Posted on 05/12/2009 6:07:48 AM PDT by Libloather
Report on Social Security and Medicare could be bleaker
Story By: Associated Press
Updated Tue May 12, 2009, 06:44 AM MDT
Analysts say today's release of a report card on Social Security and Medicare won't be anything to celebrate. Analysts think this year's trustees' report will project the two trust funds will run out of money sooner than projected a year ago, thanks in part to the worst recession in decades and resulting high unemployment.
The economic downturn has resulted in a loss of 5.7 million payroll jobs since it began in December 2007 and an unemployment rate that hit a 25-year high of 8.9 percent in April. Fewer people working means less money paid into the trust funds for Social Security and Medicare.
(Excerpt) Read more at koaa.com ...
Actual numbers are supposed to come out @ 2:30 this afternoon.
B-b-b-b-but Clinton ran a surplus all 8 years! Either that, or he was including social security receipts in the general fund. One of those two, I forget.
Last week some Freeper laughed at me for suggesting we are very likely in a depression, though we just don’t have the published figures yet.
Guess it’s time to fix up the spare room for my elderly mother-in-law....sigh.
Can’t anybody in government see this is a problem? We need to tax and spend more to dig out of the SS, Medicare, Medicaid hole... Barry to the rescue...
but...but....but....
my Congressman Andre Carson (Muslim, IN) said he would make Social Security “safe for seniors”
how could this be?
Sheesh, every 5th grader knows that the proper way to say it is ‘more bleaker’.
Andre lied to you. He knows it. Now you know it.
Last week some Freeper laughed at me for suggesting we are very likely in a depression, though we just don’t have the published figures yet.
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Once again it has been made obvious to you as well as to me that being a Free Republic member, in and of itself, does nothing to raise a person’s intelligence level. I would have asked why you said very likely, I consider it a foregone conclusion, anyone who laughs at the thought is living in dreamland.
My only question is whether it is a depression, which implies a recovery at some point or an engineered descent to a lower level plateau, the latter is looking more and more likely.
This is a prime example of the government “investing” our money for us, not to mention the fact that government entitlements will fail.
The trust funds don't exist anyway except in the same computer system that the Fed uses to print money.
The funny part is that the smaller SS surplus is actually making the national debt increase at a slower pace than would be the case if the revenues were not decreasing.
Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations are doing that Gen-X and Y will end up paying for.
Freep mail me to be added or dropped. See my home page for details and previous articles.
“Trust funds?!” “Run out of money?!” There are undoubtedly still a great many who believe that SS funds (that is, Social Security. Given the Hussein administration one must be clear) are somehow separated from the rest of the money confiscated by Big Brother each year.
And we want Zero and Unions running Banks and Chrysler?
Economics / Recession 2008 - 2010
May 11, 2009 - 05:35 AM
By: Money_and_Markets
Martin Weiss writes: Any economist fixated on so-called “signs of a recovery” needs to have his head examined.
As I’ll prove to you in a moment, the hard-nosed reality is that five major economic cyclones are in progress at this very moment.
The storms are not abating. Nor are they changing direction. Quite the contrary, what you see today is, at best, merely a deceptive calm before the next, even larger tempests.
For investors who follow Wall Street, it could be fatal.
[snip]
Actually Government Motors could be a nice booby trap for Baraq if the GOP can ever get the message across that taxpayers are going to be subsidizing lush retirement payments and platinum benefits for UAW members.
I knew it all along, but I’m sure as hell not gonna let him forget he said it, LOL.
You understand I didn’t want you to continue through life being surprised by Andre. Most everybody else knows he’s telling lies because his mouth opens and closes.
You understand I didn’t want you to continue through life being surprised by Andre. Most everybody else knows he’s telling lies because his mouth opens and closes.
Clearly impossible. Nancy, Barney, and Teddy have spent the last five years telling me the Social Security crisis was just an invention of the Bush administration.
“SS will start going into the red in 2017.
I believe today’s report will show this has moved up to 2012 or so because during this recession, payroll tax revenues have been smaller than were projected last year at this time.
“The funny part is that the smaller SS surplus is actually making the national debt increase at a slower pace than would be the case if the revenues were not decreasing.”
Huh? On the contrary, so long as the government keeps spending the SS surplus every year (as it does), this masks the true size of the deficit. Thus, the faster the surplus is wiped out, the sooner this day of reckoning comes.
Because we’ve been stealing from the Trust Fund for 40+ years, we have to pay back what we borrowed. But because those “borrowed” (”stolen”, if you prefer) funds were NOT placed in assets we could sell, we will either have to borrow more (from the Chinese!) to cover the shortfall between expenditures and payroll taxes or we will have to use federal general funds. We’ve taken SO much from the Trust Fund that it will take until about 2040 to pay it all back. But at that point, the Trust Fund is officially broke and BY LAW, Congress at that point either has to drastically cut benefits (about 40% IIRC) or increase payroll taxes to restore fiscal balance. It ain’t a pretty picture. This is why adding trillions to our fiscal woes at this juncture rather than resolve this looming fiscal crisis is so flagrantly irresponsible. See http://www.iousathemovie.com/
Here is how it works. After all the SS benefits are paid out to the 55 million or so who receive them, the "surplus" is deposited into the General Fund. In return, the Treausry deposits that same amount in the form of non-market T-bills into the SS Trust Fund. These T-bills accrue interest as well. The SS Trust fund is included in our now $12 trillion national debt under under "Intra-governmental holdings" as distinct from the publically held portion of the debt. Ironically, the smaller the surplus, the less money there is to put into the general fund, which thus slows down the amount of Intragovernmental holdings. Of course, the general fund must find this money from somewhere else, i.e., it must borrow more or spend less.
When payouts exceed revenue, as they did in the early 1980s, then these non-market T-bills need to be redeemed by the federal government so SS pay out the benefits. If the date is moved up to 2012 then that just speeds up this process. SS will then have to continue using its T-bills to fund benefits and by 2042 [or earlier], it will use up all of its T-bills and be able to pay about 75% of the benefits.
Because we’ve been stealing from the Trust Fund for 40+ years, we have to pay back what we borrowed. But because those “borrowed” (”stolen”, if you prefer) funds were NOT placed in assets we could sell, we will either have to borrow more (from the Chinese!) to cover the shortfall between expenditures and payroll taxes or we will have to use federal general funds. We’ve taken SO much from the Trust Fund that it will take until about 2040 to pay it all back. But at that point, the Trust Fund is officially broke and BY LAW, Congress at that point either has to drastically cut benefits (about 40% IIRC) or increase payroll taxes to restore fiscal balance. It ain’t a pretty picture. This is why adding trillions to our fiscal woes at this juncture rather than resolve this looming fiscal crisis is so flagrantly irresponsible.
True enough on what will happen by 2040 or so. I would not term it stealing since the SSTF was provided with interest bearing T-bills in return for the "surplus." The argument could be made that it is better for the General Fund to borrow money from ourselves (SS) than the Chinese. Of course, we could also cut spending. I spoke to a member of the SS Trust Fund Board (Tom Savings) who said it would be far better to eliminate the SSTF and just make SS a line item in the federal budget.
The real problem with SS is that it is structurally unsound. In 1950 there were 16 workers for every retiree, today it is 3.3 workers, and by 2030 it will be two. And SS is on automatic pilot with a formula being used to increase benefits each year [COLA] that bears no relation to revenue. They are not linked like Medicare B is.
SS is unsustainable. The status quo is not an option. We can reform it by using personal accounts or we can kick the can down the road like we did in 1983 by raising taxes and reducing benefits including raising the retirement age again. The 1983 fix was supposed to make SS solvent for the next 75 years. It took just 29 years if the new date is now 2012 when SS goes into the red.
SS is far easier to fix than Medicare/Medicaid. We are headed for a huge fiscal train wreck. The Train Wreck Ahead Medicare is rolling toward disaster, and there is no easy way to fix it.
According to those that follow Austrian economics theory this is a depression which are caused by the boom and bust of a huge credit expansion.
2017 - just in time for there to be nothing for any generations after the Boomers.
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