"the claim that Social Security is self-financing and doesn't contribute to the deficit" is false.

[Better Believe It]

That's what those who wish to cripple and ultimately destroy Social Security are beginning to say now that the Treasury Departments general fund will contribute over 100 billion dollars to the Social Security trust fund this year and probably more in future years. BBI

4 Social Security Changes Coming in 2011
Several claiming options will be eliminated this year
By Emily Brandon
January 18, 2011

Lower Social Security taxes. The amount workers pay into the Social Security trust fund will temporarily drop from 6.2 percent of taxable wages up to $106,800 annually to 4.2 percent in 2011 only. For self-employed workers, the Social Security tax rate will drop from 12.4 percent to 10.4 percent next year, due to provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, signed by President Obama on December 17. Employers will continue to pay 6.2 percent of wages into the entitlement program.

The Social Security system's finances are not expected to be harmed because the trust fund will be reimbursed for the full amount of the tax break from the general fund of the Treasury. However, this change also means that the Social Security trust fund will no longer be completely funded directly by citizen contributions. "This pretty much ends the claim that Social Security is self-financing or that it doesn't contribute to the budget deficit," says Andrew Biggs, a resident scholar at the American Enterprise Institute and a former deputy commissioner of the Social Security Administration.

http://money.usnews.com/money/retirement/articles/2011/01/18/4-social-security-changes-coming-in-2011

[tabatha]

1. Just for one year.

[PSPS]

3. HAHA. Yeah, just like the 'temporary' bush tax cuts for the rich.

[Selatius]

24. Sunset provisions don't really carry much weight on DU. Ask anybody here about the PATRIOT Act nt.

[kelly1mm]

34. Is that like kinda pregnant? nt

[PSPS]

2. It is now that Obama has started its dismantling.

Obama's unprecedented action of reducing contributions and "replacing" them with funds from the (now looted dry) treasury will be known in the future as the first step in the scuttling of Social Security.

[leftstreet]

6. No Republican Administration could ever have gotten away with this

:grr:

[PSPS]

8. I think you mean "only a republican administration"

Despite Obama's oratorial skills and promises to be otherwise, his actions have been virtually all GOP/Bush approved. What we have is a de-facto GOP white house/administration.

[TheWraith]

26. It amazes me the level of delusion here on DU.

Some people apparently have so much invested in their Bush-era hatred of the government that they'll create their own universe where they get to rewrite everything the Obama administration does.

[mmonk]

9. Exactly.

It takes Reagan's warriors in the Democratic Party to "git er done". (the DLC)

[gratuitous]

4. Mission accomplished

Because this will become the dominant narrative in the year to come, and be the rationale for all sorts of jiggery-pokery to dismantle the most successful, best defense against poverty for the aged, the nation has ever seen. And it will be done with Democratic complicity; in fact, the only fingerprints you'll find on social security's corpse will belong to Democrats.

[bookman]

5. AEI

Right wing think tank.

[Dogmudgeon]

7. Hush! They're getting a Hate-Obama session going!

--d!

[Kalun D]

21. DAMN

FFFFING

STRAIGHT!!!

[Bobbie Jo]

33. +1000

Believe it.

[Nictuku]

10. I was wondering if anyone would notice that

PNAC=AEI (same members)

Some DU folks seem to be doing the work of the neocons these days. Who needs teabaggers?

[mmonk]

12. We know damn well who they are.

We are their enemies. Not the "Progressive Policy Institute" that pretends to be different. We're the real deal.

[Better Believe It]

15. The article excerpt points out how the right-wing is using the"tax cut" to attack Social Security

And your point is .... the right-wing Republicans are using the payroll "tax cut" to attack Social Security?

Or do you think DU'ers should not show how right-wingers are using the payroll "tax cut" to undermine Social Security?

What's your point?

[Kalun D]

22. Which Right-Wingers?

"how right-wingers are using the payroll "tax cut" to undermine Social Security?"

the Republicans?

or the "democrats" in the White House?

[eomer]

28. Obama agreed to it.

And he agreed to it without any fight, at least not any fight that we could see. It was just all of a sudden part of a deal that was made in the back rooms and by the time it was announced to the public it was already a done deal.

So far as we could see he not only agreed to it, he apparently agreed with it.

[Better Believe It]

32. "Deficit hawks" in both parties and obviously right-wingers associated with the AEI.

Perhaps you haven't noticed that it's not only right-wing Republicans proposing cuts in Social Security, Medicare and Medicaid among other social programs.

Do you really think the Obama administration and all Democratic politicians oppose such cuts?

The right-wing Republicans will have more than a few Democratic enablers on this matter.

Do you think Democrats should fight or join Republicans in cutting social programs?

[Elmore Furth]

11. FICA Taxes Were Increased During Reagan's Terms to Prepay Boomer's Social Security

Reagan raised taxes in 7 of his 8 years in the White House The social security trust fund has 2.5 trillion in t-bills that are accumulati­ng interest . The money was spent but by law and under the constituti­on the money cannot be defaulted on . The FICA taxes were raised in the Reagan administration so that the Baby Boomers would prepay their Social Security.

The outsize Federal budget deficits under Reagan necessitated hiking the FICA tax substantially in order to fund Social Security. Most of you see that deduction on your paychecks. The idea was to provide for the baby boomer generation when its massive ranks began to retire.

As result of these taxes, Social Security accumulated a vast, 2.5 trillion dollar surplus. Good news for a generation of retirees, right? Well, sorta. That money has been spent. When you hear someone talking about "Social Security in Crisis," that's what they're talking about. That's the "crisis." They're talking about the fact that Uncle Sam owes back that vast amount of money it has already spent.

Cheney's "deficits don't matter" is only true if the US government is going to default on the US Treasury Bonds held by the Social Security Trust Fund.

Then, they Trust Fund was squandered on tax cuts for the wealthy and foreign adventures so that rich Republicans wouldn't have to pay their own way.

We keep hearing that Social Security is "broke," thanks to the well-funded efforts of folks like these. But the Trust Fund currently holds a $2.6 trillion surplus, and it's expected to rise to $4.2 trillion by 2025. That's a lot of money set aside for people's retirement -- money some people would rather see used for other purposes, like paying for the spending spree of the last ten years or underwriting tax breaks for the well-to-do.

The Social Security Law said that the Trust Fund could only be used for Social Security benefits. Now the wealthy want to default on these LEGALLY MANDATED DEBTS so they don't have to compensate for their tax cuts that caused the federal deficit.

So are we going to default on the Treasury Notes sold to the Chinese? Why not? They are just a binding as the Social Security Trust Fund?

In the end this was never about anyone's grandchildren paying off the national debt. It was about the wealthy paying for their fair share of the government budget. AND THEY DON'T WANT TO PAY. Sounds like low lifes trying to welsh on their debts, doesn't it?

"When Ronald Reagan was elected, the supply-siders got a chance to try out their ideas. Unfortunately, they failed." Although he credited supply-side economics for being more successful than monetarism which he claimed "left the economy in ruins", he stated that supply-side economics produced results which fell "so far short of what it promised," describing the supply-side theory as "free lunches".<29> Krugman and other critics point to increased budget deficits during the Reagan administration as proof that the Laffer Curve is wrong. Supply-side advocates claim that revenues increased, but that spending increased faster. However, they typically point to total revenues<30> even though it was only income taxes rates that were cut while other taxes, notably payroll taxes were raised.<31> That table also does not account for inflation. For example, of the increase from $600.6 billion in 1983 to $666.5 billion in 1984, $26 billion is due to inflation, $18.3 billion to corporate taxes and $21.4 billion to social insurance revenues (mostly FICA taxes).<32> Income tax revenues in constant dollars decreased by $2.77 billion in that year. Supply-siders cannot legitimately take credit for increased FICA tax revenue, because in 1983 FICA tax rates were increased from 6.7% to 7% and the ceiling was raised by $2,100. For the self employed, the FICA tax rate went from 9.35% to 14%.<33> The FICA tax rate increased throughout Reagan's term, jumping to 7.51% in 1988 and the ceiling was raised by 61% through Reagan's two terms. Those tax hikes on wage earners, along with inflation, are the source of the revenue gains of the early 1980s.<34>




Supply-side economics

[Nictuku]

14. Right on Brother

It is nice to hear some actual truth here (instead of truthiness)

[Lasher]

17. Plus Saint Ronnie raised boomers' retirement ages.

I think we boomers have sacrificed enough.

[Statistical]

18. Not completely true. The "crisis" is that even with 100% repayment of SSA trust

plus interest plus all future contributions there is a shortfall in SSA funding.



The bad news is that shortfall is about $5.4 trillion and in 2037 SSA will be unable to make promised benefits (even with full repayment of trust fund)

The good news is that our economy is relatively large. The "gap" is leaa than 0.1% of GDP. The issue can be solved but pretending there is no problem will only make it harder to solve in the future (less time).

[jeff47]

29. Should probably avoid using a graph that doesn't match your prose.

Your graph says 2041, not 2037. Which is actually rather important. The date for when the SS trust fund is 'out of money' has been moving forward each time the SS trustees issue a new report. Indeed it used to be 2037, it's now in the 2040s.

[Statistical]

31. Actually no the reverse is true. The "2037" comes from 2010 trustee report.

The reason chart is "off" is that it is from an older trustee report.

The most recent trustee report from 2010:


http://www.ssa.gov/oact/tr/2010/II_project.html#116314

Also the recovery in 2010 was much slower than projected so likely the 2011 report is going to show the date pushed even closer.

Still the exact date is not important. The important fact is that it is incorrect to say there is no "crisis", we just need to pay back SSA trust. Every trustee report for last decade has shown a long term insolvency over the last 74 years. Crisis is a bogus word but there is a long term insolvency. It can be resolved, the gap between revenue and expenses is roughly 0.6% of GDP over next 75 years so it is most certainly solvable.

However doing nothing will only make the problem get worse. As we get closer to 2037 or 2040 the amount of change necessary to balance the books increases. Small changes now can balance the books. By 2037 it will take cutting benefits roughly 28% across the boards to balance the books.

[DCKit]

30. Well said. They're aiming for default, so they don't have to pay U.S. back.

This is the same exact reason they derided and laughed at Al Gore's "Lock Box". They couldn't afford to have it locked away, or the Fed would have been broke long ago.

Shocking, I know, but they did/do the same thing with the Federal Highway funds.

[OHdem10]

13. Remind everyone: When Wall Street crashed essentially,

many many many Seniors lost their 40l K Retirement
funds completely or very large amounts. There are
many seniors who were on the verge of retirement
and lost big time. Now they are having to work
and if they did not have their SS they would be
in horrific conditions.

For anyone who has 401 K, Steve Kroft CBS and
Regular on 60 MINUTES, CBS just ran a great program
and very informative.
Are you aware that 401 Ks are not the best managed
program? They explained there are so many hidden
fees taken out that it is possible that over a
lifetime of contributions the Fund Managing the 401K
will have taken 1/2 of the contributions and the people
never know it. Rep. Miller, D. California was pictured
on the show explaining he has tried to get rid of fees
being secretly removed but he has not been able to get
movement on this.

For younger people, investing your SS into stock market
might sound great but think long and hard. Sometimes
the bird in the hand is worth two in the bush.

[Lasher]

16. This $100 billion will be in the form of US treasury bonds.

The very same type of trust fund bonds that people like this AEI shithead like to call 'worthless IOUs'.

[glinda]

19. They will muddy the money placement and raid it and then claim there is none.

[Name removed]

20. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Codeine]

23. The American Enterprise Institute,

whose mission statement reads in part "to defend the principles and improve the institutions of American freedom and democratic capitalism—limited government, private enterprise, individual liberty and responsibility, vigilant and effective defense and foreign policies, political accountability, and open debate."

Great source there, dude.

[madrchsod]

27. +1

[pnorman]

25. k & r!

n/t