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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWorkers have been paying higher social security taxes than necessary for 30 years. In 1983,
when they jacked up the rates and changed the rules (raising the retirement age, taxing benefits), they told us we were prefunding our own retirements & the changes would save the system.
We didn't sign on for 30 years of higher SS taxes to give rich people & corporations 30 years of income tax cuts, then turn around and cut benefits again to make sure rich people would never have to pay higher income taxes.
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woo me with science
(32,139 posts)
sabrina 1
(62,325 posts)The SS fund belongs to the People, it is a separate fund and has nothing to do with what Debt the Fed Government accumulates or does not. Every politician who even mentions SS in the same sentence as the Deficit is perpuating the Republican lie and they are attempting to deceive the people.
Bernie Sanders has no problem explaining this simply fact. I have no idea why there is still any confusion about the lie told for decades by Republicans about SS. A simple statement 'SS funds are completely separate from the Federal Govt and SS has a surplus of over 2 trillion dollars. SS is solvent for the next two decades at least, even with this economy.
It is infuriating that there is no clear statement from the Dem leadership putting this Republican lie to rest.
I see one Dem, Tammy Baldwin has done so, let's hope that others will join her now and get SS out of these discussions completely.
dmr
(28,705 posts)
RepublicansRZombies
(982 posts)yes!
Flatulo
(5,005 posts)
Vincardog
(20,234 posts)sabrina 1
(62,325 posts)into it. It is not part of the Federal Budget. If the Fed Government borrowed from it, then that loan became a debt that must be repaid, just like any other loan, from China eg, they took out. Iow, SS has a surplus of 2 trillion dollars, most of it airc, is in Treasury Bonds. Those bonds are backed by the full faith and credit of the US Government.
If the Gov borrowed from that fund, that is the same as the Gov borrowing from China. Does anyone claim that China, a creditor of the US Govt, as is the SS Fund, caused the deficit?
The fact that the money was borrowed in no way means that SS contributed in any way to the deficit. It simply makes the owners of that fund, The American People, creditors of the US Govt like all its other creditors, China eg, the US Government borrowed from.
And if the US Gov defaults on any of its creditors, in this case it would be the American People, the US would lose the trust of all of its other creditors. Which is why they have never defaulted on loans. It would immediately cause other creditors to start calling their debt and it would plunge the value of Treasury Bonds.
Flatulo
(5,005 posts)is downgraded, the the bonds they sell to finance the debt must pay out higher interest rates, commensurate with the higher risk? Who gets the interest? The SS trust, or the government?
The US government's bond rating was dropped one level, but the result (surprising unless you subscribe to Modern Monetary Theory) was US bond yields actually went down (effectively, a lower interest rate).
The dirty truth Wall Street doesn't want the public to know is that the US government will always be able to repay it's debts because Congress can create money on demand (see Article II, Section 8 of the US Constitution about coining money). There might, depending on the situation, be some inflation as a consequence, but the capability is always there.
Many people, Ben Bernanke included, actually feel we don't have enough inflation right now, which is allowing corporations to sit on huge piles of cash rather than investing it to increase production (and thus employment). So a little more inflation might actually do us all some good.
Vincardog
(20,234 posts)lalalu
(1,663 posts)I am just mad that so many people on the left are allowing the right to continue blaming social security for the deficit. If anything some of the surplus from social security was used to keep the government functioning.
This is just another way of trying to blame social security and destroy it. Wall street is still salivating over the prospect of taking over this money. I would think by now people would have woken up.
sabrina 1
(62,325 posts)ugly head. Boehner is telling it, Romney told it, and the MSM will never correct it. But no Democrat should be falling this lie, they should know better.
And I am expecting that the president will be announcing soon that SS had zero to do with the deficit and will not be part of any discussions on the Deficit.
progressoid
(53,156 posts)The SS Trust Fund has not been put in a "lock box" and Al Gore suggested. Those borrowed funds are considered part of the national debt and they will need to be replaced at some point.
Flatulo
(5,005 posts)paid with more borrowed money. Maybe not exactly borrowed, but monies raised by the sale of US Treasuries, on which we will have to pay out interest.
I don't quite see the difference.
truebluegreen
(9,033 posts)and now they think we should pay AGAIN? Because THEY didn't do THEIR jobs?
Nuh-uh, not happening--especially since all they would do with the money is waste more on the military and tax cuts for the rich.
lumberjack_jeff
(33,224 posts)It is immaterial if China is redeeming the bonds they hold or the SS trust fund is. Borrowing money to pay off the debt owed to SS recipients doesn't add to the debt at all.
The problem is one of accounting. Because SS receipts have been counted as general tax receipts, the cashflow makes the deficit appear smaller. Since the cashflow from here out will be negative, it shows up on paper as a bigger deficit.
sabrina 1
(62,325 posts)two other creditors of the US Gov. We don't blame those creditors for contributing to the deficit because they didn't. So why is anyone trying to blame SS which loaned money also to the Fed. Gov? They issued loans, just like we the people did. And those loans have to be paid back to the creditors. Including to the SS fund.
FogerRox
(13,211 posts)Would it be wise to actually take 3-4 trillion dollars and lock it in a bank vault? Removing 3-4 trillion dollars from the economy would cause a recession. Is that what you want.
Banks take your deposit and then lend out your deposit.
JoeyT
(6,785 posts)power to tell you "No, we rather enjoyed using your money. In fact we'd rather think of it as our money now, and we don't think we should have to give you any of our money."
Nor does the bank get to tell you "You want to make a withdrawl? Yeah, remember when you deposited the money we told you you could withdraw it in June? Well we changed our minds. You can't have any of your money until October."
Edited to add: I don't think they should immediately yank 4 trillion out of the economy either. I just don't agree with using banks as an analogy.
FogerRox
(13,211 posts)where the money should be kept?
AnotherMcIntosh
(11,064 posts)
Mnpaul
(3,655 posts)We need to go back to paying interest on that money borrowed from S.S. During the Bush admin., we stopped paying it. Bush spent about $1 trillion that should have gone to S.S. Their reasoning was that we owe it to ourselves and don't need to pay it.
sabrina 1
(62,325 posts)borrowed from make the American People just one more creditor. It's interesting that no one blames those other creditors for the deficit. SS had nothing to do with creating the deficit. We the people are creditors now of the Fed Govt who have been borrowing money to pay for Wars and for the Bush tax cuts.
They did borrow the money and they don't want to pay it back. They want to privatize that enormous fund, which is set to double by 2023 and gamble with it on Wall Street.
Read the Third Way plans for SS. 'Savings Accounts' instead of the way it is now set up. The Third Way is part of the Dem Party so it's not just Republicans who want to use the People's Fund to gamble with on Wall Street. It is people like Erskine Bowles who has been trying to do that since the Clinton years.
They must be stopped, there is no other way around it.
SomeGuyInEagan
(1,515 posts)... *funded* out for another few decades. FUNDED! ALREADY FUNDED!!!
Medicare/Medicaid are also ALREADY FUNDED into the future. I believe everything else has to go back year-after-year to ask for money.
More than a few Dems fall into this same trap.
This has nothing to do with debt, it has everything to do with:
1) Shifting even more wealth to the wealthy (stealing the silver on the way out of the door)
2) Destroying anything that FDR or LBJ created for the common good
3) The mental derangement which is hard-wired into those who are conservative
Warren Stupidity
(48,181 posts)the trust fund. "they" can go fuck themselves. Pay up you rich fucks. We aren't that stupid.
meti57b
(3,584 posts)...and leave us with worthless promises to pay it back.
ToxMarz
(2,919 posts)They buy US Treasury bonds, the only truly 'safe' place to keep it. So yes the government has borrowed it all by selling treasury bonds. But the government would have sold them anyway, and Social Security needed a safe place for their money. We just owe less to China (who would never accept repayment of less than we borrowed plus interest). STUPID right wingers are being duped into not being paid back because it is socialist evil system. They would rather let the wealthy steal it, which is essentially what they have done as that money has funded their tax break, war profits, and corporate welfare. Now they have to pay more taxes to pay back what they have taken, or get us to agree not to be paid back.
Vincardog
(20,234 posts)SomeGuyInEagan
(1,515 posts)If that happens, we're all in a deep world of shit.
Vincardog
(20,234 posts)SomeGuyInEagan
(1,515 posts)Meant to reinforce your point. Apologies.
Vincardog
(20,234 posts)
dixiegrrrrl
(60,157 posts)which is one reason they are doing all this dancing around the issue of SS being "broke".
Look, on PAPER, the fund is fine.
On PAPER, the budget is ok.
On PAPER, the banks are solvent.
But in reality..........
On the Road
(20,783 posts)but as far as I can tell, that argument shows a fundamental misunderstanding of what a bond is and should be completely disregarded.
Corporations or government entities issues bonds in order to borrow money. The money is always spent -- that's why bonds are issued. Regardless of the reason, the bond is an asset. It is generally safer than stocks or most investments. The Social Security fund has a surplus of over $2 trillion of these bonds.
Whatever Congress spends for defense, medicare, or any other purpose is irrelevant. The bonds are in the rough equivalent of a pension fund and earmarked for Social Security shortfalls that will occur as the baby boomers retire. Theoretically, the Social Security fund could trade them for corporate bonds or bonds of other government entities, but they buy Treasury bills in order to reduce risk. In hindsight, it's not too bad a trade.
Any Chief Financial Officer that invested the pension fund in company bonds and then tried to tell retirees or other bondholders "Oh, those bonds we issued? We spend that money on a factory" would be summarily laughed off the stage, fired, sued, and end up in jail. It's an utterly ludicrous argument to anyone with any knowledge of financial instruments. It appears to be designed to impart a sense of sophistication to those ingenuous enough to trust their sources, repeat that line to others, and build up a consensus for cutting Social Security.
If that happens, I really don't know what would happen to the bonds in the trust fund. They won't evaporate and can't be used for anything else. If there is an attempt to appropriate them, it would have to be voted on by Congress. In that case, the only justification i can think of would be: "But the pension fund was just sitting there!"
As far as "worthless promises to pay it back," the behavior of bondholders (primarily the very rich and pension fund managers) indicates that the "promise to pay it back" is held in higher regard than virtually any other government or corporate entity.
lumberjack_jeff
(33,224 posts)Money IS debt.
The only thing that underlies our entire economic system is a series of "worthless promises" (e.g. "backed by the full faith and credit of the United States of America"
.
Warren Stupidity
(48,181 posts)No, there isn't. And yet investors buy treasury bills at ridiculously low rates because they are such a safe and secure investment. What is in the trust fund are t-bills, backed by the full faith and credit of the us government. The FICA surplus is invested in interest bearing bonds, the government, as it does with all revenue form treasury notes, uses that revenue for current expenses, including of course payouts on debt.
It might seem circular and confusing, but really it isn't. The trust fund is not some huge mountain of debt that comes due in one 4trillion dollar swoop, it is an already accounted for part of the federal debt, and it will be paid out slowly to finance the boomer retirement, until the demographics return the account to a surplus as the boomers (alas that's me) fade away.
Starfury
(860 posts)Inasmuch as any fund or account (including your bank account) can be said to have money in it.
How Social Security Trust Funds earn interest
OAS & DI Assets
OAS & DI Trust Funds Receipts
The SS Trust Fund earned over $114 billion in interest last year, for example.
dmr
(28,705 posts)many don't believe me. 
That pre-funding is a hell of a lot of money.
I remember it well, & I never complained about the increase because I knew I am a part of a large generation that would have a huge impact once we reached retirement age. It angers me today that there are those who want to renege on the American people regarding this benefit that we paid into without complaint.
I collect SS now & am on Medicare. I want these benefits to be available for all generations to come. It's a promise we all make to each other; one we pay into; one that is excellently managed, and one that should be left alone.
sabrina 1
(62,325 posts)decades long propaganda about SS. We have relied on politicians to do it, but they have failed obviously since so many still believe it.
I am encouraged though that more and more people do seem to realize that is a lie.
It would be a huge betrayal of the people if SS is not removed from these discussions and now is the time to deliver the message to Republicans, very, very publicly.
The media helps perpetuate the lie also. Maybe it's time to launch a huge campaign to set the record straight once and for all. Because obviously it is up to the people now.
dmr
(28,705 posts)I'm in to add my voice. 
AnotherMcIntosh
(11,064 posts)Samantha
(9,314 posts)"If anyone tells you Social Security is broke, don't believe it." He is also working to get other Senators to back him up.
The Republicans are just using a down economy to get Social Security privatized so that their "friends" can gain access to all those automatic deposits. Wall Street has wanted this money for decades, and now the Republicans are trying to weave Social Security into the deficit issue when it actually has no business in that debate whatsoever. It is not broke, it has a 2.6 Trust Fund built up since that 1982 or 1983 agreement, babyboomers have prepaid their retirement, and there is also a Medicare Trust Fund. Funny, we never hear anything about that, do we?
Sam
AnotherMcIntosh
(11,064 posts)Please tell me that none are 3rd-wayers.
Samantha
(9,314 posts)Some really well-known businessmen, such as the Koch Brothers, absolutely do not want to pay a FICA tax. They want these "entitlement" programs abolished. And the Repubicans are carrying their water for them.
Sam
sabrina 1
(62,325 posts)set up Think Tanks eg who constantly wrote 'thoughtful' articles pushing the lies about SS.
Why don't Democrats have Think Tanks?
We could ask organizations like Moveon who are now joining the Unions and several other Progressive organizations and SS advocacy Groups, to launch a campaign of ads in major News media explaining how SS is a separate fund from the Fed Govt. How the Govt borrowed from the fund, making the American People creditors of the Fed Govt like China eg.
We do not blame China for contributing to the deficit because they didn't. The Fed Govt borrows from other creditors and we the American People are just one of their creditors. Creditors do not cause people to get to the point where they need to borrow to pay for things like Wars and Tax Cuts for the Wealthy. They do loan money which has to be paid back when someone asks them if that someone is trustworthy enough to be sure they will pay it back. So far, the US Govt has been able to borrow, but if they default on the American People, that will be the end of them borrowing from anyone else.
And SS/The American People's Fund, China, Japan are all creditors of the US Govt, but none of them created the deficit. Unnecessary wars and tax cuts for the wealthy added to the deficit because we really couldn't afford them and borrowed to be able to do so.
aggiesal
(10,777 posts)There was a reason for this.
Currently we are the only generation funding OUR retirement and OUR PARENTS retirement.
You see, Social Security was extremely underfunded by the time the Baby-Boomers were set to retire.
Reagan of all people saw this, and passed a law that raising the maximum amount. At that time it was
only around $53K (I think), while today its around $108K.
Doing this saved Social Security for all of us.
There is enough money in Social Security to pay 100% till 2042(?), and then it pays out about 75%
after that. If we raise the limit from $108K to unlimited, Social Security would be funded for everyone
forever (And you know Republicans won't let us have that!!!)
As far as the SS Trust fund, the gov't bought gov't bonds with the SS funds. Every month the gov't
cashes in some of those bonds to cover the shortfall we are currently experiencing. But, this was planned.
We knew that around 2010, that SS would be paying out more then it was taking in. It will be this was
until 2042(?) when the surplus finally runs out. That's why SS will only cover around 75% after that,
unless the rules are changed.
OnlinePoker
(6,126 posts)Last edited Thu Nov 15, 2012, 06:57 PM - Edit history (1)
After that, only 3/4 of the money going out will come from contributions. The rest has to come from taxpayers. The Disability Insurance portion of the fund is in worse shape, projected to run out of funds in 2016.
http://www.ssa.gov/OACT/TRSUM/index.html
PETRUS
(3,678 posts)And even that represents higher benefits than we're paying today (due to cost of living increases). Further, the tax increases necessary in order to pay out scheduled benefits in full are miniscule - about 5% of projected wage growth.
OnlinePoker
(6,126 posts)I don't know where I got that figure. This is what comes of too many nights of less than 4 hours sleep in a row...I don't see things clearly.
PETRUS
(3,678 posts)Lack of sleep sucks.
sabrina 1
(62,325 posts)three decades from now is to raise the cap on SS and increase employment, which hopefully will happen anyhow. The projections you made are based on the current economy and as anyone can see, even in a bad economy with high unemployment, SS has still had a surplus every year.
That is partly due to the fact that SS has two other sources of income, one being interest on the Treasury Bonds.
We are being lied to, outright lied to by John Boehner and Romney most recently, who shamelessly claim that SS is 'going broke' but considering who they work, no surprise.
What is also shameful is the lack of a clear statement from the Dem Leadership putting that lie to rest. I am waiting and hoping to hear such a statement and to finally see SS removed from any discussion of the Deficit since it had, has nothing to do with the deficit.
benld74
(10,284 posts)when he went on one of his rails against the Democrats. He stated his case and I calmly looked him in the eyes and said, "How can you be against the Democrats when it was the Republicans that raised your SS taxes AND are going to TAX you on them when you receive them."
Crickets,,,,,,,
former9thward
(33,424 posts)Congress, both House and Senate, were controlled by Democrats. Without that support no changes could have been made.
HiPointDem
(20,729 posts)from both parties.
http://www.ssa.gov/history/tally1983.html
it was a bipartisan love-fest, just like today. they always manage to compromise for things the ruling class likes.
you'll notice that three of our leading liberals, conyers, kennedy & gore, are recorded as 'not voting'. pffft. safe cowardly vote.
WillyT
(72,631 posts)
Jim__
(15,219 posts)
Dustlawyer
(10,539 posts)
Starry Messenger
(32,381 posts)
cer7711
(612 posts)Bravo!!!
:::applause-applause:::
ErikJ
(6,335 posts)And it will peak about $ trillion then by 2037 the surplus will be gone.
Wasnt the SS hike supposed to expire after 30 years or so? Since the boomer bulge will be going away?
Liberalynn
(7,549 posts)
limpyhobbler
(8,244 posts)Like others have said, Social Security does not contribute at all to the debt.
reformist2
(9,841 posts)In other words, the middle class put $3 trillion into the program and the rich essentially borrowed against it to fund their tax cuts. But let noone say the money was stolen. The SS fund has $3 trillion in bonds that are every bit as good as US Treasuries held by any billionaire anywhere in the world.
RepublicansRZombies
(982 posts)
Sherman A1
(38,958 posts)something I have been asking for a long time. SS was fixed for this generation in 1983, so I wonder just why we need to fix it again.
Teamster Jeff
(1,598 posts)
TBF
(36,595 posts)Starfury
(860 posts)I don't believe I've ever heard mentioned in these sorts of discussions, but not only is there currently a huge surplus, it earns interest. From How Social Security Trust Funds earn interest:
The rate of interest on special issues is determined by a formula enacted in 1960. The rate is determined at the end of each month and applies to new investments in the following month.
The average of the 12 monthly interest rates for 2010 was 2.760 percent. The effective interest rate (the average rate of return on all investments) for the OASI and DI Trust Funds, combined, was 4.6 percent in 2010. This higher effective rate resulted because the funds hold special-issue bonds acquired in past years when interest rates were higher.
I read elsewhere that the effective interest rate for 2011 was 4.4%. Not too shabby in the current investment climate...
sabrina 1
(62,325 posts)source of revenue for the SS and one of the reasons why even in this economy, with unemployment high, the SS fund still had a surplus over the past few years.
Live and Learn
(12,769 posts)
LongTomH
(8,636 posts)I need to be able to use this in arguments with my RW family!
nashville_brook
(20,958 posts)
Generic Other
(29,080 posts)or else.
Le Taz Hot
(22,271 posts)And one more thing. Beginning in the 1970's women started joining the workforce en masse which means that even MORE money was poured in SS.
HiPointDem
(20,729 posts)Live and Learn
(12,769 posts)No argument on this post, HiPoint. That was what we were told. We were paying our own way.
Agony
(2,605 posts)or do they inject it back into the economy by spending it on... oh say
food
housing
the grandkids
medicine
maybe even dinner out once a week
...
SS recipients are the real job creators.
We should be fighting to lower the retirement age not scrapping over how to hold the line...
pansypoo53219
(23,031 posts)of course he limited what COULD get FICA. fucking eliminate the cap + lower the tax! + index everything. the rich get NOTHING!. they can use their BOOTSTRAPS.
WCGreen
(45,558 posts)
Laelth
(32,017 posts)Gotta love him.
-Laelth