Good news, Social Security is not going broke!

[AngryAmish]

<http://krugman.blogs.nytimes.com/2008/03/25/look-and-feel-15-years-younger/>

"Look and feel 15 years younger!
The latest report of the Social Security Trustees is out. I think the key message is what has happened to the estimate of actuarial balance — the difference between projected outlays and projected revenues over the next 75 years. This is the thing that’s supposed to get steadily worse as time goes by, as the 75-year window contains ever fewer years in which the baby boomers are in the work force, paying payroll taxes, and ever more years when the boomers are out of the work force and collecting benefits.
In fact, however, the actuarial balance has been improving rather than worsening. It’s now better than it’s been since 1993. What this tells us is that projections made in the mid-to-late 1990s were, in the light of subsequent revisions, way too pessimistic.
Moral: Social Security’s financial problem is relatively minor. It doesn’t deserve the emphasis it receives from most pundits."

Now if we can only do something about Medicaid...

[Breeze54]

1. But last night they said that SS Medicaid was gone by 2019.. right in time for my retirement!

:shrug:

It changes everyday, doesn't it? :sarcasm:

On edit: Sarcasm tag added for those sarcasm challenged. ;)

[AngryAmish]

2. Medicaid is different than SS

SS ok

Medicare, medicaid, not so much.

[Breeze54]

6. "Social Security fix needed Treasury Secretary says program is 'financially unsustainable.'

Paulson: Social Security fix needed

http://money.cnn.com/2008/03/25/pf/soc_sec_trustees_report/?postversion=2008032517

Treasury Secretary says program is 'financially unsustainable.'

Trustee report says government will have to pay back what it owes starting in 2017.

By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: March 25, 2008: 5:43 PM EDT

NEW YORK (CNNMoney.com) -- Treasury Secretary Henry Paulson, saying that Social Security is "financially unsustainable," called Tuesday for quick action to keep the system strong and released a report detailing the program's funding shortfalls.

The federal government will have to start paying back what it owes the Social Security trust fund in 2017 so the program can continue paying 100% of benefits. By 2041, if the system is left unchanged, Social Security will only be able to pay out 78% of benefits promised to future retirees.

Those are two key estimates in the Social Security and Medicare trustees' 2008 annual report.

Shoring up Social Security is one of the main economic issues that will face the next president. Most proposals involve raising taxes or reducing benefits. Democrats typically have opposed benefit reductions while Republicans have opposed tax increases.

"This year's Social Security Report again demonstrates that the Social Security program is financially unsustainable and requires reform," Paulson said at a briefing. "The sooner we take action ... the less drastic needed changes will be."

more...

Live Hearing on C-Span I now... http://www.c-span.org/watch/cs_cspan_rm.asp?Cat=TV&Code=CS

[Greyhound]

4. No, it doesn't change, the source of the propaganda determines what is said.

Remove the cap and not only is it solvent for as long as it is practical to project, but would generate a surplus that can be used to help Medicaid and Medicare.

Wall Street will not rest until they get their hands on that $$$.

[Breeze54]

5. Ah, that's what I said. I forgot the sarcasm tag.

:eyes:

[Hannah Bell]

10. There's no need to remove the cap.

There is NO crisis. None, nada, zip.

For the last ten years, real performance has tracked the "low-cost" forecast, not the "intermediate" forecast (the source of all the scary numbers).

The low-cost forecast has SS cruising forever, paying out scheduled benefits without even drawing on the Trust Fund.

[Peanut Butter]

3. The Republicans Wasred Precious Time aka Global Warming

I don't expect ANYTHING good to come out of Washington DC until
we have a Democrat with a larger majority.

I have my preference but I will vote for either.
Even a bad Democrat is better than a fascist nut case Republican :)

[Warpy]

7. Fright wingers have been screeching about

social security's imminent demise since the program was first proposed in the 1930s. My dad, who died 2 years ago at 89, told me he'd heard all the same stupid arguments when he was a lad and why the GOP was full of shit, even though he voted for them every 4 years.

Social security is an insurance program, designed to be pay as you go. The only crisis it's facing is the fact that Congress won't be able to rob half the premium payments to fudge the books on what reckless GOP tax cuts have done to the budget.

Remember, social security is our program. The rich hate it because they don't need the pittance it gives them and think that what we pay into it should just be added to our income taxes and we should go back to the retirement system of the 1920s--live with your children or starve.

[liberal N proud]

8. The Social Security going broke story is just another right wing fear mongering

attack on Americans

[Igel]

9. The usual.

Look at a measure that doesn't mean much to say there's no problem. I'll quote from the report at http://www.ssa.gov/OACT/TR/TR08/II_project.html#105057 .

"The year-by-year relationship between income and cost rates shown in figure II.D2 illustrates the expected pattern of cash flows for the OASDI program over the full 75-year period. Under the intermediate assumptions, the OASDI cost rate is projected to increase rapidly and first exceed the income rate in 2017, producing cash-flow deficits thereafter. Redemption of trust fund assets will allow continuation of full benefit payments on a timely basis until 2041, when the trust funds are projected to become exhausted. This redemp­tion process will require a flow of cash from the General Fund of the Trea­sury. Pressures on the Federal Budget will thus emerge well before 2041. Even if a trust fund’s assets are exhausted, however, tax income will con­tinue to flow into the fund. Present tax rates are projected to be sufficient to pay 78 percent of scheduled benefits after trust fund exhaustion in 2041 and 75 percent of scheduled benefits in 2082."

Key word: "cash-flow deficits." They'll have to redeem trust fund assets. Then, in 2041, the trust fund runs out--later than previous projections.


"The balance of the combined trust funds peaks at $2.7 trillion in 2017 (in present value) and then turns downward. This cumu­lative amount continues to be positive, indicating trust fund assets, or reserves, through 2040. However, after 2040 this cumulative amount becomes negative, indicating a net unfunded obligation. Through the end of 2082, the combined funds have a present-value unfunded obligation of $4.3 trillion. This unfunded obligation represents 1.6 percent of future tax­able payroll and 0.6 percent of future GDP, through the end of the 75-year projection period."

In other words, from 2017 to 2040 (note that it'll probably be a few years after 2040) $2.7 trillion will come from general governmental funds. That's $113 billion a year on average, under current projections, that'll be added to what the Congress has to apportion. It won't be averaged though, so there will be "Pressures on the Federal Budget will thus emerge well before 2041." At that point they'll have to decide to cut benefits smoothly (until they reach 78% or so) or just wait until 2041 and have a sudden cut-off. Or decide to raise taxes to cover the difference--keeping in mind that when that happens, the ratio of people paying/people receiving will not be all that favorable; any increase can happen smoothly and incrementally--and if done early enough, be kept low--or it can happen right at the end.

Increasing FICA now won't make much of a difference unless the excess is put in non-governmental securities (which will do two things, probably both bad: it'll place the money at risk, since financial securities are almost always risky; it'll make the government a shareholder, and place pressure on the government to get involved in stockholder issues). The best thing would be to dispose of the general fund deficit and work to pay down the national debt, while not increasing taxes so much that it costs either prosperity or money. (One analysis rather nicely showed that the top 1-5% of wage earners from about 1970 to the present paid just about the same percentage of their income in federal taxes in any given year--something to note. Simplifying quite a bit, when tax rates are high, they seek out more shelters; when rates are lower, they seek out shelters less.)

[Hannah Bell]

11. But the "intermediate forecast" those dire predictions are based on

is wrong every year. REAL economic performance has more closely tracked the LOW-COST forecast over the last ten years.

The low-cost forecast predicts: SS will pay out scheduled benefits forever, without drawing down the TF.

GIGO: If the assumptions you use to make your forecast is garbage, your forecast is also. Among the assumptions the Trustees build into their intermediate forecast: 75 years of Depression-era growth, & a collapse in immigration.

The intermediate forecast is cooked to keep crisis ever-looming over the horizon.

There's no crisis.

[Pharaoh]

12. Isn't the problem

that the Government has all these IOU'S to SS..............

(meaning they've been spending it for other things all along)

But The Government is (us) Broke ..............