How big is Social Security's funding shortfall?

Pioneer Press/AP ^ | 8-12-12 | Little Stevie Ohlemacher

[TurboZamboni]

WASHINGTON—Social Security's long-term funding shortfall is big by any measure. How big? That depends on how you look at it. Over the next 75 years, after Social Security drains its trust funds, the massive program is scheduled to pay out $134 trillion more in benefits than it will collect in tax revenue, according to agency data.

That's an immense number that could use further explanation. Three ways to look at $134 trillion spread out over 75 years:

— $30.5 trillion in 2012 dollars. We all know that $134 trillion won't buy nearly as much in 2086 as it would today. Social Security's number crunchers project that annual inflation will average 2.8 percent in the long term, after a short period of slightly lower inflation. When the annual shortfalls are discounted for inflation to 2012 dollars, they come to $30.5 trillion.

— $8.6 trillion in present value. This is a financial term that Social Security uses to reflect the time value of money. It means that if Social Security had an additional $8.6 trillion on hand today and invested it in a security that paid returns of 2.9 percent above inflation for 75 years, the program would have enough money to cover the shortfall.

The problem, of course, is that Social Security doesn't have an additional $8.6 trillion on hand to invest.

[TurboZamboni]

Treasury Secretary Timothy Geithner, speaking on behalf of the Obama White House, to Rep. Paul Ryan: “You are right to say we’re not coming before you today to say ‘we have a definitive solution to that long term problem.’ What we do know is, we don’t like yours.”

http://www.freerepublic.com/focus/f-news/2847964/posts

[P.O.E.]

after a short period of slightly lower inflation

Is that the inflation that excludes food & fuel?

Anyway, I'm not so sure the usual models are in play. You've got the crowding-out effects of massive non-SS transfer payments, future employment & wage projections, etc. Add to that the huge percentage of SS payments are not paid to seniors, fraud, etc.

[jpl]

The sad thing is that, even here at a conservative web site, there are a lot of people who secretly believe in the Keynesian rubbish that we can just endlessly borrow and print money and that everything will be just fine.

[jpl]

Also, anyone who thinks we can go on for another 75 years like this is living in a delusional fantasy world. Not even close.

[GOPJ]

Social Security Disability is taking the place of Welfare in States that want to dump problems on the Federal Government... That’s what going to break Social Security. And it’s what will break Disability for the folks who REALLY are disabled...

[muawiyah]

First solution is to begin rebating Social Security payments subject to income taxes BACK to the Social Security side of the ledger rather than just stuffing it into the General Accounts to be wasted on GSA parties.

[GoldenPup]

All BULLSHIT, communist scare tactics in a desperate attempt to “scare up” an election victory. Won’t work, commies!!!

[muawiyah]

Social Security Disability is administered by the Social Security Administration but it’s funded out of General Revenues, not Social Security payments (FICA)

[muawiyah]

Probably make more sense to compute present value in terms of a future governed more by DEFLATION than INFLATION ~ much like today

[bmwcyle]

Reality has been lost with the Democrat party for years. The American voter has been forced into sleep to keep them in power. If you can see reality, you know our freedom is mostly gone with our nations wealth.

[TurboZamboni]

Disability Ranks Outpace New Jobs In Obama Recovery

The disability ranks have outpaced job growth throughout President Obama’s economic recovery. While the economy has created 2.6 million jobs since June 2009, fully 3.1 million workers signed up for disability benefits.

http://news.investors.com/article/617233/201207060945/disability-climbs-faster-than-jobs-under-obama.htm

anyone who has unemployment about to end is now...DISABLED!

see how easy this is?

[The Sons of Liberty]

How big is Social Security's funding shortfall?

Let's look at Social Security in a different light:

Would there be any shortfall at all if:

They weren't giving Social Security to illegal aliens, and

The money paid in had been set aside in a "lockbox" as promised, instead of being used as a slush fund by cooked and irresponsible politicians?

[mrsmith]

"How big is Social Security's funding shortfall... after spending all it's surplusses on welfare?"

Well, like any investment plan whose assets have been looted for consumption- too big!

[Libloather]

And Commiecare™ hasn’t even kicked in yet.

[GOPJ]

And unlike ‘unemployment; benefits, disability benefits can last for 60 to 70 years. They don't end.

Go down to your local Social Security office - more than half the people waiting to see a clerk are under 30 and look like gang bangers. You, TurboZamboni will be supporting them until they collapse the system... Then they'll move on to the next scam and grandma and the injured army vet will die...

Dems think of that as 'compassion'... Sick. Dems are sicko...

[P.O.E.]

Comparint the SSA's own press releases from April 2011 and May 2012.

The point at which non-interest income fell below program costs was 2010. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period. (April 2011).

In April 2011 they project fund exhaustion a year earlier than before. In May 2012 they project fund exhaustion 3 years earlier than the 2011 projection

In 2011 they're earning 4.6 percent interestand in 2012 4.4 percent (not sure how this works, given that SS payments are then "loaned" to the general fund), and one wonders what their interest rate projections are going forward.

I mean it's a shell game anyway, but point is I have trouble believing any government projections.

[P.O.E.]

Comparint s/b comparing
interestand s/b interest and

That’s what I get for posting while watching TV.

[muawiyah]

The whole point of doing a present value analysis on something 75 years in the future is to INVENT MONEY ~ that's how Olympia Snowe came on the idea of charging the USPS $5.3 billion a year for 10 years to pay for postal employee medical insurance 75 years in the future!

It became an enormous sum and she and her running dog lackeys in the Senate could then say, with a straight face, that they'd come up with a $50 trillion addition to the US Budget ~ so everything was balanced back to George Washington's time.

This article, to the degree it looks at present value, is garbage unless the readers understand what that means ~ but, like the US Senate where people ought to know, even the people who know are easily tricked and panicked into making rash judgments and stupid decisions.

[ridesthemiles]

Obama & Geitner couldn’t think of enough mischief, so they lowered the EMPLOYEE part of FICA payments by 2%.

Let’s do some math:

Say there are 50 million people in the USA working fulltime.

Lets say they are making ONLY $10 an hour.

40 hours a week ..... 52 weeks a year ==2080 hours.

Let’s say they work the whole year & their gross income is $20,800.00

$20,800 times 50 million == $1,040,000,000,000
One Trillion, Forty Billion dollars gross income-—at only $10 an hour.

The 2 % ‘discount’ Barry & Little Timmy handed out for a ‘stimulus’ calculates as such:

2% of the 1 Trillion 40 Billion ==$20,800,000,000.

That is $20 BILLION 800 MILLION in funds which is NOT going into the Social Security fund via payroll deductions.

At ONLY $10 per hour!!!

Since the FICA deduction is taken out until up to a threshhold which is OVER $100,000 in individual earnings, the shortfall of money not deducted is causing serious problems for the USA.

The stimulus of the American economy which was promised by this discount in the FICA deduction never happened-—because the cost of everything, led by gasoline, has continually gone up and up.

Barry & Little Timmy are doing a great job—at destroying America.

[Norseman]

The way out of the social security morass is to go to a forced defined contribution plan (401K’s) for people under a certain age, say 40, and deduct a small portion of wages to cover a means-tested retirement payment for people who would go without shelter and food without it, much like nursing homes now operate. If you’ve got the money to pay for nursing home care, you pay it yourself; if and when you don’t, the government steps in. That’s humane, but doesn’t give away the store.

Then, in 30 or 40 years, aggregate social security payments would be significantly reduced by the means testing, and most people would have significant 401k’s built up for their retirement. And with only a limited number of people qualifying under the means testing, the pressure to continually pump up benefits would diminish considerably, unless the program became fully funded at which point benefits could be increased and/or the tax funding the means-tested program could be reduced.

At a minimum, anyone entering the workforce today should be put on such a program. Those who’ve paid in for, say, five years already could be offered non-public treasury debt as buyouts from SS, to be placed in their 401K plan. This could be done for everyone up to a specified age, say 40, 45, or even 50. Eventually we’d get to a more stable situation that way.

States are finally realizing that defined-benefit retirement plans lead only to fiscal disaster. The federal government needs to come to the same conclusion, and soon.