Recession Puts a Major Strain On Social Security Trust Fund

[galileoreloaded]

Source: Washington Post

The U.S. recession is wreaking havoc on yet another front: the Social Security trust fund.

With unemployment rising, the payroll tax revenue that finances Social Security benefits for nearly 51 million retirees and other recipients is falling, according to a report from the Congressional Budget Office. As a result, the trust fund's annual surplus is forecast to all but vanish next year -- nearly a decade ahead of schedule -- and deprive the government of billions of dollars it had been counting on to help balance the nation's books.

While the new numbers will not affect payments to current Social Security recipients, experts say, the disappearing surplus could have considerable implications for the government's already grim financial situation.

The Treasury Department has for decades borrowed money from the Social Security trust fund to finance government operations. If it is no longer able to do so, it could be forced to borrow an additional $700 billion over the next decade from China, Japan and other investors. And at some point, perhaps as early as 2017, according to the CBO, the Treasury would have to start repaying the billions it has borrowed from the trust fund over the past 25 years, driving the nation further into debt or forcing Congress to raise taxes.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/30/AR2009033003291.html

[Autumn]

1. That's what happens when you raid

the piggy bank and just leave IOUs , and that is money they we paid into that fund.

[EFerrari]

2. I think it's even worse than that. That's also all the money undocumented workers

put in on fake SS#s that they knew they would never get back. And, the movement is very much in the other direction right now.

[Autumn]

3. Very true,

the only problem SS has is that these politicians have robbed it every chance they get. Al Gore was the only one responsible enough to want to lock it up.

[mbperrin]

4. First, we're talking about the current year's surplus - yes, that's right,

Social Security takes in much more money each year than it writes out, and has now for a couple of decades. The article says that this current surplus will all but disappear - that means it doesn't disappear.

If it disappears today, there is enough money in the trust surplus of nearly $3 trillion to pay full benefits until 2041.

Yes, 2041, 32 years from now, when the oldest baby boomers would be 95, more likely dead, and the youngest, 77, right at the edge of their life expectancy. How could this coincidence have happened, you ask?

Because it's no accident. In the early 80s, folks realized that baby boomers were actually getting older, just like everyone else - imagine!

And so we doubled our SS tax on ourselves to handle just this event.

So be afraid of Reds, duck and cover, remember the Alamo, don't let the terrorists win, and now, watch out for those Mexican drug lords hiding under every bed.

But don't worry about Social Security - the same fine folks that have melted the global economy due to their overwhelming greed and total lack of humanity just haven't been able to steal it. Yet.

Make serious efforts to steal it, and see how much energy this old boomer still has, and 77 million more with me.

[galileoreloaded]

9. The way I read it though..

is that shrinking revenues are compelling the gov. to borrow more, thereby requiring more and more of the yearly cash receipts to cover debt service.

Project that on our current heading, or exponentially, and the government is rapidly losing it's ability to fund daily operations....

Good post.

[mbperrin]

10. You're absolutely right, of course. Never could understand how anyone

(even a government) could take a pay cut and vastly increase spending indefinitely.

Wait! Turns out deficits DO matter!

[Igel]

11. You make no sense.

The problem is that the trust fund is full of IOUs. Yes, those are assets, but they're IOUs. In order to be used by the SSA, they have to be converted to cash.

You're left with a bunch of IOUs from Congress to an agency under Congress' jurisdiction. Congress can pay it out of the budget surplus, I guess. Oh, wait, there is no budget surplus.

But let's say the debt has to be paid back by Congress. They can do this in one of several ways: Increase the deficit and the national debt to pay for it; they can increase taxes; they can cut other spending in the budget. Those are the choices. Note the palpable paucity of politically palatable options.

Keep in mind they don't *have* to pay back the debt. There'd be a political price to pay, of course, but they could wipe out the debt with a very simple act of Congress (since it's debt owed by Congress to itself). Or they could simply increase FICA taxes (or reduce benefits). Still sucky alteratives.

Did I miss one? Remember to start with the important first step: The Social Security Trust Fund is stuffed with IOUs issued by Congress, so the *only* source of money will be through Congress.

[CatholicEdHead]

5. We never had Gore's Lock Bock with 8 years of W

[NashVegas]

6. Fuck You

Fuck you fuck you you fucking fucks.

[nc4bo]

7. Good god. Anything to do with SS should forever be untouchable.

But oh nooooooo, the greedy fuckers just couldn't leave the money great social safety net of society just sitting there collecting dust now could it?

Rob Peter to pay Paul and when we've exhausted that route, we go begging to the debil and sell our souls.

Will China be willing to make a few more deals with us and at what price?

:mad:

[harmonicon]

8. oh no! not taxes!!

boo-hoo-hoo. Tax the rich, you slimy fuckers!