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Don't look now, but Social Security's trust funds are vanishing
Washington Examiner ^ | 04/27/2012 | Veronique de Rugy

Posted on 04/28/2012 4:36:33 PM PDT by SeekAndFind

You had better start increasing your personal retirement savings, because Social Security is fast approaching insolvency. According to the latest Social Security Trustees' report, released Monday, the program's combined trust funds will be exhausted by 2033 -- three years earlier than last year's projection and seven years earlier than projections made in 2006.

This means that by 2033 Social Security benefits would have to be slashed significantly. Sounds bad, right? Well, it gets worse.

Since 2010, Social Security has been running a permanent cash-flow deficit. This means that the taxes collected for the program aren't enough to cover the benefits going to retirees. The last time this happened was at the beginning of the 1980s.

Social Security optimists will argue, this time around, that the program can draw on the $2.7 trillion in assets accumulated in its trust funds. That's why Congress created the trust funds in 1983, following the recommendations of the Greenspan Commission. In any year when the program runs a surplus, Social Security invests it in trust funds, from which benefits are paid in years when outlays exceeded payroll tax receipts.

For instance in 2011, the payroll tax brought in $691 billion to pay the $746 billion in retirement benefits. To fill the gap, Social Security drew from the trust fund balances to make payments to retirees. This system will theoretically continue until the trust fund assets are exhausted in 2033. At that point, current law dictates that benefits will be slashed to the level of payroll tax revenues. That will translate to a 25 percent benefit cut across the board.

Think about it this way. Today, monthly Social Security benefits average $1,125 per recipient. After the cut, benefits would dropped to $843.75 -- a $3,375 reduction in benefits a year..

There's another reason why these trends are alarming. For years, the federal government has used Social Security's surpluses to pay for roads, education and wars. Now that the Social Security program will be demanding its money back from the Department of Treasury on an annual basis, the government will have to borrow more and more from investors, increasing the publicly held debt at a greater pace.

Lawmakers could also cut benefits or raise taxes, but they are usually reluctant to go down these unpopular roads. Neither party has introduced a serious plan to reform Social Security, but both sides have, for two years running, supported reductions in payroll tax rates without equal benefit cuts. To pull this off, policymakers borrow yet more money and transfer it to the Social Security Trust Fund to make it appear as if tax revenue was collected. It is another unfunded promise to seniors that will be paid for by future generations.

Unfortunately, Congress has been using a similar gimmick for some time. Beneficiaries of the Earned Income Tax Credit, for example, already have their share of the payroll tax refunded to them. The Making Work Pay tax credit -- part of the stimulus bill -- did the same.

The silver lining to Social Security's new annual deficit is that it exposes the fiction that the program doesn't need reform because it is fully backed by tax contributions. This is important, because a failure to reform the program means dramatic benefits cuts in the future, even for the poorest Americans. Lawmakers have many policy options to choose from: private accounts, privatization with safety net for the poor or eligibility age hike. The only bad option is to do nothing.


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: pension; retirement; socialsecurity

1 posted on 04/28/2012 4:36:35 PM PDT by SeekAndFind
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To: SeekAndFind

An IOU is not a “trust fund.”


2 posted on 04/28/2012 4:41:33 PM PDT by E. Pluribus Unum (Government is the religion of the sociopath.)
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To: SeekAndFind

I repeat for the bazillionth time:

Anyone younger than 55 who thinks he/she is going to see a dime of Social Security is insane.

It is a big zero in my retirement planning.


3 posted on 04/28/2012 4:42:26 PM PDT by freedumb2003 ('RETRO' Abortions = performed on 84th trimester individuals who think killing babies is a "right.")
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To: SeekAndFind

The bad news is that the commie ‘RATS were counting on the illegal aliens to keep their Social Security scam afloat. I hope they’ve got a Plan B.


4 posted on 04/28/2012 4:42:49 PM PDT by FlingWingFlyer (Dumb, dependent and Democrat is no way to go through life. - Rep. Louie Gohmert (R-Texas)
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To: SeekAndFind
Social Security is fast approaching insolvency

Oh my goodness! When did this happen?
5 posted on 04/28/2012 4:44:37 PM PDT by andyk (Go Juan Pablo!)
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To: E. Pluribus Unum
An IOU is not a “trust fund.”

How can the word "trust" even be used when discussing government promises?

6 posted on 04/28/2012 4:45:37 PM PDT by EGPWS (Trust in God, question everyone else)
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To: SeekAndFind
It's those Fat Cats fault! No Bush's fault!

Cut it down burn it up, tomorrow we starve. /s for the sarcasm impaired

7 posted on 04/28/2012 4:46:59 PM PDT by rawcatslyentist ("Behold, I am against you, O arrogant one," Jeremiah 50:31)
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To: E. Pluribus Unum
It's still an obligation.

BTW, the US government has assets ~ when they run out of cash they can do what everybody else does ~ sell stuff and hand over the proceeds to the creditors.

Or, distribute the assets ~ I"d be happy to have a 10 sq ft site in the Capitol Rotunda ~ I'd sell magazines and candybars.

8 posted on 04/28/2012 4:47:40 PM PDT by muawiyah
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To: SeekAndFind

I want my money back. If they keep it, in most circles, that’s a crime.


9 posted on 04/28/2012 4:55:24 PM PDT by Libloather (The epitome of civility.)
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To: SeekAndFind
Three years earlier??

Wonder if that has anything to do with the 2% discount on SS payments for last year and this year.

Ya think??

10 posted on 04/28/2012 5:03:02 PM PDT by Sacajaweau
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To: SeekAndFind

Any excuse to bring on the death panels.


11 posted on 04/28/2012 5:04:21 PM PDT by bgill
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To: SeekAndFind

but the Democrats say everything is great, there’s no problem.


12 posted on 04/28/2012 5:05:20 PM PDT by FormerACLUmember
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To: freedumb2003
Anyone younger than 55 who thinks he/she is going to see a dime of Social Security is insane.

Nonsense! They will get back every penny they ever put in.

In hyper-inflated currency.

13 posted on 04/28/2012 5:05:24 PM PDT by null and void (Day 1194 of America's ObamaVacation from reality [Heroes aren't made Frank, they're cornered...])
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To: E. Pluribus Unum
An IOU is not a “trust fund.”

Well said.

In 2033 they will run out of IOUs and they will just keep funding the shortfall from the General Fund. That's what they are doing now and that's what they will be doing in 2034.

14 posted on 04/28/2012 5:07:35 PM PDT by InterceptPoint (TIN)
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To: muawiyah

“sell stuff and hand over the proceeds”

In this case however, the Fed will just print more money.


15 posted on 04/28/2012 5:11:05 PM PDT by radioone (No dogs were harmed in the writing of this response.)
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To: muawiyah

It’s an “obligation”, a distinction without a difference in Bizarro world.

Even though employees are required to contribute, there is no right to collect, at least according to SCOTUS.


16 posted on 04/28/2012 5:15:47 PM PDT by Freedom4US
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To: InterceptPoint

Social security had two sources from which to pay.

1. Those who are paying in now.
2. The national Debt.

There is no fund containing actual saved money for social security. They have to borrow money for SS now because there is no longer enough coming in to pay obligations.

The instant the government can’t borrow anymore, then Social security will be shorted. Not in 2033 or any such nonsense. It could happen next week or next year, but it is coming soon.

The author of this article most likely knows this. And therefore I consider this just another in a long list of propaganda articles.


17 posted on 04/28/2012 5:18:22 PM PDT by Revel
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To: E. Pluribus Unum

Thank you for hitting that right at the outset. There never was, nor was there intended to be, a “trust fund”. Any journalist who uses that phrase as if a trust fund actually exists ought to be fired for stupidity or mendacity.


18 posted on 04/28/2012 5:19:45 PM PDT by achilles2000 ("I'll agree to save the whales as long as we can deport the liberals")
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To: muawiyah

I once saw an estimate that the Government owns assets worth over $200 Trillion. Of course, this would probably involve selling land rights to “evil” oil and mining corporations.


19 posted on 04/28/2012 5:21:00 PM PDT by rbg81
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To: freedumb2003

Anyone younger than 55 who thinks he/she is going to see a dime of Social Security is insane.


What? You never heard of SSI? [/s]


20 posted on 04/28/2012 5:22:02 PM PDT by rbg81
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To: Freedom4US

“Even though employees are required to contribute, there is no right to collect, at least according to SCOTUS.”

Exactly, And when the crap hits the fan then I really wonder if the government will pay out one more dime to SS. There are so many other things they may consider more important. And at that point it will be Martial law anyways. Not much of a chance at that point that there will be any more elections.


21 posted on 04/28/2012 5:23:16 PM PDT by Revel
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To: SeekAndFind
It's my money, and I want it now..............

/J.G.Wentworth- I really hate that commercial.

22 posted on 04/28/2012 5:32:10 PM PDT by Sarajevo ( Alcohol does not solve any problems, but then again, neither does milk.)
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To: SeekAndFind

Al Gore thought it should be in a lockbox. I would have rather seen Al Gore in a lockbox (in St. Elizabeth’s))


23 posted on 04/28/2012 5:36:45 PM PDT by Freestate316
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To: Revel

Look at the GM bankruptcy - about 800 years of economic law was upended whereby bondholders were stiffed and got nothing. “Normally”, in a bankruptcy, bondholders are senior and get paid first, before anyone else.

My guess is that were things to get really dicey, foreign creditors will/are get paid first. If the problem was just limited to social security, that would be another matter but when taken in aggregate the fiscal problems look pretty bad. Trillion dollar deficits, state and local governments insolvent, manufacturing jobs long ago gutted and shipped offshore, etc etc, it’s a long list of horrors.

Mencken had it right a hundred years ago - “Elections are advance auctions of stolen goods.”


24 posted on 04/28/2012 5:36:57 PM PDT by Freedom4US
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To: Freedom4US
Look at the GM bankruptcy - about 800 years of economic law was upended whereby bondholders were stiffed and got nothing. “Normally”, in a bankruptcy, bondholders are senior and get paid first, before anyone else.

Yes, how can that be allowed to stand?

What's the latest on that, are there mega civil suits and why not?

25 posted on 04/28/2012 5:44:48 PM PDT by ROCKLOBSTER (Celebrate Republicans Freed the Slaves Month.)
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To: rbg81

Just an acre with a working well and I’m good to go.


26 posted on 04/28/2012 5:52:17 PM PDT by muawiyah
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To: ROCKLOBSTER

It’s “allowed” because if nobody stops them, they get away with it. All the laws in the world mean nothing if nobody can enforce them.

The MF global debacle is similar in that respect. This type of $h&t is just getting wound up, imo. Many people don’t have a clue what’s happened, much less what’s coming down the pike. They still seem to think that installing another politician will patch things up.


27 posted on 04/28/2012 6:00:05 PM PDT by Freedom4US
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To: SeekAndFind
I suppose the Democrats want everyone to forget LBJ moved the SS Trust Fund into the General Fund so the Feds could just borrow money from it when they had some grandiose spending plan. I seem to remember the Fed has "borrowed" some 2.6 Trillion from it.
28 posted on 04/28/2012 6:01:34 PM PDT by antidemoncrat
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To: SeekAndFind
Hey Washington Post idiots! The leftist stole 16 trillion dollars of the American tax dollars they personally saved in the SS trust fund years ago and replaced the money they stole with IOU’s that have never been paid! Currently the government has more than 47 trillion of unfunded liability (promises) made to Americans!

Wake up you idiots, regurgitating everything the leftist say an do is not news, and is the number one reason why you are the old media and a dying news outlet.

No one reads you anymore, Americans cannot trust what they read in your newspaper! This article about the ss trust fund is just another example of the Washington bubble, unable and unwilling to get the facts right, again!

29 posted on 04/28/2012 6:13:02 PM PDT by paratrooper82 (We are kicking Ass in Afghanistan, soon we will be home to kick some more Asses in Congress!)
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To: freedumb2003
Well, there will be something, but who knows what the heck it will be. Your approach is prudent.
30 posted on 04/28/2012 6:33:49 PM PDT by hinckley buzzard
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To: muawiyah
LOL! Just set up a little kiosk right?
31 posted on 04/28/2012 6:35:31 PM PDT by hinckley buzzard
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To: hinckley buzzard

Absolutely. Just give me 5X4 and I can stack enough candy boxes in there to make more on a daily basis than the Chief Justice ~


32 posted on 04/28/2012 6:52:11 PM PDT by muawiyah
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To: rbg81
Did an analysis several months about regarding federal government assets.

It's huge.

In fact, the assets owned by the US Government are so enormous we can't actually debase our currency even when we try. We are the world's reserve currency because we have the reserves!

33 posted on 04/28/2012 6:55:59 PM PDT by muawiyah
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To: SeekAndFind

And here is where YOUR money went!

http://www.socialsecurity.gov/OACT/ProgData/fundFAQ.html#n4


34 posted on 04/28/2012 7:17:01 PM PDT by Ruy Dias de Bivar
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Click the link. The Republic you save may be your own.

35 posted on 04/28/2012 7:52:17 PM PDT by RedMDer (https://support.woundedwarriorproject.org/default.aspx?tsid=93)
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To: SeekAndFind

If they’re going to cut the retirement income they’ve promised everyone (I know it’s a Ponzi scam, but they pretend it’s not, so I will to), how about letting some portion of IRA/401k funds be withdrawn tax-free to compensate?


36 posted on 04/28/2012 8:25:30 PM PDT by jrp (AND)
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To: SeekAndFind

I would prefer turning Social Security into a means-tested welfare program, but if it takes exhausting a fictitious ‘trust fund’ to get it under control, that’s better than nothing.


37 posted on 04/29/2012 3:11:10 AM PDT by BobL
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To: SeekAndFind

Did I miss something in the article,The contributions to social Security come strictly from Payroll deductions which Obama has cut in half and called his Middle class tax cut the past couple of years to the tune of hundreds of Billions of dollars from the social security trust fund. Is it just a Coincidence since that so called payroll tax cut went into effect The trust fund Insolvency has Accelerated? How come NO ONE MENTIONS THAT?


38 posted on 04/29/2012 4:59:33 AM PDT by ballplayer
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To: E. Pluribus Unum
An IOU is not a “trust fund.”

For sure - if it had been a trust fund, and managed like one (and only used to recompensate actual "donators"), it would be awash in cash.

39 posted on 04/29/2012 5:02:20 AM PDT by trebb ("If a man will not work, he should not eat" From 2 Thes 3)
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To: jrp
If they’re going to cut the retirement income they’ve promised everyone (I know it’s a Ponzi scam, but they pretend it’s not, so I will to), how about letting some portion of IRA/401k funds be withdrawn tax-free to compensate?

If you want tax free withdraws, then you need to contribute to a Roth IRA or a Roth 401K if your company offers it. That said, there is no guarantee that politicians of the future won't reverse course and tax the crap out of it..

40 posted on 04/29/2012 6:14:57 AM PDT by EVO X
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To: jrp
If they’re going to cut the retirement income they’ve promised everyone (I know it’s a Ponzi scam, but they pretend it’s not, so I will to), how about letting some portion of IRA/401k funds be withdrawn tax-free to compensate?

If you want tax free withdraws, then you need to contribute to a Roth IRA or a Roth 401K if your company offers it. That said, there is no guarantee that politicians of the future won't reverse course and tax the crap out of it..

41 posted on 04/29/2012 6:15:09 AM PDT by EVO X
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To: SeekAndFind

No social program is going to be slashed , ever. The value if the money you receive will continue to lose value due to the nature of deficit spending and fiat currency. It results are the same, except with inflation, no voting is required and it is the easy way out for the pols.


42 posted on 04/29/2012 6:24:29 AM PDT by central_va ( I won't be reconstructed and I do not give a damn.)
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