How screwed up IS social security?

[Kingshakabobo]

I had dinner last night with some republican "friends" and the subject came up. I must admit that I am not up to snuff on the numbers so I wasn't able to put up much of an argument against their well rehearsed repub/chimp talking points. Also, it might have been the three vodka martinis but that is another story.

Anyway, the 8 to 10 trillion deficit by 2042 number came up and the bankrupt by 2042 argument came up. I know those numbers are bush scare tactics, like WMDs, but what are the real numbers?

How screwed up is social security and what will it take to fix it? When they say it is funded till 2042 what happens after that date?
How do they arrive at the 8 to 10 trillion dollar deficit. I hear it's an inflated number but what do they base it on?

Does anyone have some numbers they can toss out or a good source of info?

Thanks

[Raster]

1. Not a shred of truth. Nada. Nope. Nyet.

Nice piece by Molly Ivins. And there's much, much more...

http://www.workingforchange.com/article.cfm?itemid=18374


on edit: and ultimately, do you want these assholes trying to "fix" Social Security? Look at their track record.

[SammyWinstonJack]

10. I sure don't!

x(

[nancyharris]

18. I like Molly, but she is being a tad bit dishonest

<Snip>
According to the deliberately alarmist projections of the fund's trustees, it will have exhausted the trust fund in 2042. According to the nonpartisan Congressional Budget Office, Social Security will be able to rely on the trust fund until 2052 and after that will still be able to pay 81 percent of scheduled benefits.
And that's if no changes are made to the current system.
<Snip>

What Molly fails to mention is that the “Trust Fund” has no actually money in it. The “Trust Fund” is a collection of government bonds that the government must recompense starting in 2018 when the Social Security outlays exceed Social Security taxes. That money comes from the general fund and is collected in the form of Income Tax. Now it is true that the government is unlikely to default on its bond obligation but the money will be taken out of taxes.

There is much that can be done to avoid this shortfall (call it a crisis if you like). Turning back the scheduled Bush tax breaks would be a good start. Increasing the age of retirement would be another. But to put your head in the sand and claim that a problem does not exist is not in the interest of either the Democratic Party or our senior citizens of the future.

[papau]

20. Problem does not exist as all bonds require scheduled taxes - SS bonds

are not special, nor is the amount required to be redeemed very large on an annual basis.

But I do like the idea of the Trust fund getting Congress's leave to sell the Bonds on the open market so this bullshit about no money could end.

As to a fix for a non-problem - raise the wage cap if that floats the GOP boat.

[Raster]

31. dishonest, compared to who? And "recompense"? That means pay it back!

[nadinbrzezinski]

2. nope look at the GAO, numbers

we do nothing benefits will go down to 80%... the fixes are very sinople, but remember what your "frineds" want to do is to DESTROY social security, this has been a goal of the Right since 1932

Also the ponzi scheme they propose failed in the UK, and right now the UK is considering a whole new program to take care of a rising elderly poverty and destitution... this is 20 years later

What it is, well a gift to wall street.

[SharonAnn]

3. There have been lots of good articles published recently.

Check the New York Times for Paul Krugman's recent articles.

Also Common Dreams.

Also the Washington post.

Also tompaine.com.

I don't have any of my links here at work but I've kept tons of them.

Bush's tax cuts are a bigger problem and a much larger dollar amount. Making the tax cuts permanent is a much larger problem. Medicare is a much larger problem.

Why is he not addressing the real, larger, more urgent financial problems?

Also, the issue about the IOU's being worthless is bogus. The rich just don't want to have to pay taxes to pay them back. Why would the government consider that debt issued to anyone else has to be paid back but if it's been issued to U. S. workers it doesn't have to be paid back? Wealthy people have to be paid back. Other countries have to be paid back. Corporations have to be paid back. But not workers? Talk about class warfare.

[REACTIVATED IN CT]

4. In Depth Krugman Essay on Soc Security

This should answer your questions



Confusions about Social Security
Paul Krugman, Princeton University
View the Article (194 K)

http://www.bepress.com/ev/vol2/iss1/art1




There is a lot of confusion in the debate over Social Security privatization, much of it deliberate. This essay discusses the meaning of the trust fund, which privatizers declare either real or fictional at their convenience; the likely rate of return on private accounts, which has been greatly overstated; and the (ir)relevance of putative reductions in far future liabilities

[shesemsmom]

5. I understand it is seriously screwed up

they've used it for there personal cash cow so long, it wont be there for me and probably no one my age

[Cocoa]

7. not true

that's a lie that we've been hearing since at least the Gingrich era.

[shesemsmom]

11. You don't think they have been using it to finance other projects

and if not where is the money coming from

[papau]

24. The "use" does not matter as the Actuaries financial projection says NO

PROBLEM

may as well talk about the ratio of workers to bene's

or the longer life span

for goodness sake - all these things are taken into account in the Actuary's projection that the trustees publish each year -

AND THERE IS NO PROBLEM TO 2042 EVEN USING A LOW BALL GDP GROWTH OF 1.6% - AND WITH A MORE REASONABLE GDP GROWTH THERE IS NEVER A PROBLEM.

[Warpy]

15. My dad heard that same speech when he was your age.

He's 88, and it's there for him.

It's insurance, not investment. It's pay as you go (or was until Reagan raised the rates 6 times, giving poor people a back door income tax increase). It will be there for you unless you allow them to fuck it up!

[StephanieMarie]

6. From the NYT on Jan 10

"For the Record on Social Security"
...It's bad enought that the $10 trillion is a highly inflated figure, intended to overstate a problem that is reasonably esitmated at $3.7 trillion or even considerably less... Over the same 75 years the shorfall in medicare benefits for doctors' care and prescription drugs is 3.5 to 6 times as much as the shortfall in SS... "

Additionally, the predicted shortfall in SS 75 years out assumes only like 1.7% annual growth in GDP, whereas, historically, our GDP growth is more like 3%, in which case, there is no shortfall at all.

The fact is that Bush has rewarded all his other big supporter industries, and it's time to reward the banks.

[mcscajun]

8. Paul Krugman's paper in The Economist's Voice

http://www.bepress.com/cgi/viewcontent.cgi?article=1048&context=ev

[rqstnnlitnmnt]

30. very helpful, thanks

[abburdlen]

9. Here's a few numbers

Social Security will be able to pay full benefits until 2042.
http://www.aarp.org/legislative/elections/Articles/a2003-09-03-ss_policy.html

Of course there is some disagreement. The Congressional Budget Office sees no problem paying benifits until 2052.
http://www.cepr.net/publications/facts_social_security.htm

Josh at TalkingPointMemo is on top of the issue.

[OneTwentyoNine]

12. I'd bet if you could find articles from 20-25 years ago....

They would state without a doubt that SS will be totally penniless by 2005.

If its in such bad shape then how the hell would there be 2 trillion in it for Bush to withdraw for his "play the stock market" scam???

[Warpy]

13. social security is solvent at present rates of payout

until 2050. That means the boomers, that generation they love scream about in their Chicken Little act, will be covered completely. It is solvent at 80% of present rates until 2010. These figures were arrived at using the most conservative numbers out there, meaning the system is probably solvent, period. I believe the GAO came up with these numbers.

The truth is that 40% of your FICA taxes, which were always meant to reflect a pay as you go system, have been systematically robbed for decades to pay for pork and an imperial military, being put into the general fund and giving you a back door income tax hike.

The crisis in social security means that the rate of overpayment will decrease until FICA is once again a pay as you go insurance progam, thus depriving Congress of all that money to fudge the books on their overspending on pet military and pork projects. That is the crisis, folks, that they'll have to start being honest about what tax cuts for the rich have done to the solvency of government, as a whole.

Were social security really in crisis, the sensible thing to do would be to remove the laughably low earnings cap, to make all income subject to FICA premiums. They're not going to do this, of course, since it would mean they'll have to cough up more tax money instead of just us peasants. They'll shriek and moan and gnash their teeth and try to destroy the system completely so that they'll be able to use 100% of what we're now paying to support the elderly for military waste and pork projects.

[Inland]

14. Here's the easiest thing to toss off.

1)According to the Congressional Budget Office---hired by the rethugs in congress---the system is in the black until about 2050 and then will pay at least 3/4's of benefits after that, forever and ever until the sun burns out.

2)Every rightie "cure" requires diverting money away from the system, which makes it go broke sooner, not later.

I say every proposed cure is worse than the disease. Me, I would rather see the "disaster" of three quarters of benefits than Bush's harebrained scheme.

[SeekerofTruth]

16. In serious trouble by 2018, but people hide their heads in the sand

You must understand the trust fund to understand why it will be in trouble in 2018. Current taxes received are immediately spent on SS and on other government services. The so called surplus, consists of the government writing itself an I.O.U for money that it says it will pay back to SS in the future. Consider this: Write yourself an I.O.U of $1m dollars payable in 2040. Consider it's now 2040 how valuable is the I.O.U? It's worthless because there is no money behind it. Just as there is no money behind the SS Trust fund.

Understand this, and you truly understand why it's in trouble. Of course, Bush's proposal won't do anything to fix the problem.

[nadinbrzezinski]

22. What bush wants to do is DESTROY the system

and until you are honest about it, no other point matters

[BillZBubb]

26. For a self-titled "seeker of truth" you sure aren't doing much seeking

You clearly don't have a clue about finance. The US uses the Social Security surplus and issues bonds to cover the borrowing. So what? The government will repay Social Security when appropriate. Government bonds are not worthless, and anyone who knew anything about investing and finance would never make such an absurd and uninformed claim. In fact US treasuries are one of the most secure investments in the world.

And your "write yourself an IOU" example is sophomoric. You are not a government with tens of trillions in property holdings and the ability to tax the largest economy in the world.

[Strelnikov_]

27. Reneging On The SS Trust Is A Political Decision

Writing off the SS trust is the only way the SS 'crises' rhetoric can be justified. Since the GOP thinks there is a looming crises, then they just need to come out and say it:

"We do not plan on paying the SS trust notes. All of those funds went to tax cuts for the rich".

Enough of their typical spin, hand-wringing about the 'IOUs' to push SS 'reform' one day, then acting as if there is no problem with the long-term Federal debt on another day in order to push more tax cuts for the rich.

[OneTwentyoNine]

17. Find out how many Murikans stop paying in at $87,000.....

Why should millionaire bastards like Limbaugh and O'reilly only pay SS for ONE week and ride free for the other 51??

Anyone making around 4.6 million and above per year only pays into SS for one week under the current system.

How many thousands of people are there making 200K and getting a free ride after June 1st?? Want more money in SS,then change the GD rules...

[underpants]

19. I'll add:they are NOT "Worthless IOUs" they are T-Bills

The single safest investment that can be made and they ARE earning interest.

Look money comes in (your and my FICA) and out of that benefits are paid anything left is used to buy Treasury Bills (hey if it's good for the bank of China ) and the CASH is used to pay for ongoing programs (military and way down the line parks etc.). The whole thing is viable unitl 2042 (Soc.Security Trustees) or 2052 (CBO).

The savings that supposedly will be realized won't be realized until 2050.

Oh and if they bring up Chile (long story) tell them that Chile saved no money anyway because they understandably put in safety net for people who lose everything because they don't know what they are doing making investments. They get less than they would have but the still have enough not to be starving on the street....then mention that privatization of the retirement account was a MAJOR part of the Argentian economic collapse.

[underpants]

25. BTW- the money in your wallet is a TREASURY NOTE too

Franken just made that point. An excellent one.

[LibDemAlways]

21. Social Security works.

If anything it will eventually need to be tweaked to assure full benefits beyond 2052.

Foolish schemes like investing SS money in the stock market would be the road to ruin for many. Before SS many seniors were at the mercy of their children to provide for them in their old age. I remember my grandmother moving around, alternating weeks at a time between her three children, so as not to be a "burden" to any one.

Is that really what anyone wants to go back to?

Thanks in great measure to SS, which they paid into all their working lives, my 82 year old parents are independent and living in their own home. Benefit cuts and playing roulette with the money only assures that we are taking giant steps backward and that once again grandma and grandpa will face a grim future of dependence and poverty.

[EVDebs]

23. Not anywhere near as screwed up as Medicare !

By 2079 the medicare deficit is around $62 trillion plus the $17 trillion the new 'drug benefit' added by Repub Congress just passed...$79 Trillion compared to a SS estimated $12 trillion...

See "Medicare faces cost crisis Multitrillion-dollar deficits loom over federal programs"
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/11/07/BUG0V9N54U1.DTL

"""Because Social Security is the easier of the two problems to solve,'' said Texas A&M economist Thomas Saving, who signed the report as a public member of the Social Security and Medicare Trust Fund, the board that oversees the financial health of the two programs.
Saving said elected officials of both major parties have been unwilling to face the future costs of federal health care programs.
"I don't have to be as careful,'' said Saving, who outlined the Medicare problem in an analysis issued after the official report.
In his analysis, he writes, "Although policy-makers have focused on the long-run sustainability of Social Security, the financial problem in Medicare is five times as great.''
Looking more than 75 years into the future, Saving estimates that the nation faces a $62 trillion unfunded liability for Medicare -- versus a $12 trillion gap for Social Security.
Yet, he said, lawmakers created a prescription drug benefit that added nearly $17 trillion in future IOUs to that $62 trillion shortfall.
As a frame of reference, the entire U.S. economy is worth about $11 trillion this year. And Saving projected only future Medicare costs. The separate Medicaid program -- whose combined state and federal costs of $270 billion in 2003 nearly equaled Medicare's $278 billion price tag -- is also on an upward trajectory.""

The Bush administration is now refusing to assist states in paying for the unfunded mandate of these healthcare programs, further exacerbating state budget difficulties ! Yet trillions are being pissed away in the DoD's 'black hole' of accounting...

[Is It Fascism Yet]

28. it's not screwed up at all

my understanding is that social security could continue as is for another 50 years without running out, and that if we stopped "borrowing" (read: stealing for Bush&Buddies) from it, and invested it properly, it could remain solvent throughout the forseeable future. Shrub's dirty grimy hand is just in our pockets, that's all.

[Kingshakabobo]

29. Thanks everyone!! n/t

[ChairOne]

32. It's not especially screwed up... Drum has a lotta good stuff....

http://www.washingtonmonthly.com/archives/individual/2005_01/005446.php#more

And Krugman has been mentioned, I believe...