Ron Paul-1st congressman to speak the truth about Soc. Sec.

[kuozzman]

I've been saying for months that the roughly $1.5 Trillion surplus doesn't exist and that the IOUs that are the surplus are worthless in the sense that the government will have to raise taxes (or borrow $2trillion like Chimp wants to do) in order to pay any benefits come 2018. The truth is-the government stole the surplus, literally. I've been attacked and even called a Republican(WTF???)for previous posts like this. For more specific info about this, check out my blog:
http://ignorantusa.tripod.com/socialsecurity/
or longer version(my website): http://ignorantusa.tripod.com/id19.html

Here's Ron Paul's most recent column. It supports everything I say, just like every annual CBO report and several other government documents, which I have links to on my blog/website.

Social Security reform promises to be the biggest domestic issue this year in Washington, but most of the proposals are nothing more than flim-flam. The only honest solution to the future insolvency of the program is for Congress to stop spending so much money. Unless Congress makes real cuts in spending-- and stops spending Social Security taxes on completely unrelated programs-- millions of Americans simply will not receive even a fraction of the money they paid into Social Security. Ignore the rhetoric about tax increases and cuts in benefits, as though you are to blame for the problem! All Social Security obligations could be met if Congress did not spend so much on other things.

In the 1930s, Social Security was presented to the American people as a social insurance program, with individuals paying a monthly “premium” in exchange for retirement benefits later. It was supposed to be a forced savings program, based on the assumption that some people would be unable or unwilling to save for their older years. Seven decades later, however, the ratio of younger working people to older retirees has changed dramatically, exposing the Ponzi-like congressional raid on the system itself. What has not changed, however, is our willingness to accept the notion that the government should force us to save for our older years

Notice that neither political party proposes letting people opt out of Social Security, which exposes the lie that your contributions are set aside and saved. After all, if your contributions really are put aside for your retirement, the money will be there earning interest, right? If your money is put away in a trust fund account with your name on it, what difference would it make if your neighbor chooses not to participate in the program?

The truth, of course, is that your contributions are not put aside. Social Security is simply a tax. Like all taxes, the money collected is spent immediately as general revenues to fund the federal government. The Social Security trust fund does not exist, and Social Security “surpluses” are nothing more than an accounting ledger showing that contributions exceeded benefits paid for a given calendar year-- not that the excess was put aside. Social Security benefits are paid each year from general funds, like other federal programs. Since these programs and overall spending keep increasing, the government can’t give up any sources of tax revenue. Allowing people to opt out of Social Security would force the federal government to admit it has been stealing money from Social Security for decades.

http://www.house.gov/paul/tst/tst2005/tst012405.htm

[Warpy]

1. Social security was robbed

to cover the devastating effects of tax cuts for the rich and corporations. That's the whole story, right there.

Those same entities will have to pay it back. That's how to preserve it.

That goes against the dogma of Stupid and of the DLC Democrats.

I'm afraid it's going to be up to us.

[kuozzman]

2. The theft started under Bush 41 and continued under Clinton

and peaked under Chimp.

[Freddie Stubbs]

14. It's been going on since the program started

The money was NEVER set aside.

[indepat]

34. Greenspan was an architect of refunding the SS system in early Reagan

days when budget deficits were beginning to mushroom in large part due to tax cuts. Surely the big-time raid on that mythical lockbox commenced early in the Reagan days. Let's never sell the Gipper short.

[Freddie Stubbs]

38. The money has been used for other purposes since the FDR administration

It has never been set aside, it has always been spent.

[indepat]

39. So true, but in earlier years both the base amount subject to payroll

taxes and the per cent of that base amount taxed were relatively small, so the raid on the mythical trust fund didn't get going like gangbusters until the Greenspan-inspired major refunding scheme was implemented in the early 1980s. At that time, a single taxpayer began sending Uncle Sam 35+% of each marginal dollar earned when his/her taxable income reached some $20,000 whereas the multi-million dollar athletes were sending Uncle only 28% of each marginal dollar. Now that poor schlock will have his SS benefits sharply reduced to pay for the tax cuts enjoyed by those highly-compensated athletes, et al, including corporate chieftans.

[LynnTheDem]

3. You've been called a Republican...so to dispute that, you cite a...

Republican.

Ok.

[papau]

12. LOL :-)

Never trust a GOPer to be really on your side!

:-)

[ProfessorGAC]

30. Yeah, And One Trick Pony, Ron Paul

Not a source i find terribly compelling.
The Professor

[Ganja Ninja]

4. The trust fund money is in the form of Treasury Bonds.

They are as good as any other Treasury Bond. How the Government comes up with the money to pay them off has no bearing on their legitimacy. The Government cannot just pick and choose which bonds they want to default on. If they default on any it would trigger a world wide economic disaster.
The real crisis for the GOP is that by 2018 projected payroll taxes will match SS payouts. After that the government will have to start paying the trust fund back. That means no Social Security funds to borrow from. Somehow the government will have to make up the difference either by increasing taxes or cutting programs.

[Johonny]

5. or

Cutting SS payouts so there is still money to steal.

[Ganja Ninja]

13. If Social Security is privatized it only brings the problem to a head

more quickly. I think the GOP would be just as happy if we raised the payroll tax. That way they could keep funding tax breaks for the rich by borrowing the money from the Social Security surplus. They would be happy as a pig in shit if the payroll tax just kept paying a surplus on into perpetuity. I think that's the real goal here.

[LynnTheDem]

6. The trust fund is good until 2052.

After that we're still good for 70% of benefits...which beats hell out of bush's plan to cut benies by 50% for men, and even more cut for women. Oh and borrowing $2-3 trillion to boot.

Who says 2018?

[Ganja Ninja]

16. The trust fund will last until 2052.

The payroll tax won't be providing a surplus after 2018. That's when the trust fund starts to pay out rather than build up. They are trying to portray 2018 as a crisis because they won't have to SS surplus funds to supplement the general fund like it has been for so long. That means they will have to come up with the funds to cover the general fund AND pay off the bonds in the SS trust fund. That's why I'm saying they don't want to privatize. They want to raise payroll taxes. So they can keep supporting the tax cuts for the wealthy and borrowing the funds from a SS surplus.

[LynnTheDem]

27. Ahhh gotcha!

Thanks; thought you were meaning the fund was out by 2018, lol!

[kuozzman]

17. In 2018, the government will have to start paying benefits

using the trust fund. In order to do that, they will need to either raise taxes or borrow money in order to pay the bonds. The trust fund is good until 2052 only in the sense that the govt. will have to raise taxes or borrow in order to fund it. THAT'S NOT RIGHT-THAT'S LIKE US PAYING THE SAME THING TWICE FOR NOTHING.

This is explained in the CBO’s annual report on the “Budget of the United States” annually, in some form or another. (2000 Report): These balances are available to finance future benefit payments and other trust fund expenditures--but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. From an economic standpoint, the Government is able to prefund benefits only by increasing saving and investment in the economy as a whole. (2003 Report): The Government’s responsibilities to make future payments for social insurance and certain other programs are not shown as liabilities according to Federal accounting standards; however, they are measured in other contexts.

[ferg]

32. not true, the trust fund isn't touched until 2028

Remember, the trust fund is invested in US treasuries. So it pays interest on those treasuries. Since the trust fund is now huge, the interest is also huge.

So Social Security has sufficient income from the payroll tax plus its investment income to have a surplus until 2028 (p 50 of the trustees reports). The trust fund increases until 2028.

[papau]

11. very true :-)

in 2018 they must borrow $18 B to redeem the Soc Sec Bonds that will be sent to Treasury, or theu must cut the budget so $18 raised by the FIT is available to redeem those bonds, or the FIT must be increased so that it can cover the cash needed.

The last option might be called the rich repaying the Soc Sec funds they stole to finance the tax cut for the rich.

[anarchy1999]

7. IMHO, Ron Paul is another national treasure/last of our statesmen.

There aren't many out there left like him. I honestly don't know how he keeps being re-elected, oh yeah, he runs as a "Republican".

[w4rma]

8. Remember that Al Gore ran on a platform that included the SS "lockbox"

to prevent SS taxes from being used for non-SS things. Ron Paul isn't saying anything new although he is the first Republican, that I know of, to be saying anything like this.

[kuozzman]

18. You'll love this, the GOP stole Gore's "lockbox" idea, click on this

link to my website and look at the third picture down of the GOP's SS "lockbox". Notice the sign on the podium "EVERY DOLLAR SAFE".
http://ignorantusa.tripod.com/id12.html

[w4rma]

31. Jeeze, Repugs are so untrustworthy. (nt)

[papau]

9. Not True - Paul's point is wrong. Gov Bonds are assets for all that lend

money to government.

And all these lenders expect to be paid.

The fact that the gov may have to raise taxes to pay off those bonds does not make those bonds worthless.

And Paul's "Allowing people to opt out of Social Security would force the federal government to admit it has been stealing money from Social Security for decades" just shows stupidity on Paul's part - Soc Sec is not an investment program - it is insurance - and it is fiscally sound and works. Someone should take Paul aside and teach him how insurance works. But he is correct in that the insurance prinicple between generations means the new generation may not opt out without causing the end of the fiscal soundness.

Besides the hit to taxes in 2018 is not the full $2 trillion plus that will be on the books at that time - The Trust must sell only 18 billion of bond assets in 2018.

What the hell is the big deal?

AARP suggests selling 15% of the Trust fund assets now and buying equities - and that may be an idea we both can agree on.

The problem is the deficit - it is not Social Security

Words have emotional meaning - and Dems must not fall for the words chosen by the GOP. Bonds musy be redeemed and will cause a need for cash - meaning new bonds or taxes. That is not the same as saying gov bonds are worthless - or gov bonds are worthles but only if owned by Soc Security (I would hate to tell China or Japan that the US Gov bonds they intend to redeem to pay the retirees in their own countries are worthless - could lead to an interesting discussion!) :-)

[kuozzman]

19. Do you not realize that what you are saying is that it's OK that

people are paying the same thing twice, but getting nothing more.

Once to create the surplus in the first place.

Then the government spent the surplus and replaced it with bonds.

Now when they raise taxes or borrow to be able to pay the bonds, we are paying the same thing once again.

THAT'S INSANITY!

:wtf:

[Ganja Ninja]

21. No your wrong.

It's not paying for the same thing twice. We paid into a fund then borrowed from the fund. That money went to pay for government expenses. Paying the money back is the responsibly of the American people. It's a debt we owe to ourselves.

[papau]

23. Not Insanity-the bills wre not covered by first FITtax - and the bond lets

the shortage on the first FIT tax hange and be paid later.

Nothing is paid twice.

What is bad is the payroll tax that hits the non-rich harder is used to let the rich avoid paying FIT..

The Social Security Surplus funds the tax cut for the rich.

Normally that means that when the bond is due, the FIT - meaning the tax that hits the rich the hardest - is raised - so that the rich repay the monies they "stole" from Soc Sec in order to fund their tax cut for the rich.

[Ganja Ninja]

20. Exactly! All the screaming about a crisis in 2018 is a lie.

The government has lots of assets they could use to pay back the trust fund. Just look at the real estate they own. Here in Tampa we have Macdill AFB which sits on the water right in the heart of Tampa. It's a huge piece of prime property. It could bring millions if not billions if it were developed. We can put an Air Force base anywhere. I'm sure there are examples like this all over the country.

[kuozzman]

22. The lie I'm talking about is not the one that they're talking about.

Nobody, except now Ron Paul, even speaks of the fact that the taxpayers will have to fund the bonds in the surplus in order for them to be redeemable.

[papau]

24. Of course bonds must be funded - you thought they were a free lunch?

The tax cut for the rich is not affordable.

We borrow to afford it.

We must pay back that borrowing.

It has nothing to do with Social Security.

[Ganja Ninja]

26. Government Bonds are a debt owed by the government.

The government is funded by the people. Nobody is going to pay those debts for us. Whether it's a re-payed by taxes on the rich or some other means it will have to be paid.

[indepat]

33. One question: how do you sell the non-negotionable bonds held in the SS

trust fund? The Repukes will likely assure that very little, if any, of those non-negotiable bonds are ever made good.

[elehhhhna]

10. The same bonds are paying for the Iraq occupation, and

that's happening NOW. There isn't any cash in a lockbox set aside for that. Maybe we could trim some spending from the World Domination Budget?

[w4rma]

15. Note, Ron Paul opposed the Republican leadership's invasion of Iraq (nt)

[durutti]

25. Though his principled opposition to the war is admirable, the fact is that

Paul is still a far-right loon, not too different from Buchanan.

[Strelnikov_]

28. Opting Out Of Social Security Is A Non-Starter

Most everyone would opt out, then society would still have to pay for the 50%+ that would not otherwise have adequate retirement funds.

I agree that the funds have been spent. We, through our government, have spent them. And the future generations will have to pay them back once the trust fund comes due. Because the majority of the populace is uninformed, or uninterested, in the debt transfer to future generations, the politicians have been able to get away with this.

As I interpret your post, you are making the point that the overall Federal deficit level is what threatens SS. Basically, this is Krugman's position, per a recent editorial, and I fully agree.

Which leads to the question of the $ 2 T Our Leader wants for 'reform'. If the politicians make the political decision not to honor the trust fund debt, what is to say they would honor the additional $2 T placed into the SS system. I have seen nothing that indicates that these 'personal' accounts will be any different than what we have now in the trust fund, an account backed by the full faith and credit of the United States.

If the government is broke, wouldn't they be inclined to simply reduce the debt by the amount in the personal accounts? Thus leaving us with another $2 T in debt for the next generations to pay off.

[hfojvt]

29. Ron Paul has a nice republican answer

Stop spending (on social services is his unstated premise), and a nice "governments can't be trusted" philosophy (so drown the damned thing in the bathtub already).
The reason we are facing a big deficit hole is because of the Bush tax rebate to the wealthy. I am just hazarding a guess, but did Paul by any chance vote FOR those tax cuts?
I am not impressed by Mr. Paul or his Republican spin points (the trust fund is imaginary, so let's not pay it back). That is how his rhetoric sounds to me. The trust fund has been borrowed by the government - got that - borrowed. Calling it imaginary is just the first step to saying: "it is not going to be paid back." Sure that will mean the younger generation will pay more taxes, but tough noogies. It is the social contract. You pay the debt that is owed to my generation and someday you may get to retire and sponge off the next generation.

[cattleman22]

35. RE: screwing the next generation

""Sure that will mean the younger generation will pay more taxes, but tough noogies. It is the social contract. You pay the debt that is owed to my generation and someday you may get to retire and sponge off the next generation.""


You sound like a Repuiblican tyring to screw one group of people so that you can help people ofyour own kind.

The biggest problem I have with SS is that it depends on an ever increasing population. People retiring now had to pay for 1/16th of a a retired person's payment. People of my generation will have to pay for 1/2 of a retired person's payment. It is pathetic that anyone would claim that is fair.

[hfojvt]

36. It seems to me like a screw or be screwed question

Especially as long as the Republicans push for the wealthy and non-workers to be untaxed.
What is the alternative? For my g-g-generation to have paid a huge regressive tax and then get nothing? To hell with that.
Also, increasing incomes and smaller families mean that future generations will be supporting fewer people on higher incomes than any generation in history. They can afford to pay higher taxes just like we did.
Still, is it really a tax increase if we return to pre-2000 levels which clearly should never have been cut in the first place?

[rowire]

37. The S Is Going to Hit the Fan

This sounds huge. If this is actually the case, which it appears to be, where are we going to get the money to run SS. If we borrow the money to run SS, where are we going to sell $1.5 trillion in bonds?