Social(ist) Security Question

Discussion in 'Budget & Taxes' started by TheResister, Oct 5, 2016.

  1. TheResister

    TheResister Banned

    Joined:
    Sep 8, 2015
    Messages:
    4,748
    Likes Received:
    608
    Trophy Points:
    113
    Try explaining this to me, please.

    We have a local radio talk show host by the name of Herman Cain. I don't understand him, so I pose this question based upon something he's said many times:

    A) Social Security is almost broke. There isn't enough in the account to last another five years

    B) Social Security has no specific account for Social Security

    He can't explain how it can be both. Anybody have an answer?
     
  2. Vegas giants

    Vegas giants Banned

    Joined:
    Jan 28, 2016
    Messages:
    49,909
    Likes Received:
    5,343
    Trophy Points:
    113
    Social security tax receipts are counted down to the penny. So are payouts. Projections show receipts will exceed payouts. Its not rocket science.
     
  3. TheResister

    TheResister Banned

    Joined:
    Sep 8, 2015
    Messages:
    4,748
    Likes Received:
    608
    Trophy Points:
    113
    You may have provided a good answer, but you didn't understand what I asked.

    The radio talk show hosts seem to think all the money goes into some general fund. So how would you know when it was broke? In order for Socialist Security to be solvent, wouldn't they need to invest the money OR should we count on the $12 BILLION DOLLARS per year that undocumented immigrants put into it? I'm thinking, either way, this setup is a bust if we don't do something different.
     
  4. WillReadmore

    WillReadmore Well-Known Member

    Joined:
    Nov 21, 2013
    Messages:
    59,467
    Likes Received:
    16,350
    Trophy Points:
    113
    It seems like an accounting problem to me.

    Congress HAS invested SS revenue - in America. That makes sense in that there are serious problems when government invests by buying stock or otherwise investing in private enterprise, etc.

    The catch is that congress doesn't want it showing up on the books. Their version of accounting seems to be that all their SS investments in America were a bust while other investments in America were successful!!
     
  5. OldManOnFire

    OldManOnFire Well-Known Member

    Joined:
    Jul 2, 2008
    Messages:
    19,980
    Likes Received:
    1,177
    Trophy Points:
    113
    All FICA monies go into the general fund and in exchange SS is given interest-bearing US treasuries. When SS needs cash for payouts they cash in the US treasuries. As long as monthly FICA monies are greater than the SS payouts everything is fine...
     
  6. Battle3

    Battle3 Well-Known Member

    Joined:
    Oct 14, 2013
    Messages:
    16,248
    Likes Received:
    3,012
    Trophy Points:
    113
    I don't know about the 5 years comment, but on the "account" he probably means the mythical social security "lock box" in which social security funds were kept as if it was a bank account. In a bank account, you put your money in an account, it earns interest, and its your money just sitting in the account waiting for you to collect it. The money was yours, guaranteed, locked in a box, untouchable by a third party (the govt). If over your life you put in $X, when you retired you would get at least $X back. That's how social security was sold to the American people.

    Obviously that's not how it works any longer. In the past, there were years when tax receipts exceeded payments, the govt wanted that money, so they took it and spent it and put IOU's (govt bonds) in the "lock box".

    According to the SS administration https://www.ssa.gov/oact/TR/2016/tr2016.pdf

    today all social security taxes are used to pay social security benefits but the interest on the govt bond IOU's are enough to cover the deficit plus a little more. In 2015, expenses were $897B, tax revenue was $827B, the iou's (govt bonds) were used to pay the remaining.

    Total income (taxes plus govt bond interest) exceeds expenses until 2019, then it is a net loss every year. According to the social security administration, social security will be completely broke in 2034.

    The govt promised a "lock box", then they stole the money from the box, and now the people will get stuck with the bill.
     
    TheResister likes this.
  7. OldManOnFire

    OldManOnFire Well-Known Member

    Joined:
    Jul 2, 2008
    Messages:
    19,980
    Likes Received:
    1,177
    Trophy Points:
    113
    No FICA cash has ever been stolen by anyone?? Whatever cash the general fund takes from FICA it issues interest bearing treasuries in return.

    And, never did SS tell anyone that the FICA withholding they paid in was sitting in an account to be collected whenever they needed it?

    Lastly, it is impossible for SS to be 'completely broke' at any date in the future because every year there are FICA withholdings on employees and employers...
     
  8. Battle3

    Battle3 Well-Known Member

    Joined:
    Oct 14, 2013
    Messages:
    16,248
    Likes Received:
    3,012
    Trophy Points:
    113
    It was sold as a "lock box" just as I described, that's how social security was first passed.

    Its the Social Security administration itself that states the system will be bankrupt in 2034 - go read their report https://www.ssa.gov/oact/TR/2016/tr2016.pdf
     
  9. TheResister

    TheResister Banned

    Joined:
    Sep 8, 2015
    Messages:
    4,748
    Likes Received:
    608
    Trophy Points:
    113
    While I don't fully understand Socialist Security, I have to disagree with the last statement.

    Undocumented foreigners are paying into S.S. at the tune of about $12 BILLION DOLLARS annually. As you know they are ineligible to get any of that money back, lacking citizenship. So, if we get rid of them, even the small raises S.S. recipients get will quickly become negative increases (meaning decreases in monthly payments.)

    Additionally, about half of the American people rely on the government for their daily bread. When more people are taking out than paying in, the system cannot possibly remain solvent.
     
  10. Deckel

    Deckel Well-Known Member Past Donor

    Joined:
    Nov 2, 2014
    Messages:
    17,608
    Likes Received:
    2,043
    Trophy Points:
    113
    Social security receipts have up until recently exceeded the amount being paid out in benefits. The difference has been invested is US government bonds (The government spent the money and gave the SSA an IOU basically). The bonds are what people call "The Social Security Trust Fund". The SSA can then sell those bonds at market or redeem them as they come due to make up the difference when benefits exceed receipts. I am not sure how he figures it will be insolvent in 5 years. It is probably closer to 15 years. That is when based on current projections the receipts plus the liquidation of bonds will no longer cover benefits (i.e. the SSA will be out of bonds to sell). At that point, the difference between receipts and benefits will have to be made up out of the general budget; benefits drastically reduced, withholdings drastically raised, or some combination thereof to keep the program going forward.

    - - - Updated - - -

    Social security receipts have up until recently exceeded the amount being paid out in benefits. The difference has been invested is US government bonds (The government spent the money and gave the SSA an IOU basically). The bonds are what people call "The Social Security Trust Fund". The SSA can then sell those bonds at market or redeem them as they come due to make up the difference when benefits exceed receipts. I am not sure how he figures it will be insolvent in 5 years. It is probably closer to 15 years. That is when based on current projections the receipts plus the liquidation of bonds will no longer cover benefits (i.e. the SSA will be out of bonds to sell). At that point, the difference between receipts and benefits will have to be made up out of the general budget; benefits drastically reduced, withholdings drastically raised, or some combination thereof to keep the program going forward.
     
  11. OldManOnFire

    OldManOnFire Well-Known Member

    Joined:
    Jul 2, 2008
    Messages:
    19,980
    Likes Received:
    1,177
    Trophy Points:
    113
    You might wish to read;

    https://www.ssa.gov/history/InternetMyths.html

    https://www.ssa.gov/history/hfaq.html

    There is nothing that states SS will be bankrupt in 2034...that is simply the time when all the US treasuries and special bonds have been cashed in and the only money to fund SS is the FICA contributions for that year...expected to be less than the payouts...
     
  12. OldManOnFire

    OldManOnFire Well-Known Member

    Joined:
    Jul 2, 2008
    Messages:
    19,980
    Likes Received:
    1,177
    Trophy Points:
    113

    You can disagree all you wish but use some common sense; if FICA contributions in 2034 are $500 billion then obviously $500 billion can go to payouts. If the FICA contributions are too low then government simply needs to change the current formulas, like a higher FICA rate or higher FICA cap or whatever.

    A decrease in monthly SS payments is not 'completely broke'??
     
  13. Robert

    Robert Well-Known Member Past Donor

    Joined:
    Aug 16, 2014
    Messages:
    68,085
    Likes Received:
    17,134
    Trophy Points:
    113
    Gender:
    Male
    Social Security does have a specific account. I saw it once on TV and they have rows upon rows of filing cabinets with treasury IOUs from the Federal Government.

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

     
  14. Robert

    Robert Well-Known Member Past Donor

    Joined:
    Aug 16, 2014
    Messages:
    68,085
    Likes Received:
    17,134
    Trophy Points:
    113
    Gender:
    Male
    I Posted factual material on the SS and the lockbox just earlier. See post 13. It links to the factual sources.

    I want to mention your comments as to money in the bank. Banks don't have to keep your money there. Actually they can do all the business they need with people who draw out cash by keeping only part of the money there. The rest they lend out for revenues known as interest.
     
  15. Robert

    Robert Well-Known Member Past Donor

    Joined:
    Aug 16, 2014
    Messages:
    68,085
    Likes Received:
    17,134
    Trophy Points:
    113
    Gender:
    Male
    Here is what is more to fear than Social Security.

    By making my medical costs, your costs, you the taxpayer are in deep trouble. You who will live far longer than I will, shall pay and pay and pay even more and more.

    What I like a lot about the following link is it shows President G. W. Bush studying Social Security and not Obama.

    https://www.google.com/search?q=pho...hUhrVQKHWVWB24Q_AUIBygC#imgrc=QXHJkYfM6QbnKM:
     
  16. cjm2003ca

    cjm2003ca Active Member

    Joined:
    May 8, 2011
    Messages:
    3,648
    Likes Received:
    16
    Trophy Points:
    38
    as of the last report in 2015 the federal government owes social security 5.1 trillion dollars..where and when the federal government will pay this amount is the big question...25% of the national debt is owed to social security..so the numbers you are seeing on s's' going broke is because it does not include this amount of money ever being paid back...
     
  17. Battle3

    Battle3 Well-Known Member

    Joined:
    Oct 14, 2013
    Messages:
    16,248
    Likes Received:
    3,012
    Trophy Points:
    113
    In other words, in 2034 social security cannot meet its legal financial obligations - the definition of bankruptcy.
     
  18. OldManOnFire

    OldManOnFire Well-Known Member

    Joined:
    Jul 2, 2008
    Messages:
    19,980
    Likes Received:
    1,177
    Trophy Points:
    113
    Every single day SS cashes in treasuries/bonds in order to make their daily pay outs. All $5.1 trillion in bonds will be cashed in and paid out!

    - - - Updated - - -


    No...it has NOTHING to do with bankruptcy!

    All Congress and presidents need to do is adjust the FICA contributions each year in order to meet the pay outs...
     
  19. Woolley

    Woolley Well-Known Member

    Joined:
    May 6, 2014
    Messages:
    4,134
    Likes Received:
    962
    Trophy Points:
    113
    The argument that SS will become broke because tax receipts in some years will not match outflows is preposterous. If one were to follow this logic to every other federal expenditure one would have to conclude that the military is and has been broke for decades.
     
  20. WJV

    WJV Banned

    Joined:
    Jul 30, 2016
    Messages:
    939
    Likes Received:
    13
    Trophy Points:
    0
    USA has reserve status and cannot run out of money. Elites are %$%$ing with you. How can they print up trillions out of thin air for QE but not be able to pay for welfare? 12 trillion in QE for the wealthy - but they dont have any money for welfare?

    It is time to riot. If not now then when?

    The problem with USA is that it is full of people that would actually like welfare recipients to starve to death. They would love it.

    edit - And the global community should go to war with USA because at the end of the day we are paying for you to live beyond your means by accepting USD. But the thing is that our wealthy gains from your QE money printing just like the US wealthy does. Your elites print those QE trillions not just for themselves but also for their elite buddies in all other nations. They will print up QE trillions for themselves and their non-American friends but will not pay for welfare? They pretend that they do not have enough money so they can put pressure on for cuts to welfare when US welfare is about the worst in the developed world already? And half of you Americans are receiving some form of welfare? Half of America is going to put up with their nonsense is it? Jesus Christ. When is enough enough? These 'elites' are stupid. Their nonsense is ridiculous. Any fool can see it.

    USA cant run out of money. USA cant run out of money because of the reserve status. USA can afford trillions in QE money printing for the global wealthy - for nothing, just to keep them above you - and they are going to tell you there is no money for welfare?

    The reason they have to pay welfare is not because they are nice people - it is so you dont rise up and kill them. They will not stop paying welfare.

    [video=youtube;exuGv3HsV-U]https://www.youtube.com/watch?v=exuGv3HsV-U[/video]
     
  21. Kode

    Kode Well-Known Member

    Joined:
    Feb 5, 2016
    Messages:
    26,309
    Likes Received:
    7,461
    Trophy Points:
    113
    Gender:
    Male
    He contradicts himself, as you noted. There's your answer.

    Now, do you want some facts and details? Fine. BTW, in spite of nonsense that says your bank account has dollar bills in it, umm nope. It doesn't. But Social Security...

    The S.S. Trust Fund has Treasury securities (Treasury bills) in it valued at about $2.8 trillion. Those T-bills were bought and fully paid for with FICA funds every month. If you have T-bills in your investment fund or 401k or desk drawer, they have actual value too. What did the government do with the money when you bought those T-bills? Who knows. No matter, they have value and you can redeem them. Same with S.S.

    "In the annual Trustees Report, projections are made under three alternative sets of economic and demographic assumptions. Under one of these sets (labeled "Low Cost") the trust funds remain solvent for the next 75 years. Under the other two sets (the "Intermediate" and "High Cost"), the trust funds become depleted within the next 20 years. The intermediate assumptions reflect the Trustees' best estimate of future experience.

    "Some benefits could be paid even if the trust funds are depleted. For example, under the intermediate assumptions, annual income to the trust funds is projected to equal about seventy-nine percent of program cost once the trust funds become depleted. If no legislation has been enacted to restore long-term solvency by that time, about three-quarters of scheduled benefits could be paid in each year
    ."

    https://www.ssa.gov/OACT/ProgData/fundFAQ.html

    Social Security will not "go broke" in the foreseeable future unless unemployment goes to 100%.

    Any other questions?
     
  22. Kode

    Kode Well-Known Member

    Joined:
    Feb 5, 2016
    Messages:
    26,309
    Likes Received:
    7,461
    Trophy Points:
    113
    Gender:
    Male
    Then "bank holidays" when there's a run on banks is a big question. In your world it isn't possible because all the money is still there. LOL!
     
  23. Kode

    Kode Well-Known Member

    Joined:
    Feb 5, 2016
    Messages:
    26,309
    Likes Received:
    7,461
    Trophy Points:
    113
    Gender:
    Male
    That's because, unlike Obama, Bush didn't know anything about Social Security, --as with most other things.
     
  24. Kode

    Kode Well-Known Member

    Joined:
    Feb 5, 2016
    Messages:
    26,309
    Likes Received:
    7,461
    Trophy Points:
    113
    Gender:
    Male
    Some information on the redemption of those Treasury securities is required here.

    When the SSA needs to supplement FICA funds to meet current obligations (as they do just about every month now) the government sells the usual public issues of T-bills on the open market, -largely to foreign investors, -in a value equal to the needed Trust Fund T-bill redemption requirement for that month. The proceeds are turned over to the SSA and the corresponding Trust Fund Treasuries are "retired", meaning cancelled. Thus the redemptions are on-going and there's no need to redeem all of them at once (in fact that would be exceedingly dumb). And the redemption process, in essence, simply moves the Trust Fund Treasuries out of the Trust Fund and into the hands of private and institutional investors. And so there's no need to find tax dollars to redeem the Treasuries.
     
  25. Battle3

    Battle3 Well-Known Member

    Joined:
    Oct 14, 2013
    Messages:
    16,248
    Likes Received:
    3,012
    Trophy Points:
    113

    Wow, not only are you wildly ignorant of sociology and political science and history, you take things totally out of context. Go read the series of threads leading up to the one you posted about. Try to at least keep up with discussions.
     

Share This Page