Seniors Interested In Why Social Security Will Be Paid

Comment

Comment by Joe The Economist on July 25, 2011 at 11:53am

Kelly,

 

Again, this deals with longer term issues, and I encourage you to join our "Fix Social Security Now" if the subject is in your area of interest.

 

"The only way I can see social security lasting is if it is privatized. "

 

All Federal government employees participate in Social Security.  I don't know when it changed, but it was in my lifetime.  As for state employees, their pensions are a major problem but they are state specific problems, and do not impact Social Security. 

 

I am happy to look at privatization plans.  The ones that I have found have three problems : They are too old.  They use unrealistic economic assumptions.  And they are not pure play privatization plans - like Congressman Ryan's ideas.  Do you have one that you particularly favor?

 

 

Comment by Kelly Wayne Jerome on July 25, 2011 at 6:32am

The only way I can see social security lasting is if it is privatized.  I also believe they will need to privatize the pensions for government workers.  The only government worker that should have their pensions guaranteed by the government are military personnel.  There are way too many people working in government.  You have state employees, county employees and city employees pulling the wealth of our country down.  If they can not make major restructuring in those areas, I don't see SS being successful at all. 

They have no problem forcing a social security withdrawal on payroll checks why not privatize it for everyone.  I think if both private employees and government employees were all in the same boat about their retirements they would pay much closer attention to how the government was spending their money in the future.

If they privatized Social Security and allow the individual to draw from it when they wanted they would not have to change the age when their benefits become available.

There are so many better ways to do this, their failure to do it a better way just leads me to believe the sole purpose is to break us financially. 

Comment by Joe The Economist on July 23, 2011 at 1:12pm

Gregg, I am happy to create a discussion point under the Fix Social Security Now Group, and that is where this discussion belongs.  It doesn't affect August 3rd, 2011.

 

You have much more faith in the system than I do.  I don't look at 75 year projections because the system will have failed long before then.  And the number that I found in the Trustee's report was 7 trillion.  Heritage says that it is 7.7.  Again, it could be 100 trillion.  The system will be gone long before then.  The working generation cannot pay income taxes at this point sufficient to support both the deficit and the retirees.  Productivity will play some role in when it collases but it will not change the if unless we change the system.

 

The problem with Social Security isn't the number of retirees to workers.  That is demographic.  The problem is economic. The problem is real wages, jobs, and productivity.  Our economic system does not produce sufficient slack to take as much from one and give to another has it had in the 90s. Private sector jobs are down since 2000.  Private sector wages are slightly above flat.  So we are suppose to pay for three times the government with the same wages? 

 

We need people like you who see the problem and are willing to dig through data to work on our project.  Of course, you may already be working on a solution and can't divide your time.  I can tell you that you are much more optimistic than we are because you are looking at the 75 year time line.  If you go to our group page you will find a discussion that the exhaustion point is much sooner than 2036.  We would welcome your thoroughness on that subject.

 

We do disagree about one thing.  If Social Security didn't exist, the government would have spent that 2.6 trillion anyway they would simply have borrowed or printed it anyway.  I look forward to your participation in my next blog where I tackle the idea that the Trust Fund is a collection of worthless IOUs. 

Comment by Kelly Wayne Jerome on July 23, 2011 at 11:59am

The one thing we don't know is where is all the money going.  There is way too much hidden money going into projects that result in nothing.  We take a chunk out of NASA, where we could see some of the results.  I bet there are several programs the government has been hoarding our tax money into.  We need to have a complete audit of the federal government and account for all the money.  One government office claimed they still had 8 billion dollars of stimulus money left in their budget.  What the Hell?  We gave stimulus money to the government?  Shouldn't they have been the last people to get the money?  That sounds as if the stimulus package was just another tax if government offices were receiving the funds.  I would like to see how much stimulus money went to the federal board of education in Washington, as if they needed to grow that failure anymore?

Comment by Gregg on July 23, 2011 at 10:24am

Joe: The $17 trillion figure came from the 2009 Trustees Report. You'll have to forgive me for not updating my figures as the 2011 Trustees Report shows the Social Security Unfunded Liability of the infinite horizon based on the intermediate assumptions now at $20.5 trillion on printed page #66. (That's $17.9T + $2.6T for the Trust Fund = $20.5T)

(And before we get squirreled up with the other figures on page #66's chart: Know the percentages of payroll and GDP are worse than useless because they don't address the huge front-loaded bulge of disbursements required to cover the baby boomers.)

"In what sense do you see us as protraying anything is fine with the system?"? In every sense. For e.g. look at your immediately preceding sentence. The phrase "before the Trust Fund runs out" pretends the trust fund hasn't already run out. That today it has value in excess of having not collected it in the first place! That's completely a lie. For decades we've had a social pact to pay SS benefits from current taxes, and the trust fund in that regard is NO different. As the trust fund's $2.6T in our-grandchildren-owe-us's is redeemed it will either come from new taxes or new borrowing (from China). That's exactly what would have happened if we hadn't collected the "surplus" in the first place (except they wouldn't have been able to spend the first $2.6T as general revenue).

As the distance between the truth and the portrayal becomes too great, there comes a point where the portrayal is mootly distinguishable from the lies.

Comment by Joe The Economist on July 22, 2011 at 10:59pm

Again, you are reading something into this article that is way out of scope.  It is about August 3rd, 2011. Separately, you are the first person to tell me that we aren't overly dire about the system.

 

On August 3rd, 2011, the President will have exactly 0 abiltiy to spend any payroll taxes.  The payroll taxes will cover Social Security checks.  If there is excess cash, the government will not be able to borrow it.  The point of the article is that Social Security checks are safe on August 3rd. 

 

On August 3rd, 2011, whether payroll taxes cover the full check isn't relevant.  There are more than sufficient back-ups to provide funding for the checks. Again, on August 3rd, 2011.

 

"All the federal finances have been managed as one big pot for decades"  That is factually not true.  The Trust Fund has been separate from the government since the start.  It is included in the over-all budget, but that doesn't changed its operations which are separate.  If SS were part of the general fund, there would be no Special Redemption Bonds to discuss.

 

The value of the Special Redemption Bonds have a market value that is consistent with comparable bonds.  That is at least how the private sector handles non-marketable debt.  The market value is somewhat beside the point in terms of August 3rd 2011.  The fact is that the Trustee (Obama's Treasury Dept) has a fiduciary responsibility to manage the Trust.  The purpose of the Trust is to provide benefits when payroll and interest do not cover the out-go of the system.  If the Trustee invested the 150 billion in cash that they received over the past year in such a way that it is not available on August 3rd - it is negligence.  The debt ceiling is not unforseeable.  Going into a debt crisis without a cash reserve is incompetence.  The point is that the Treasury had adequate cashflow and notice of the debt ceiling to manage the problem.

 

Medicare is a much bigger problem than Social Security - but it is not a problem for paying SS checks on August 3rd.  The Trustees there are not negligent.  They have warned Congress that it is underfunded.  They have done their job.  The managing Trustee of Social Security would be negligent if they didn't plan for the debt ceiling.

 

If you have visited our site, you should read the section on The Problem Is Today.  Very few people accept our view because it is more dire than just about anyone.  I don't know where 17 trillion comes from.  I have seen the number as low as 2 trillion and The Heritage Foundation cites the long-term under-funding as 7 trillion.  If I discount all of these figures, it is because we don't believe that there is a long-run for the system. I think it implodes long before the this underfunded obligations materialize.  I am not sure that it will not implode before the Trust Fund runs out.

 

In what sense do you see us as protraying anything is fine with the system?

 

 

Comment by Gregg on July 22, 2011 at 10:00pm

@Joe: I took a look at your website. Didn't find your "plan download". Your website, like your post, does our nation a disservice by not conveying how bad our situation really is.

How does your website's plan deal with SS's $17 trillion in unfunded liabilities? If it doesn't address the full amount, let's not waste our time.

Re:"Dedicated Payroll taxes": For the last 20 years ~30% of program receipts were surplus. So your statement "The President does not have the authority to spend your payroll taxes on his personal priorities" is 30% in error. Let's convey the truth?

My point is your presentation is misleading, and based on intent, deceptive. Our nation needs better.

My source for "SS payroll taxes HAVE NOT covered system outgo" is the trustee reports.

Re: "SS Payroll taxes not covering disbursements" is from the trustees report. Your "Generally speaking payroll taxes at this point should cover the out-go of the system." is true only under under the low-cost projections which are unreasonable. And then, only for ~8yrs. Again badly misrepresenting the true picture.

Re: "cash reserve" Didn't the recent $150 billion in redemptions pay benefits because their wasn't enough tax income? All the federal finances have been managed as one big pot for decades. For e.g. the Clinton "surplus" that never reduced the federal debt. And to convey system confidence by pretending someone has a fiduciary responsibility to have a certain amount of crises cash in the bank again avoids the truth.

The trust fund's $2.5T assets don't have a "market value". Those bonds are non-negotiable special issue only for the trust.

"Technically"?!?! Medicare's problems are financial until they're solved politically. You and I both know it's the bigger nut. And no one blamed the trustees (for anything other than going along with the farce).

The nation's going down in flames, and here we sit? Why are you portraying everything's fine when you know full well it's not?

Comment by Joe The Economist on July 22, 2011 at 8:30am

Where did you get the statistic on illegals.  Generally speaking illegals contribute to SS rather than draw from it.  The SSA has a suspense file where payments on bogus SSNs are kept.  In 2006, that file was $50 billion large.  As you can tell, I don't have current information.

 

I would forget the MSM.  If the Republicans were serious - and I don't think that they are - they would launch an investigate into the management of the Trust Fund.  They would look at the ability of the Trust Fund to pay checks during the debt crisis. It is a fair question to ask : was the managing Trustee prepared for the debt ceiling.  If they were unprepared on August 3rd - fire them all.  That would get the MSM's attention. 

Comment by Kelly Wayne Jerome on July 22, 2011 at 7:38am

Why does it do that?

By the way, those conservatives were on Fox after 10pm.  Chances are the seniors didn't see it and I doubt if it was run on any MSM the first time, let alone again in the morning.

The conservatives message does not get out because the msm does not allow it to get out.  You have to remember the socialist are controlling the media also.

I believe one of the first things the Tea Party needs to do once better organized, is contact senior citizens and give them outlets where they can find the conservative message.  News on television and internet.  The biggest problem with getting the conservative message out to seniors is they aren't regular users of the internet.  The number of seniors who have access to internet is minimal compared to the rest of the population.

 

I think they would like to hear the argument why SS is going broke.  The socialist blame it on the fact we aren't collecting enough money from the rich, they never mention how many of the 12-20 million illegals are drawing on SS that never paid in a dime to begin with.

It is getting more important to get the message out to seniors because they do vote, if they are voting off the information given by the MSM like so many others, they are voting ignorant to all the issues.

 

Comment by Kelly Wayne Jerome on July 22, 2011 at 7:29am

I watched Bachmann and two other conservatives on fox News attempt to explain that the President was lying to the public about SS checks not going out.  They went through the whole explanation as to where the money would come from and what would be priorities to be paid.  They also went on to explain the only reason SS checks wouldn't get mailed out is if obama chose not to make seniors a priority.

 

Now what is running on Fox News is the commercial about spending cuts for hospital visits.  The conservatives need to come out with a commercial explaining how obama care has robbed from both medicare and ss in order to be implemented and how that will change their coverage due to the unresolved cost of the overall program.

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