which you can verify for yourself by going online to the government's annual OASDI and HI reports. According to the official 2010 Social Security reports, between 1984 and 2009 the American people contributed $2 trillion, that is $2,000 billion, more to Social Security and Medicare in payroll taxes than was paid out in benefits.
What happened to the surplus $2,000 billion, or $2,000,000,000,000.
The government spent it.
Over the past quarter century, $2 trillion in Social Security and Medicare revenues have been used to finance wars and pork-barrel projects of the US government."
Ah, and the government raided the Social Security "trust fund" in the 1980s, and has been using the money since then to directly fund government operations. In order for the Timmy Geithner to pay out all those debased Social Security benefits, he first has to sell an interest bearing treasury bond. Whether the government eventually explicitly defaults on its debt by refusing to redeem maturing treasury bonds, or implicitly defaults on its debt by debasing the currency (as it is doing now with QE2), those receiving Social Security benefits are in for a big haircut.
I remember Al Gore and his "lock box" promise regarding Social Security. For much more than just this reason, I wish he had not been robbed of the presidency.
Certainly, the educated and well read author knows full well that SS revenues came up $41 billion short in 2010. To raise that amount, the federal govt had to borrow and add to the federal debt.
I do not understand why the author , knowing that SS payment obligations added to the federal debt in 2010, would proceed to tell us that SS has never added to the debt. Some may say that he is purposely lying about the situation. I just can't think of a reason for a lawyer to lie...
One need not be 'ignoring' one of the three sources of revenue if one only knows of two-- the SS taxes and the miniscule amount of taxes collected on the paid SS benefits them selves..
...' Critics carp that repaying those debts will require borrowing. But that would be caused, not by Social Security -- which has already paid for future benefits, but by the two Bush tax cuts and two Bush wars....'
I am not a lawyer so you lost me on that one.... but I am fearful that your third source of revenue for SS has something to do with the IOU's in the Lock-Box.
For you are implying that if the SS cashes in some IOU's , while the only way the present day govt would be able to get that money is by borrowing and adding to the debt., you do not call it borrowing and adding to the debt because...It's Bush's fault !!
So if SS is short on revenue vs expenses, the borrowing and additional debt is not real borrowing and not really adding to the natl debt because it's Bush's fault.
For calendar year 2010, in billions of dollars
639.8 Employment taxes
23.9 Income from taxaction of benefits
117.5 Interest
-0.1 Other Income
781.1 Total Income
701.6 Benefit payments
6.5 Administrative Expenses
4.4 Transfer to Railroad Retirement
712.5 Total Outgo
68.6 Net increase in assets
So when you hear people saying that benefits exceeded taxes in 2010, that is true, but the interest on the trust fund exceeded that shortfall.
Where the Bernsteins go wrong is when you combine their two concepts:
1) Social Security benefits have nothing to do with deficits.
2) Starting in about 2037, Social Security benefits in full may require additional funding in order to pay full benefits.
If a new tax HAS TO BE DEDICATED to Social Security to ensure full scheduled benefits, the deficit increases by the amount of that tax diverted to Social Security away from the general fund.