How Congress 'Extends the Life' of Social Security

American Thinker ^ | 05/08/2019 | Jon Hall

[SeekAndFind]

On April 22, the trustees for Social Security issued their annual reports, and the situation for the huge transfer program is unsustainable, the same as it’s been for years. The government tells us yet again that the program is running out of money. The danger here is that Americans have been hearing these dire predictions for so long now that they’ll no longer take them seriously.

April 23 on Fox News’ Special Report, Bret Baier reported on the trustees’ reports and discussed them with his panel. Panelist Charles Hurt opined that the financial difficulties of the big transfer programs are a “slow-rolling catastrophe,” and added this: “The fact remains that they're going insolvent.” If Social Security were a private sector enterprise, it’d long ago have been declared insolvent.

Although no link was provided, Baier surely got his information from the Social Security Administration’s A Summary of the 2019 Annual Reports or from Treasury’s April 22 press release, both of which say: “Social Security’s total cost is projected to exceed its total income (including interest) in 2020 for the first time since 1982, and to remain higher throughout the projection period.” What we should note here is the parenthetical “including interest.”

What the quote is referring to is OASDI, i.e. the combined trust fund operations of both Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI). But the program for old timers (OASI) is already under water in that income from its dedicated tax, the payroll tax, isn’t enough to pay benefits.

To confirm that refer to Table II.B1. -- Summary of 2018 Trust Fund Financial Operations

[central_va]

The government tells us yet again that the program is running out of money.

Lie. Lie. Lie. It(SS) will never run out of money. Benefits come from the general treasury fund. They will just continue to pay SS benefits with deficit spending until all the baby boomers are dead. This is a "nothing burger" scare tactic.

[Tell It Right]

Almost agree with OIFVeteran except for a couple of things.

1) Illegals do claim SS benefits but do it illegally by identify theft. They do it more with tax "refunds" (the IRS giving back more than you put in is not, in my opinion, a refund). But they also do it with SS benefits, too.

2) As OIF pointed out the SS fund invests in U.S. treasury bonds. Those are the "IOU's" Congress uses to "steal" from SS. So on the one hand Congress hasn't stolen from the SS anymore than Congress steals from any of us who invest in U.S. treasuries (which I do some when I expect a stock market downturn, like I'm doing now). Like OIF, I wish others would quit saying Congress raided the SS fund.

But at the same time, IMHO, the SS being the #1 buyer of U.S. treasuries (basically the government "owes" itself more than it owes China or Japan) gives Congress more leeway to spend more than they should. So when Congress says, "We'll just spend more money. No big deal. All we're doing is adding to our debt." -- what they're really doing is telling the U.S. Treasury to generate more treasury bills (IOU's), which in turn devalues the treasury bills already in the market. In short, it devalues the treasury bills owned by the SS fund. Since by law the SS fund can invest in only U.S. treasuries, running up our debt does in some way "raid the SS" by devaluing the SS fund's only means of investment growth. Does it make the SS fund's investments lose money? No. A million dollars invested in treasuries 20 years ago is worth more than that today. But it does make the SS fund not earn as much on its investments as it would if Congress wasn't spending money like my ex.

[FreedomNotSafety]

“...all excess funds were to be placed in the general fund and a special interest bearing bond was then given to the social security trust fund.”

And those bonds must be redeemed with current tax dollars. In other words the funds accounting is just a shell game. Today’s recipients are paid from today’s taxes. Futures recipients will be paid from taxes collected at that time.

This makes SS a welfare program. It has rules that make it seem like a pension or trust but the SC ruled early on that SS is whatever Congress wants it be. Spend, create dependency, buy votes, tax.

SS cannot go broke, it cannot be robbed, and it cannot be mismanaged any more so than any other wealth transfer scheme. Politicians current and future will make a political calculation on cost (taxes) vs benefits (votes) and rule accordingly.

SS is much like the fabled gas tax for highway spending.

[Mr Rogers]

I’m retired military. The military retirement system - paid in advance since 1984 - is in the black. In theory, I could soon start getting Social Security - which I’ve paid in to for over 40 years. I still suspect at some point I’ll be told I don’t “need” Social Security and that it is double-dipping.

We’ll see. I don’t apologize to anyone for getting military retirement. If that pisses anyone off, too bad.

[FreedomNotSafety]

So you say it is better to have the government give you money taken by force then to take money from people giving it voluntarily?

The government could just hand out $30k checks to all the poor needy retirees without all sleight of hand of SS. They could call it Welfare for Retirees. But the no one wants welfare especially on this forum.

Anyone else who is poor could have a check to. Dignity and all of that. Call it the Dignity for All program.

[OIFVeteran]

Government workers have been paying into social security since 1982.

[Buckeye McFrog]

The solution is privatization. As usual government screwed up this government program.

You're not wrong, but try actually doing it. W dipped his little toe in the water on that one and got decapitated for his troubles.

[dfwgator]

W dipped his little toe in the water on that one and got decapitated for his troubles.

And after that, W pretty much checked out for the rest of his term, and went through the motions.

[OIFVeteran]

Agree it is a shell game. It’s the equivalent of me putting a cookie jar on top of my fridge for my kids college fund, putting $100 dollars in it at the beginning of every month, then replacing it with a slip of paper that says IOU $100 dollars with interest and taking the money out to pay bills at the end of the month, when my kids ready to go to college I have to either borrow, sell stuff, or work more hours to pay that back. Of course the government can do something I can’t, print more money.

From my research there were two main reasons they made the law this way; 1)they didn’t trust the stock market 2)economist believed that pumping all that money in the stock market would cause massive problems.

[1Old Pro]

W dipped his little toe in the water on that one and got decapitated for his troubles.

Yes he did and he did a really poor job of it and the Dems as you recall sent their demonstrators to all the Congressional town halls and the media ran with it. The only way forward is to make small incremental changes annually. Elected officials tend not to fix problems because most often the fix isn't popular and the media gins up trouble like they typically do.

[OIFVeteran]

The government taxes for all kinds of purposes. We all benefit to one degree or another from that. I see it as no different than that.

[Dr. Sivana]

The third way is also the solution, begin privatizing, allow individuals to invest their portion in a variety of diversified investments including a fixed account.

George the Younger tried to promote that right after his re-election. It did not go well.

[aMorePerfectUnion]

either collect more taxes or pay less benefits.

Invest in things outside just treasury securities so there are market returns instead of manipulated Fed returns...

Privatize accounts as Chile did decades ago - leading to a higher net worth of Chileans than Americans...

Get rid of scammers with "hurt backs"...

[FreedomNotSafety]

The benefits derived from government spending are less than the wealth taken. The government does not create wealth. So we all benefit from government taxation and spending to some degree the total degrees do not add up to a net benefit.

Makers and takers. The takers benefit the makers lose. Once your philosophy grabs hold the next stop is Venezuela. Because makers do not produce for the takers forever.

[American in Israel]

Stop paying benefits to illegal immigrants...

[babble-on]

Investing in market returns is a lot more plausible in a small country than a big one. When the fund has to turn around and start selling, Chile is not going to move the global market, but Social Security would have.

Still, Bush’s idea was a reasonable one, and based on where markets are today, it would have been a big moneymaker. Pelosi doesn’t mention that much.

[babble-on]

The only way an illegal immigrant is getting money out is if he put money in.

Immigration has been a major bright spot in the Social Security solvency calculations.

[OIFVeteran]

With social security everybody who works pays in and only those who pay in (with a few exceptions) can take out. Hell, that’s better than the military and highways and I’m sure many other government services. Many people pay zero federal tax and receive the benefits of those.

[Svartalfiar]

Easy solution. TARP-style bailout of all SS accounts, with everyone paid out their account balance into their existing 401k or TSP (marked as non-taxable). Or a new Roth IRA.

Not sure where the Constitution says the FedGov can run a retirement plan for anyone but Fed workers.

[Svartalfiar]

The easiest solution would be to push the retirement age from 67 to 70.

Bite your tongue. Screw that. I look at SS as a tax break and nothing more. Why should 65+ be paying taxes?

Or, allow for people who hit 65 (or whatever age) to take out their account balance in a single lump sum. This makes every account that takes this option cost-neutral (even makes money off SS investment/interest), and prevents people who live 'too long' from receiving more benefits than they put in.