SS Funds In Simple Terms

[BeFree]

SS has collected, over the years, about $2.5 trillion more than has been paid out. That money could not just sit in a bank somewhere, I suppose, so it lent it to the feds via treasury bond. Lord knows the deficit ridden govt. needed the money.

So, the SS reserves were lent to the US govt.

The government has spent the reserves (and more) which they borrowed via the bonds. The govt. sells bonds all the time, and each time that increased debt adds to the deficit.

The SS is not causing the deficit, the selling of bonds in general IS causing the deficit. And the selling (lending) of the 2.5 trillion in bonds to the SS is a part of the deficit.

When the SS needs extra money it redeems some bonds. So the govt., in order to pay back SS has to sell other bonds to say, China, which further increases the debt and adds to the deficit.

If for some reason SS needed a trillion, the govt. would have to sell an EXTRA trillion in bonds, to say, China, or Japan, or whoever, because the govt. is broke.

That is the only way SS can tap the SS reserves.

[liberal N proud]

1. Borrowed with no intention of ever paying it back

Still Social Security turns surplus.

Those of us working today are paying the Social Security benefits of those who are receiving today. When we are retired, there should be younger workers paying our benefits.

One of the myths of the right is they will never see the money they put it, this is why they can say that. They ignore the fact above.

[customerserviceguy]

5. Like a Ponzi scheme

Social Security has stayed afloat only because there is a larger group of contributors (the baby boomers) who saw their taxes jacked sky high under both Carter and Reagan to pay for the smaller generations before them.

Where's the larger generation behind the boomers who will pay them? It not only doesn't exist, it doesn't have the decent paying union jobs that at least many of the boomers had. It will be a retirement financed by burger flippers and Starbucks baristas.

[liberal N proud]

6. WOW?

[customerserviceguy]

7. What wows you

the fact that I compared SS to a Ponzi scheme, even though I didn't say it was one?

Tell me where I'm wrong on the math of the baby boom generation's effect on the solvency of the Social Security Administration over the course of the last 30 years or so. Tell me where I'm wrong on the baby bust that followed.

[texastoast]

8. So what if we remove the cap?

What do you think about that?

[customerserviceguy]

10. I say only partially

If you lift the cap, you lift the maximum Social Security benefit, the well-off get to grab even more of it for the few years they choose to keep working.

Here's a better idea: Lift the cap slowly and gradually on the worker's tax, let the sky be the limit on the employer's tax. No preciptuous rise in maximum benefits, and if stupid corporations want to pay some dimwit $10 million bucks to play golf, then they can finance some of the Social Security problem.

Also, where is it written in stone that employer and employee shares should be the same? Rate employers on profitability, and some could afford to pay 1, 2, or even 3 percent more than their employees are paying. Again, no raise in the earnings that would give rise to higher benefits, but a way to get more money into the system to shore it up.

[ipaint]

14. The boomers paid for both the older generation and part of our own.

As far as a retirement of flipping burgers, 25% of baby boomers have no retirement and 25% have inadequate funds for retirement.

Join the club.

[customerserviceguy]

19. I was referring to those who would be paying FICA taxes

as the burger flippers, and of course, you can't support a retiree with Social Security taxes from two low-paid jobs. However, it seems like these younger workers will indeed be joined by some older ones who will still have to work.

My plan is to perform some computer repair services on the side for my fellow baby boomer retirees who did a better job of planning for it than I did.

[NoNothing]

11. Social Security is not in surplus

As of this year. It was in the news, you must have missed it.

[ipaint]

16. Actually it was news in march, as of today it's not true. nt

[mikehiggins]

2. That seems to wrap it up pretty fairly.

The problem is that the Cat Food folks tell us that if we redeem those bonds we become a de facto part of the deficit because they will have to borrow money to pay back the money they borrowed (some might prefer the term "stole" but let's be nice)

In a sense that is correct but in another sense it is bull. The motivation for taking the SS funds in the first place was to fund government programs (like 2 unjustified wars and huge tax cuts mostly aimed at the rich) without having to raise taxes, and take the risk of folks waking up to the con game that was being foisted on them by the GOPuks and their Dino friends.

The taking of the SS funds ( which are made up of taxes paid by average Joes and Jills working at lower paid jobs) is probably a crime but since GW got a pass on starting two wars a little matter like 2.5 trillion dollars probably won't even show up on the radar.

[sandnsea]

3. Who pays the borrowed money

is the question.

Workers?

Or the rich?

[Raster]

4. It will be the workers, of course. The rich owns Congress.

[BeFree]

9. The kids

And maybe they should? We spent a ton of money on schools, roads, govt. buildings... the list goes on and on. They will get to use all those things.

Our generation did a hell of a lot and people in the US today have got it pretty damned easy. And we deserve it. If not us, now, then who, when? Here we are. We did this. Now it belongs to the kids. Here ya go, kids.

Sure, we screwed things up too, but this thread is about SS and spending.

Our generation borrowed massive amounts of money. More than has ever been borrowed before. Some of that was from SS, the rest from from rich people. Rich people buy bonds, because putting money in bonds is better, sometimes, than putting money in a bank.

Only thing is....the bonds the rich buy actually produce some interest, whereas SS bonds don't. Otherwise SS would be rolling in the dough, eh?

But paying yourself interest on money you borrow from yourself hasn't been invented yet. It may never be invented, for obvious reasons. So, SS funds don't collect interest, because it's all our money.

SS is the largest banking loan office, ever. SS money was handed out interest free, and payments back into SS are due, like, well, whenever.

In fact, SS was used as a great free ride for deficit mongers like Ronald Reagan, et al.

And now kids, it's all yours.

[iamtechus]

18. SS funds DO collect interest

The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

[BeFree]

20. Ok

So how much are the t-bills worth?

And why don't we turn those bonds into cash? And hand the SS back it's money?

[NoNothing]

13. It definitely is not a crime

Because that is how it is supposed to work, "motivation" never entered into it.

After all, what would YOU have them do with the money?

Ironically, Bush actually would have had them do something different, by diverting some of that money from purchasing government bonds to purchasing corporate stocks and bonds. Of any recent president, he was the closest to actually changing that arrangement.

[dkf]

12. Actually the SS bonds are not negotiable. They cannot be bought nor sold

And have no secondary market. They do not pay interest in cash but in more bonds. They do not mature. These are not normal US bonds

[BeFree]

15. I read that somewhere,

... and being as I never heard one iota of evidence to the contrary, I take that as being true. And it makes sense... like I wrote above, paying interest to yourself on money you lent yourself, will never happen.

We, the people, borrow our money from SS.

[dkf]

17. Linky.

http://iphone.cbsnews.com/site?t=IdrHX8K0XqbeM5Yz0AzwjA&sid=cbsnews_ip