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To: Parmy
Who spent the SS surpluses?

Short answer: your parents and grandparents. If you are collecting Social Security, you did.

The surplus wasn't as large as a lot of people think. It is about to peak, but it's still only enough to pay less than 3 years of benefits.

The reason it's that small? It's because most of the payroll taxes collected over the past 40 years were immediately paid as benefits.

In the 70's, Congress increased old age benefits to an unsustainable level, and/or didn't raise taxes high enough to compensate. They tried to correct it in the 80's, but it wasn't enough: the economic and demographic assumptions were too optimistic.

And I'll save you the effort of retorting with the usual canards: It wasn't SSI -- that's separately funded from the general fund. And it wasn't disability fraud -- while the DI fund has a more severe problem, it's separately accounted with it's own trust fund and a dedicated portion of the payroll tax.

I'm referring only to the OASI (old age and survivor insurance) benefits.

Who spent all that tax money?

If you are referring to the surplus in the Trust Fund: it wasn't spent, it was loaned. It's currently in the equivalent of US Treasury Bonds, as required by law when Social Security was created.

In 2010, the payroll taxes became insufficient to pay benefits, so Social Security started withdrawing from the Trust Fund. It's a relatively small amount, and the dividends collected are sufficient to cover the withdrawals. But, that will change in the next few years, and the Trust Fund balance will start to decline -- until about 2034 when it hits zero.

If nothing is done and the Trust Fund hits zero, benefits will be reduced about 21%, by law. Social Security can't borrow money.

To give you an idea of the severity of the problem right now, you can read the summary of the 2015 Trustees Report, starting at the bottom of page 7:

https://www.socialsecurity.gov/oact/tr/2015/tr2015.pdf

For the combined OASI and DI Trust Funds to remain solvent throughout the 75-year projection period: (1) revenues would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 2.62 percentage points (from its current level of 12.40 percent to 15.02 percent, a relative increase of 21.1 percent); (2) scheduled benefits during the period would have to be reduced by an amount equivalent to an immediate and permanent reduction of 16.4 percent applied to all current and future beneficiaries, or 19.6 percent if the reductions were applied only to those who become initially eligible for benefits in 2015 or later; or (3) some combination of these approaches would have to be adopted.

87 posted on 11/06/2015 9:08:14 AM PST by justlurking
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To: justlurking

“the surplus in the Trust Fund: it wasn’t spent, it was loaned.”
Well, there is often a conflation when this is discussed.
The money was indeed loaned and is being paid back.

However it is significant that it was loaned to be spent.
Had it been used (for example) to pay down the debt in preparation for the time when the government would face the burden of paying more in benefits than it would receive in payroll taxes then:
A. the TOTAL tax burden upon young people like the OP would be less
B. The cost of borrowing would be less.

Interestingly Gore promised to use ‘some’ of the excess taxes to pay down the debt, also the media meme is that Clinton would have done so but impeachment required him to use the money to please his congressional allies.
Which is all bull, but shows the obviousness of the situation at the time.


99 posted on 11/06/2015 9:23:39 AM PST by mrsmith (Dumb sluts: Lifeblood of the Media, Backbone of the Democrat/RINO Party!)
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