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Why Social Security Will Go Bankrupt Sooner Than People Think
The American Thinker ^ | August 14, 2009 | Paul B. Matthews

Posted on 08/14/2009 3:00:26 AM PDT by Scanian

On May 12, 2009, the trustees for the Social Security system released their annual report,

"The 2009 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds."

Following release of this report, many media outlets were quick to report (or should I say regurgitate) the findings sited in the trustee's executive summary -- notably that Social Security payroll tax collections would begin to exceed benefits paid in 2016, a year shorter than had been forecasted in 2008.

Although the news media were correct to convey this fact, such simplistic accounts failed to candidly state the true deterioration of the Social Security system over the past year.

For example, in their 2008 report, the Social Security trustees projected a cash surplus of $87 billion in 2009 -- a figure reduced to $19 billion this year. However, even this sharp 78% reduction in the projected Social Security cash surplus failed to illuminate the nonsensical statistical assumptions used by the trustees in the prognostications -- assumptions so unfathomable they make the 2009 trustee report virtually useless.

Employment and Wages

Social Security tax collections are dependant upon two factors: the level of employment and the level of wages. If more people are working, then naturally payroll tax collections from employees and employers are higher. Moreover, as wages increase, at least up to the OASDI cap level ($106,800 for 2009), then payroll tax collections too will increase.

However, both employment and the level of wages have declined rapidly in the United States this year. This is best signified by the current 9.4% unemployment rate (up from 7.6% in January), a headline rate that will certainly exceed 10% in the near future.

Moreover, average hourly earnings increased to just $18.56 in July

(Excerpt) Read more at americanthinker.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: bhoeconomy; economy; employment; federalspending; seniors; socialsecurity; spreadthewealth; taxes; wages
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1 posted on 08/14/2009 3:00:28 AM PDT by Scanian
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To: Scanian

wont matter anyway ....dollars are fast becommig worthless...gove must stop spending...


2 posted on 08/14/2009 3:08:40 AM PDT by dalebert
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To: Scanian

Our pols have been skimming the SS “trust fund” for decades. Income tax receipts will soon be funding monthly checks. The young family just starting out will be subsidizing senior citizen vacations even more.


3 posted on 08/14/2009 3:09:31 AM PDT by Jacquerie (Never let a crisis go to waste - You know who)
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To: Scanian
The US Treasury and Social Security “trust fund” will zero out at the same time. They are one in the same...It's been that way ever since FDR created it.
4 posted on 08/14/2009 3:13:44 AM PDT by Dixie Yooper (Ephesians 6:11)
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To: Jacquerie

Your telling me that a person who has HAD to put money into the system involuntarily for the last 50+ years should not be able to get it back ?


5 posted on 08/14/2009 3:36:33 AM PDT by Renegade (You go tell my buddies)
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To: Renegade

No.


6 posted on 08/14/2009 3:39:42 AM PDT by Jacquerie (Never let a crisis go to waste - You know who)
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To: Renegade
You got me thinking further. I believe the SS tax rate should remain constant. If fewer workers (darned 40 years of abortion) work fewer hours, that means the payout to seniors would need to decline. The system was supposed to be self supporting and should remain so. Of course, the pols would rather hyper-inflate our currency and destroy the country first. Don't worry. Your monthly checks are safe.
7 posted on 08/14/2009 3:51:56 AM PDT by Jacquerie (Never let a crisis go to waste - You know who)
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To: Scanian
I'm not worried. This is one senior citizen that could use some of that bailout money. Besides that couldn't happen in my SS account. Last time I checked, I and my employer contributed enough that I will be 85 when my account is empty. I'll probably have served my life sentence by that time anyway. Wait a minute! My account? Ummmm??? Something doesn't sound right about that. //sarcasm off//
8 posted on 08/14/2009 3:58:58 AM PDT by mosaicwolf (Strength and Honor)
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To: Scanian
I'm not worried. This is one senior citizen that could use some of that bailout money. Besides that couldn't happen in my SS account. Last time I checked, I and my employer contributed enough that I will be 85 when my account is empty. I'll probably have served my life sentence by that time anyway. Wait a minute! My account? Ummmm??? Something doesn't sound right about that. //sarcasm off//
9 posted on 08/14/2009 3:59:04 AM PDT by mosaicwolf (Strength and Honor)
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To: Jacquerie

I hope they’re safe . That is my firearm and ammo $$$.
Last Pres . Bush check paid for two fine Rugers .


10 posted on 08/14/2009 4:03:18 AM PDT by Renegade (You go tell my buddies)
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To: Scanian

What’s a few billion when we are borrowing trillions. Just ask Red China for more money.

It’s the Obama way.


11 posted on 08/14/2009 4:31:33 AM PDT by Venturer
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To: Jacquerie

>The young family just starting out will be subsidizing senior citizen vacations even more.

dude, that is plain ignorant.
Those seniors have been paying into SS their entire lives - they are not some unwashed illegals sliding across the border.
Get informed


12 posted on 08/14/2009 4:33:54 AM PDT by bill1952 (Choice is an illusion created between those with power - and those without)
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To: Scanian

what about the lockbox?


13 posted on 08/14/2009 5:44:38 AM PDT by sickoflibs (Socialist Conservatives: "'Big government is free because tax cuts pay for it'")
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To: Renegade

I would gladly take a lump sum payment of all the money I’ve had confiscated (and still being confiscated)just to be rid of dependence on the government.


14 posted on 08/14/2009 9:48:00 AM PDT by NTHockey (Rules of engagement #1: Take no prisoners)
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To: NTHockey
I would gladly take a lump sum payment of all the money I’ve had confiscated (and still being confiscated)just to be rid of dependence on the government.

I would take half and still be happy.

I'm not relying on SS to fund my retirement.
Never have, never will.

15 posted on 08/14/2009 9:53:29 AM PDT by Just another Joe (Warning: FReeping can be addictive and helpful to your mental health)
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To: bill1952
The article estimates that in 2016 SS taxes will no longer cover SS payout to seniors.

Unless payroll taxes are increased the extra money needed will come from income taxes. It is a mathematical certainty and has nothing to do with what seniors paid into the system.

16 posted on 08/14/2009 1:12:36 PM PDT by Jacquerie (We live in a judicial tyranny - Mark Levin)
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To: bill1952; Jacquerie
Jacquerie said: "The young family just starting out will be subsidizing senior citizen vacations even more."

bill1952 said: "dude, that is plain ignorant. Those seniors have been paying into SS their entire lives"

Without getting into who is ignorant, I think it important to point out that there is nothing contradictory about these two statements. Seniors have been paying into the system their entire lives. And young families will be subsidizing senior citizens.

What you, bill1952, seem to be ignoring is that the seniors permitted all of their payments to be SPENT, and not saved, by making payments to a prior generation. They permitted this despite warnings from intelligent people along the way that such a ponzi scheme was unsustainable.

The real question is going to be, at what point will the younger generation, who will NEVER see any benefit from Social Security, demand that the program be abandoned?

There really are no surprises in all this. The outcome has been predictable all the way up to the point where the system breaks down and the payments to beneficiaries must be sharply reduced if not eliminated.

The only unknown is what people are going to do about it? Will they wise up and stop implementing hare-brained socialist schemes? Or will they simply find some other way to steal one person's money to give it to another?

17 posted on 08/14/2009 2:12:15 PM PDT by William Tell
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To: William Tell

Nicely stated.


18 posted on 08/14/2009 2:14:27 PM PDT by Sparko (It's the Economy, Stupid!)
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To: Just another Joe
Just another Joe said: "I would take half and still be happy."

At the risk of starting a bidding war, I would settle for 45%, paid in gold.

19 posted on 08/14/2009 2:15:23 PM PDT by William Tell
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To: William Tell
What you, bill1952, seem to be ignoring is that the seniors permitted all of their payments to be SPENT, and not saved, by making payments to a prior generation. They permitted this despite warnings from intelligent people along the way that such a ponzi scheme was unsustainable.

Oh horseshit. We were outvoted by the same liberal trash in the same way that conservatives of all stripes are being outvoted right now, and with the same lasting damage, ie, these programs cannot be outdone.

you neatly sidestepped my entire point and shifted the blame to a straw man.

A cute dialog, but you sound like Nancy Pelosi, with the same propensity to ignore the facts stated and rail against a chimera created by you to avoid the issue stated.

20 posted on 08/14/2009 5:16:22 PM PDT by bill1952 (Choice is an illusion created between those with power - and those without)
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