The economic reality of Social Security

[reaganator]

First off, I want to be told how I am wrong. For many decades, when there was a surplus to the Social Security contributions this money was moved to the general fund and spent. In place of this spent money are $2.7 trillion of U.S. Treasury Notes in the Social Security Trust Fund Reserve. To redeem these treasury notes that merely represent the spent surplus Social Security contributions new money must be collect from taxpayers or federal deficit spending exercised. The $2.7 trillion of U.S. Treasury Notes cannot be used to demonstrate the solvency of Social Security which is often done.

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TOPICS: Business/Economy; Miscellaneous; Society
KEYWORDS: gettothepoint; stupidvanity; unclesamiou; vanity; youcanlookitup

[SpaceBar]

Yup, a big pyramid scheme.

It’s been evident to those with their eyes open forever.

[ssfromla]

Never forget that they had to change the law so they could drain it.

[Liz]

I found the Social Security Trust Fund:
https://moneymorning.com/2017/03/31/the-social-security-trust-fund-is-just-a-stack-of-ious-in-a-west-virginia-filing-cabinet/
If we do a heist and steal the file cabinet we own it all.

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Count me in.

[FreedomNotSafety]

Wrong? You used words such as surplus, reserve, contributions, trust fund, and solvency.

None of those words are applicable to Social Security.

Those that use the treasury notes as proof of solvency are engaged in willful ignorance of the true nature of SS which is also mentioned with such terms as “I am owed, we wuz promised, sacred intergenerational debt, trust fund, spent and wasted, cut out the waste, we have enough, I fought for this country, I could have invested it, etc..

SS is and always has been a vote buying social welfare scheme designed to enfeeble people to government. It takes, and always has, from today’s workers and gives to today’s recipients. The amount taken and given and who it is taken from and given to is simply the results of political calculus just like any other government welfare scheme.

Retirement is now like healthcare. The government, your employer, anyone and everyone else should pay for your retirement and health care. Anyone but you.

Already out defense posture is slipping away as money flows to the entitled masses. Ask the UK has this goes from here.

I have plenty of friends and family who have expect to retire on SS at age 62 (or earlier if they can be “disabled”) and ride it for 30 years. And these are die hard otherwise conservatve liberty loving anti-big-government people. But they are utterly dependent on the US governemt.

[ssfromla]

I was wrong. Here is what happened and how they got their greedy hands on it.

he 1968 decision: In 1968, the Johnson administration reclassified the Social Security trust funds to be "on-budget" beginning with the 1969 fiscal year. This combined the Social Security trust funds with the rest of the federal budget for accounting purposes, which made the Social Security surplus appear to reduce the federal deficit.

How the "borrowing" works: When Social Security collects more in payroll taxes than it pays out in benefits, it must, by law, invest the surplus in special-issue U.S. Treasury bonds guaranteed by the government. This money is then transferred to the government's general fund and used for other purposes. The bonds held by the Social Security Trust Fund are a legal obligation for the Treasury to repay with interest.

A common misconception: It is a common myth that Congress "raided" or "stole" the Social Security funds. In reality, the process is a legal arrangement where the government borrows from Social Security, just as it borrows from public investors. While it is a form of borrowing that adds to the national debt, it is not illegal. 1983 and 1990 budget acts: Subsequent laws have affected the fund's budget status.

The Social Security Amendments of 1983, signed by President Ronald Reagan, gradually moved the funds back "off-budget". The Omnibus Budget and Enforcement Act of 1990 completed this process, exempting the Social Security and Medicare trust funds from any general budget calculations or sequestration, though the underlying borrowing mechanism did not change.

[philman_36]

First off, I want to be told how I am wrong.

You Can’t Always Get What You Want

[ETCM]

It wasn’t just child mortality. An 18 year old was only expected to make it to 66. Life expectancy for a 40 year old man was just 29 years, meaning they wouldn’t see 70. Today a man who makes it to 40 should reach 77. A 65 year old past 82.

[central_va]

As a white male I consider SS reparations for years of onerous taxation, reverse discrimination and endless legal immigration used to try to keep me down, replace me and on my knees. I WANT MY F’G MONEY.

[NorthMountain]

It’s not your F’G money.

It never was your F’G money.

It has all been spent. Given away, to today’s and yesterday’s SS recipients.

The only way you get SS money is by taking it at (government) gunpoint from someone else.

You can want all you like; it won’t do you any good.

And your rant reminds me of the black female tiktokers screeching about what they’ll do if they don’t get “their” SNAP benefits.

Now ... you’ll probably rant and roar and rage at me.

That’s OK.

You’d do much better to rant and rage and roar against every politician that ever got elected to Congress or President.

Every.

Single.

One.

Including that dude that occupies the Oval Office today.

They’re the ones who are robbing you and lying to you.

Not me.

I’m just telling you a truth you don’t want to hear.

[meatloaf]

The US only has one account, the general fund. EVERYTHING is paid out of it.

[central_va]

If someone in Trumps admin would listen to my idea and shore up SS with tariff revenue then everything would be fine.

[NorthMountain]

OK ...

[odawg]

I was just repeating what my economics professor (a doctorate in the craft) told us at LSU. If those notes were backed by money, Social Security would not be in trouble, would it? You would be hard pressed to find anyone who agrees with you. The money was spent. It has not been replaced and the notes don’t replace the money. It just means they are backed up by the faith and credit of the Federal government.

[central_va]

Here is what you don’t want to hear, if they can’t pay SS then burn the f’r down. Then let the strongest survive.

[central_va]

Take the 300 billion in annual tariff revenue and buy back all of those SS T bills. In 7 years SS will be all cash.

[NorthMountain]

if they can’t pay SS then burn the f’r down.

That'll be "fun" ...

NOT.

[Merrick]

So, screw the kids who eat the tariffs and will never see SS? No thanks. The last generation screwed me (us). I won’t do it to the next.

[Sequoyah101]

That’s the score.

I only hope to sort of break even on what I put in. I’m paying tax on 85% of what I’m getting back. Not looking good.

[Tell It Right]

I was just repeating what my economics professor (a doctorate in the craft) told us at LSU. If those notes were backed by money, Social Security would not be in trouble, would it?

I respectfully disagree for two reasons.

1) Think about how much us FReepers rightly fuss that our govt can't keep running up a bunch of debt. Eventually it'll have to be paid back. That means that the treasuries have real value (the treasury / IOU's have to be paid or the country is no more). I'm not saying $1K in treasuries is as valuable as $1K in gold. I'm just saying that it's a stretch to talk like treasuries are just worthless paper. Also to say that the SS fund's purchase of treasury debt "has not been replaced" is simply not true. The U.S. Treasury Dept. has made regular debt payments to all treasury holders, including making payments to the SS fund. Just like my two treasury mutual funds grow from dividends, the SS fund slowly gets back dividends for owning treasuries more than it paid for the treasuries. My mutual fund balances are 1.5 times the money I put into them (when I rebalanced 7 years ago to prepare for an eventual retirement and shifted a quarter of my growth portfolio to bonds/treasuries/money market funds). I'm not saying owning treasuries grows as fast as a simple S&P 500 index fund (I was amen'ing Bush when he tried to allow us put just a portion of our SS contributions into investments). I'm simply saying that treasuries have value well above zero and the SS fund has benefited from being able to invest in something (I just wish they were allowed to invest in more than just treasuries).

2) As far as "Social Security would not be in trouble", yes it would be. The bottom line is that the payouts promised for SS checks is larger than the incoming receipts to SS plus investment growth (investing in treasuries). In other words, it's the Ponzi scheme property of SS that makes it insolvent, not the underlying savings account medium of the trust fund investment (cash vs treasuries).

Don't get me wrong. I hate the SS Ponzi scheme. I wish we were allowed to keep what we put into SS and invest it on our own and retire based on our rules, not the rules of lying, broke, corrupt govt. (For the record, I still plan to be fully retired in my late 50's.) I'm just saying us FReepers especially should make sure we get the details right when we fuss about govt incompetence and fraud.