IS THE SOCIAL SECURITY LOCKBOX A MYTH?

11-15-11 | TEDWINT

[MostlyAnti-Lib]

Some say Social Security will be solvent for decades to come. Others say the Social Security fund is nothing but a bunch of IOU’s. Who’s lying to us? Are they all lying to us?

I contend that, in varying degrees, they all are.

They treat us like school children. They answer our questions with half-truths and little white lies, because, to quote Jack Nicholson, “We can’t handle the truth!”

On Neil Cavuto’s “Your World” recently, Nancy Altman, the Co-director of Social Security Works, stated that there is plenty of money available to fund Social Security for many years to come, and Cavuto rebutted with, in so many words, “No there isn’t”.

And that was it. End of discussion. Cut to a commercial.

Nobody howled, “Well, that’s a darned lie!”. Nobody whipped out a stack of evidence substantiating their claim. The viewer was left sitting there, open-mouthed, wondering, “What did I just see?”

Back in 2003, when the Bush administration questioned the management of Fannie and Freddie, Barney Frank said, “I do not think we are facing any kind of a crisis”. In 2008, after the S.S. Fannie and Freddie had hit the sand big time and the country had damn near gone into the dumper, good ol’ Barney was singing quite a different song, but he, Chris Dodd, Franklin Raines, Jamie Gorelick and others came out smelling like a rose (while surreptitiously stuffing millions of dollars in their pockets), while the beleaguered taxpayers pondered, “What the hell just happened?”

The Federal Reserve, with Ben Bernanke at the helm, operates in some kind of Twilight Zone where there is no congressional oversight and no one dares to question the decrees that are formulated behind the closed doors of that august office.

Of course, the manipulation of interest rates by the Fed were instrumental in the housing meltdown, and the current “quantitative easing” and other financial sleight-of-hand measures apparently have unintended consequences that leave the American people asking, in disbelief, “Are they trying to destroy us?”

The incumbent crop of politicians (on both sides of the aisle) certainly appear to be a lost cause, but perhaps we can put pressure to bear on the newly-elected freshmen to live up to their campaign rhetoric and “drain the swamp” (that Nancy Pelosi deepened and made ever more murky) and ask the hard questions that have gone unanswered for decades.

[tumblindice]

Like Pandora’s box, the only thing left in the “SS lockbox” is `Hope’ (and handful of change).

[DManA]

I don’t understand. Who is trying to pulling wool. What do you think is a lie here?

[taxtruth]

Social Security is a “pay-as-you-go” system. This means that when you work, the government takes your money and gives it to Social Security recipients. In order to get workers to accept this system, the government promises to take other people's money and give it to you when you retire. Think of it as an exponentially larger version of Bernie Madoff’s Ponzi scheme.

[kabar]

We can't keep creating new debt, i.e., borrowing the money. The debt servicing costs are over $300 billion now with very low interest rates. Once inflation kicks in, the debt servicing costs will balloon.

The USG will have to create new debt to redeem to the SSTF IOUs. That is the problem.

[DManA]

The alternative is to raise taxes. There would be a revolt if taxes were raised to pay for the benefits in just a few years.

[DManA]

And of course the third alternative would be to cut benefits to the point where tax payers are willing to assume the burden.

I agree that we are at the edge of what we can borrow without completely collapsing the system.

Looks like to me practically speaking we are going to have to cut benefits.

[dirtboy]

What politicians would love to do is let inflation do the dirty work - if COLAs don’t keep up with inflation, it amounts to negative compounding, gradually reducing the real cost of entitlement benefits.

[Doe Eyes]

I agree that we are at the edge of what we can borrow without completely collapsing the system.

According to the 2010 Trustees report, the Social Security trust funds will have an annual surplus of $77 billion in 2010.

[dirtboy]

According to news reports, the system was in the red in 2010.

[DManA]

There was a deficit this year. Probably next year too. Then they expect a surplus for a while. Then, the deluge.

[kabar]

Agreed. You could cut benefits but with 54 million on SS, 44 million on Medicare, and 60 million on Medicaid/CHIPS, there would be a revolt. Obamacare will add another 18 million to Medicaid.

Most Americans don't have a clue as to how much trouble we are in. We are bankrupt and there is no way to get out of our predicament without a lot of pain. It is going to be terrible.

[kabar]

2010 Trustees Report--"Social Security expenditures are expected to exceed tax receipts this year for the first time since 1983. The projected deficit of $41 billion this year (excluding interest income) is attributable to the recession and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink substantially for 2011 and to return to small surpluses for years 2012-2014 due to the improving economy. After 2014 deficits are expected to grow rapidly as the baby boom generation’s retirement causes the number of beneficiaries to grow substantially more rapidly than the number of covered workers. The annual deficits will be made up by redeeming trust fund assets in amounts less than interest earnings through 2024, and then by redeeming trust fund assets until reserves are exhausted in 2037, at which point tax income would be sufficient to pay about 75 percent of scheduled benefits through 2084. The projected exhaustion date for the combined OASI and DI Trust Funds is unchanged from last year’s report.

[jwalsh07]

Here's how social security works.

You pay your FICA.

Congress spends it funding current retirees and any ecess funds are spent on beetle dung research.

Congress issues an IOU to the SS Trust Fund for the amount they spent on beetle dung research and other things not related to Social Security.

The IOU, in the form of a worthless bond, is worthless.

Your SS contributions are not yours. If you die the money you contributed goes down the rat hole. Your loved ones get nothing, nobody passes go.

Rinse and repeat until the scheme falls under it's own weight.

[DManA]

It is simplicity in itself. I think people over think it because they can’t believe it can be that simple.

[BfloGuy]

Are you high? Is the Pope Catholic? Is snow white?

Do most British evangelicals say that Jesus is the only road to God?

[DManA]

This was all explained to me when I was 18 (I’m 56 now). It’s not like we just woke up this morning and discovered this mess. So I never expected to see any benefits. But if the whole economy collapses any advantage I might have had from that early understanding will be moot.