The problem with socialism is that eventually you run out of other people’s money.
“Social Security and Medicare remain secure in the medium-term,” said Treasury Secretary Jack Lew. “Nevertheless, future solvency challenges for both programs remain.”
Twenty years is the medium term? Sounds like short term thinking to me. We are in big trouble.
These are the same people constantly telling us the US economy is fine, and even progressing, just like they did back in 2007-08. same thing will happen again, but if the collapse is large enough, there will be no coming back from it.
They just want people to continue working, paying taxes, buying things, going into debt, etc. Tell a lie enough times and people start to believe it, but when the day comes and the banks suddenly close, what will they be saying then I wonder?
The federal government usually only thinks in four year increments. 20 years is practically long term for us.
What social security trust fund? Can I put my hand on it somewhere?
Wasnt that also stated in the 2004 presidential elections?
well, lets see…we’ve had 50+ million abortions of future workers since 1973. Lets say at least half of those would have been working and paying into the system in 2016…yes, it all goes back to killing those future workers.
When you factor in all the many ways one can manipulate the SS system it is no wonder we are in trouble.For instance,file and suspend,or this is the one that gets me.An individual can claim part of his or her former spouses SS income! Found out about this from a guy my husband used to golf with.He was in no need of these funds,yes he was taking part because it is allowed.This is pure greediness IMO::eek:
There is no such thing as a “social security trust fund”. Those funds are considered part of the federal budget. They are set aside on paper only. The government is, and has been, running a deficit. Do you honestly believe that it has extra unused cash sitting around in a “trust fund” somewhere? Would you even really want that?
Social Security is funded primarily by taxes. That is simple reality. As long as the government is operational, Social Security will continued to be paid unless and until the government legislates it away.
Misleading the Public: How the Social Security Trust Fund Really Works
By David C. John
About the Author
David C. JohnSenior Research Fellow in Retirement Security and Financial Institutions
Thomas A. Roe Institute for Economic Policy Studies
As political leaders debate how best to fix Social Security, many policymakers are focusing on the wrong issue. Their sole concern seems to be the date when the Social Security retirement and survivors trust fund will run out of its paper assets. This mistaken emphasis misses the fundamental point about Social Security’s problems: There is no cash in the Social Security trust fund, and there never has been any.
The Social Security trust fund is merely an accounting device filled with IOUs that future taxpayers must repay. Far too soon, payroll taxes will be insufficient to pay all of the promised benefits. Unless Congress promptly takes action, taxpayers will have to pump hundreds of billions of additional tax dollars into Social Security to pay the promised benefits.
How the Trust Fund Operates.Workers pay their Social Security taxes through their employers. Each employer periodically sends a lump sum payment to the U.S. Treasury that includes all of the income taxes and Social Security and Medicare payroll taxes paid by both the employer and its employees.
The Treasury both receives the payroll taxes (and income taxes that higher-income retirees pay on their Social Security benefits) and pays monthly benefits on behalf of the Social Security Administration (SSA). The money stays in the Treasury’s hands until it is either paid out as Social Security benefits or otherwise spent by the government. In fact, no money ever goes into the trust fund. Instead, the trust fund balance is the result of two accounting entries by the Treasury.
First, the Treasury estimates how much of the aggregate tax receipts are Social Security taxes and “credits” the Social Security trust fund with that amount. Then the Treasury “subtracts” the total amount paid in monthly Social Security benefits from the trust fund balance. No money actually changes hands; these are strictly accounting entries.
Any “money” remaining in the trust fund is converted into special-issue Treasury bonds, which are really nothing more than IOUs. In addition, the Treasury pays interest on the trust fund’s balance by crediting the trust fund with additional IOUs. These are also strictly accounting entries, and again no money changes hands. After crediting the trust fund with the proper amount in IOUs, the government spends the extra Social Security tax collections just like any other tax revenue–to finance anything from aircraft carriers to education research.
At the end of 2002, the Social Security trust fund had a balance of $1.22 trillion. During 2003, the Treasury received $544 billion in Social Security taxes and paid out $406 billion in Social Security benefits. Therefore, the trust fund received $138 billion in these special-issue Treasury bonds, resulting in a trust fund balance of $1.36 trillion at the end of 2003.
Why the Social Security Trust Fund Differs from Real Trust Funds. Private-sector trust funds invest in real assets ranging from stocks and bonds to mortgages and other financial instruments. However, the Social Security trust funds are only “invested” in a special type of Treasury bond that can only be issued to and redeemed by the Social Security Administration. As the Congressional Research Service noted in a report on May 5, 1998:
When the government issues a bond to one of its own accounts, it hasn’t purchased anything or established a claim against another entity or person. It is simply creating a form of IOU from one of its accounts to another.
According to the Office of Management and Budget under the Clinton Administration in 1999:
These [trust fund] balances are available to finance future benefit payments and other trust fund expenditures–but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. [Emphasis added.]
In short, the Social Security trust fund is really only an accounting mechanism.
Medicare has only 12 years left. Even for me at 67 that seems too short. For my 21 year old goddaughter who just graduated from college in three years, I am sure it is ridiculous. It’s a good thing she is a hard worker, but I doubt there are enough like her to keep the Ponzi schemes going.
BTW, do the estimates of the trustees include the increasing cost of health care driven by the poorly conceived ACA? I doubt it.
The FICA tax rate is now 12.4% of earned income. If every employee was permitted to put that much into his own retirement fund rather than into the hands of an incompetent government, virtually every family could retire as millionaires.
Yes. In other words their projections as to when it’ll run out hasn’t changed. Back then they said it would run out in about 30 years. The reason I remember this is that I did the calculation and it’ll be running out right about the time I would be retirement age. And sure enough, I’ll be right around retirement age in about twenty years.
Doomsday for social security is quickly approaching and their projections as to when it will happen has been consistent.
The Social Security trust fund is already empty. It’s just an accounting gimmick. There is no money in it, it just contains IOUs from one government department to another.
Apparently, current benefits are paid from taxes from current workers, or from borrowing. And the worker base is shrinking.
That is the problem with welfare programs, they take from those who work and give to those who won’t work.
If I owned stock in senior retirement residences, I would think of selling! The resodemts may not be able to afford paying for those places, which are pretty nice, with other people’s money indefinitely.
Don’t worry, it will be fine, the Baby Boomers will simply vote to raise taxes and then give themselves even more reductions in taxes so they are paying less than they are now. If that is a problem then they will vote to slash benefits for younger people. The Baby Boomers for many years have paid for tax cuts with the futures of their children and grandchildren and they will continue to do so.
Something the Baby Boomers will need to contend with is that the Millenials have what Generation X lacked - the number of votes to control the direction of the country.
All they need to do is to raise the age of retirement to 102 and everything will be fine.