I don't understand. Yellen put forth 2 policies that can be implemented to avert the debt limit

[sprinkleeninow]

issue and have the government meet payment obligations. Part of it reads having to borrow $$. What I don't get is: funds to make SS benefit payments are in a trust fund so why a need or even a consideration to 'borrow' $$ for this??

[RockRaven]

1. Because the SS trust fund is an accounting ledger and polite fiction?

IOW it's a "trust fund" not a trust fund...

That's just a guess.

[progree]

2. Because the SSTF has only one kind of asset: special issue U.S. Treasury securities

BY LAW, each year the SS surpluses are loaned to the federal government, and no, that didn't start with Reagan. Nor did it start with LBJ. It has been that way from the beginning.

The government in turn creates special issue treasury securities that are deposited in the Social Security and Medicare trust funds. These earn interest -- paid in the form of more special issue treasury securities. In a year when Social Security revenues fall short of benefits then trust fund securities are redeemed to make up the difference. This is already occurring:

"At the end of 2021, Social Security’s trust fund reserves were $2,852 billion, having decreased by $56 billion over the year." - Source: 2022 Trustees report, https://www.ssa.gov/oact/trsum/

Similarly the Medicare Trust fund.

Anyway, Social Security and Medicare benefits are primarly paid from FICA tax receipts. But now that FICA tax receipts are falling short of scheduled benefits, trust fund securities are being redeemed by the U.S. Treasury. The money to do those redemptions comes from the general fund, meaning in practice that the Treasury has to borrow it (by selling bonds like the I-bonds and the TIPS that I bought last year).

BTW, anything you read about "pilfering" of the programs is literal fucking bullshit.

Social Security Trustees 2022 report -- https://www.ssa.gov/oact/trsum/

From the above link:

Federal law requires that the Trustees invest all excess funds in interest-bearing securities backed by the full faith and credit of the United States. The Department of the Treasury currently invests all program revenues in special non-marketable U.S. Government securities, which earn interest equal to rates on marketable securities with durations defined in law. The balances in the trust funds, which represent the accumulated value, including interest, of all prior program annual surpluses and deficits, provide automatic authority to pay benefits.

All emphasis in above by Progree.

Just to be clear -- the era of "excess funds" in the above quote has been over for years. Now there is a shortage in annual SS and Medicare Hospital Fund revenue that has to be made up by redeeming trust fund securities.

(By the way, the 4 trustees are all high level Biden administratrion appointees. This isn't a report by right wing economists or the right wing media or such)

The report is signed by:
    Janet Yellen, Secretary of the Treasury, and Managing Trustee of the Trust Funds.
    Xavier Becerra, Secretary of Health and Human Services, and Trustee.
    Martin J. Walsh, Secretary of Labor, and Trustee.
    Kilolo Kijakazi, Acting Commissioner of Social Security, and Trustee.

(and if some idiot says, well what do you expect liberal Democrats to say? Well, the same language is in Trump era SS Trustees reports too, for example this snapshot from 2019: https://web.archive.org/web/20191125074043/https://www.ssa.gov/oact/trsum/ )

Actuarial Note #142 of January 1999 (how interest rate determined, the trust fund securities etc.) http://www.ssa.gov/OACT/NOTES/note142.html

On a related subject,
But isn't it "game over" when the SS Trust Fund runs out in about 2035? - Ans, NO
https://www.democraticunderground.com/?com=view_post&forum=1016&pid=328199

Edited to add - Its also not true that Medicare is paid for by a separate tax. Part A is (the hospital insurance part) -- its part of our FICA taxes just like SS is. But Part B and Part D are paid by general funds and premiums. That's in the Social Security Trustees report as well https://www.ssa.gov/oact/trsum/ .

[sprinkleeninow]

4. Bottom line: who has paid in accordingly should get their anticipated benefit payments.

Part A Medicare costs me a monthly premium.
Part B hasn't since I started early SS benefit and then enrolled in Part B which cost 0.

I appreciate your outline.

Any any rate, the republicons and the big orange con did damage in many areas.

I 'trust' our President and those directly involved to work it out for all of us who depend on these benefits to not get tampered with.

[progree]

6. Are you sure? Part A is no premium unless one has not worked 40 quarters. Everyone pays Part B

premiums, though from what I hear, some Medicare Advantage programs pay the Part B premium.

I'm not and never have been in Medicare Advantage, so I can't say from personal experience. As a traditional Medicare person with a Supplement plan, I pay Part B premiums (it's deducted from my Social Security check), but not part A. (But I can assert that Part A has no premium for those with a work record of 40 quarters or more from voluminous material that I have read. But Part A does have a deductible).

Edited to add: https://www.medicare.gov/basics/costs/medicare-costs

Part A Medicare costs me a monthly premium.
Part B hasn't since I started early SS benefit and then enrolled in Part B which cost 0.

I appreciate your outline.

Thanks

[sprinkleeninow]

8. Sheesh, I had it reversed. A is hospital, not doctors. That's been $0 charge

since enrolling. The Part B has a premium deducted from SS monthly benefit.

I also selected Plan G as Medicare supplemental. People were 'telling me' about their advantage plans. They paid nothing. Yah, until you need it, claims filed and 'then' you pay.

I could always change if need be, but my understanding is once you're on a supplemental, and then go to Advantage, you cannot switch back to a supplemental.

2021 I had hospital plus rehab bill close to $70k and I paid nothing. Thanks be.

[Farmer-Rick]

5. Yes, and thanks for all those important details.

But if we could fix our broken health care system, Medicare would not be depleting their trust fund so rapidly. If government can't keep up with medical expenses how do they expect the average person to be able to keep up with it?

And the SocSec trust fund was supposed to be depleted after the last Baby Boomer dies. Then SocSec is supposed to be covered by current income taxes. The SocSec trust fund was just a pass through account before Raygun and Greenspin played with it. It's supposed to go back to being a pass through account after the last Baby Boomers passes.

So, taxes for SocSec need to be increased to meet that requirement. Lifting the cap higher should do the trick. The OASDI currently has almost $3 Trillion. And the filthy rich want to get their hands on that almost $3T, that's why they want to take away and privatize your retirement funds.

[progree]

7. You're welcome

Last edited Sat Jan 21, 2023, 09:48 PM - Edit history (1)

And the SocSec trust fund was supposed to be depleted after the last Baby Boomer dies. Then SocSec is supposed to be covered by current income taxes. The SocSec trust fund was just a pass through account before Raygun and Greenspin played with it. It's supposed to go back to being a pass through account after the last Baby Boomers passes.

I agree with all of the above except the "is supposed to be covered by current income taxes.". Rather is supposed to be by current SS payroll taxes (part of FICA taxes, the other part is Part A Medicare). What Raygun and Greenspin confronted was that SS payroll taxes were soon not going to be sufficient unless they raised payroll taxes, which they did mightily. Much more than needed, thus the near $3 trillion we have in the SS trust funds today.


Edited to add: I haven't heard that the projected trust fund runout date was timed to the last boomer passing or some percentage of boomers passing or anything like that. The youngest boomers (born in 1964) reach age 100 in 2064, for example. Currently, the SSTF is projected to run out in 2035, when the youngest boomer is 71, and the oldest (born in 1946) is 89.

All of this passed by an overwhelmingly bi-partisan majority. Democrats voted for the 1983 amendments that implemented the key Greenspan Commission reforms on 3/24/83 by 163 - 54 - 51 in the House, and 26 - 6 - 14 in the Senate (the 3 numbers are Yes - No - Not Voting) . https://www.ssa.gov/history/tally1983.html , https://www.ssa.gov/policy/docs/ssb/v46n7/v46n7p3.pdf

So, taxes for SocSec need to be increased to meet that requirement. Lifting the cap higher should do the trick.

Getting rid of the cap will go a long way to solving the problem, but it's not quite enough. The bottom third of https://www.democraticunderground.com/10142927989#post57 deals with this.

[Girard442]

3. Ummm... The SS Trust Fund is invested in US bonds.

If you knew someone who invested their retirement money exclusively in US bonds, you'd think of them as a prudent and very small-c conservative money manager.