Just curious, how much could Social Security costs be up after 2 year of no COLA

[ThomWV]

I started on Social Security a year and a half ago, so at the end of my first calendar year I got no raise, and I'll get no raise then coming year either. Only 2 years with no raise since 1975 and I hit both of them - the story of my life.

Social Security, we are told, is going broke as fast as Democrats can make it happen. I understand that there will be a surge of new entitlees as the "Baby Boomers" mature and file for their well-earned benefits, but that surge hasn't arrived yet. So if the outlays haven't changed and the tide of new applicants isn't at the door just yet, just how is Social Security going broke? It sure isn't raises they gave me that's breaking the system.

[madokie]

1. If I remember correctly the lie that SS is going broke is just that, bullshit

so anything after that is trash too.

[PSPS]

5. The M$M constantly propagandizes about social security

Just a day or two ago, the "reporter" was talking about how, even with no COLA this year, it would still "affect the federal deficit." This is a lie, of course, because social security is entirely self-financed, has trillions in surplus, and doesn't have a chance of running out of money for at least another 27 years (and even that can be avoided with very minor tweaks to the program without raising the retirement age.)

But I guess the M$M is drooling over all of that new advertising revenue if the program gets "privatized" (eliminated) as all right-wingers dream it will.

[valerief]

2. As long as the WAR BUDGET doesn't go broke, that's all that matters to America.

Well, that's all that matters to America's puppetmasters.

[RedG1]

3. in 2009 it was 5.8%...

so if you received $1,000 you would increase to $1,058

[Warpy]

4. There are a couple of things going on

First, the economy sucks warthog balls, to put it as politely as possible. That means fewer workers are out there with good jobs paying social security premiums. That means there is a real shortfall this year between money paid in and money going out.

Second, the dirty secret of the overpayments being safely tucked away in T-bills so that the Boomers will have their Social Security is now being exposed as what it was all along: a fraud. That money was looted long ago to line the pockets of the rich and the military and they really can't tap into it without threatening the whole international financial house of cards. They're stiffing us so they don't have to stiff China down the road if the economy doesn't improve, something that would ruin a lot of days for a lot of plutocrats. The plutocrats, of course, have a big stake in ensuring the economy doesn't improve because improving it would mean they'd have to start paying for it again.

Expect to see the CPI fudged and the newspapers full of bromides about how low inflation is in this paradise of countries as Social Security is frozen, probably for years, and even decreased.

Until people wake the hell up about what's happening to them, this is what will occur.

[mommalegga]

7. Umm, so you are saying the surplus is NOT in T-Bills?

(Thats not the case BTW)

Or are you saying that the T-Bills are worthless?

If they are worthless, better not tell the Chinese or the multitudes of other people who own them besides the SSA.



edited for typo

[Romulox]

8. The so-called surplus is not in T-bills. nt

[Statistical]

11. The surplus IS in Treasuries

They have the same weight as any other T-bill issued to any other creditor.
SSA is merely a creditor just like China, or Japan, or MetLife, or Joe SixPack.

On default on treasuries would utterly destroy faith in US dollar and US debts. The costs would likely be enough to destabilize the world economy and make the 2008-2010 recession look like a warmup act.

[Romulox]

12. Words have meaning. They are not negotiable Treasury Bills

They are more akin to I.O.U.s.

"They have the same weight as any other T-bill issued to any other creditor."

That's a meaningless statement, as the Social Security debt is not issued to any other creditor.

"SSA is merely a creditor just like China, or Japan, or MetLife, or Joe SixPack."

Nope. For the above reasons.

"On default on treasuries would utterly destroy faith in US dollar and US debts. "

Nonsense. The government could easily default on payments to seniors while paying every penny to China, Japan, Saudi, et al. The two issues are not logically connected.

[Statistical]

13. Such a default would be catastrophic and make the US a 3rd world nation almost overnight.

The idea that a default of trillions of treasury bonds would have no cost and result in no lack of coffidence in other creditors is naive (bordering of pure stupidity).

Like China or Japan or Joe Six pack seeing trillions in SSA obligations defaulted will say "I still trust my treasury bond. The bond backed ONLY by good faith and credit of US govt. The same US govt which just had the largest default in history of the world".

When China, Japan, and everyone's brother tries to get out of the ultra risky (and potentially worthless) junk bond formerly known as Treasury the face price will drop to pennies on the dollar and effective yield will be 20%, 30%, 80%. A bond holder has no legal remedy to collect on defaulted sovreign debt (you can't force a nation into bankruptcy court). Thus it is merely a promise. A promise is only as good as the word of the person making the promise. US "word" has been very good for last 80 years and we enjoy ultra low rates as a result. The US breaking its word ot other debt holders (namely SSA) would shake the confidence in that word. Every single T-bond holder in the world would be wondering if "they are next". If govt thinks it can default on SSA w/o reprocusions it may think the same thing about every other debt.

The credit rating and thus ability for US govt to borrow future debt will instantly be shutoff. The shockwave to US financial markets, and even govt ability to keep doors open (without simply printing untold trillions annihilation any remaining value in the dollar) will be staggering.

Short of starting a nuclear war there is likely nothing the US congress could do more damaging to the solvency of the US govt.

Not even the stupidest of tea partiers think SSA treasury bonds should be defaulted. Their stupid plans range from
a) reduce SS
b) privatize SS
c) return SS values to private accounts
d) allow future generations to opt out of SSA
e) minimize SS and supplement it w/ another private market program

Nobody anywhere in any portion of the political spectrum is advocating a default on SSA treasury bonds. It would be utterly catastrophic and benefit nobody. The idea that US govt is going to default on SSA bonds is looney toons. I me it ranks up w/ Obama is from Kenya nonsense.

:rofl:

[Romulox]

16. Nope. It's a fiction that these things are "Treasury Bonds" in the first place

Which is why the battle begins with semantics.

There is simply no logical connection between our domestic pension system and repayment to our Chinese masters, save the rather forced framing effort to link obligations to SS to those of T-bill investors.

"When China, Japan, and everyone's brother tries to get out of the ultra risky junk bond formerly known as Treasury "

Your wild scenarios exist (at least for the moment) in your head alone. There is simply no evidence, nor any logical connection, between funding for domestic retirement programs and international investment.

"Not even the stupidest of tea partiers think SSA treasury bonds should be defaulted. "

When an argument must be bolstered by invective such as "stupid...tea partiers", I think it becomes clear that the author is not himself convinced. You've simply not made the case that SS IOUs and real Treasury Bills are logically connected in the minds of foreign investors. :hi:

[Statistical]

20. there is no such thing as "real" and not-real treasuries (except in your head).

Treasuries are backed by nothing, nothing but a promise. There is no recourse, no do-over, no alternative way to get our money back.
If a country (any country) say fuck it pack sand then you do. You have no option, no recourse, no alternative. So a sovreign debt is only worth something because people believe/trust the sovreign will repay it.

Thus it is utterly illogical to think that poeople would watch the US default on one debt and think their debt is safe. Why? Because the US promised to repay it? The US promised to repay SSA also? Why would anyone watch the US default on one promise and "magically" think their promise is worth more or somehow stronger?

Say you and another guy each loan me $1000 each. Then I decide to stiff the other guy but I say "don't worry I PROMISE to pay you back in a couple years" that doesn't hold much water does it? Your telling me your confidence that I would repay you in full and ontime wouldn't go down hat I would pay you back. If so can I borrow $1000. I promise (wink wink) it will be the utter guy I stiff.

"When an argument must be bolstered by invective such as "stupid...tea partiers", I think it becomes clear that the author is not himself convinced."
Meh. You don't get it. Find me one credible person anywhere who thinks the US will default on SSA treasury bonds and that it will have no reprocussions for sovereign debt market. Nobody is advocating this. Nobody. Not republicans, not Democrats, not tea party idiots. Nobody. Anywhere in any branch of the govt. Hell nobody even overseas is saying this will happen or is likely to happen. Even people who want to plunder and steal SS aren't saying the govt will (or should) default on SSA rather the govt should keep the debt and they get the riches.

"You've simply not made the case that SS IOUs and real Treasury Bills are logically connected in the minds of foreign investors"
Back to this bogus "real" claim. What makes a "real" treasury real? Nothing. It is a paper promise from the govt to repay you. Period. There is nothing that makes it any stronger. If the US govt decides to repay you they will. If they decide not to repay you they won't. Lastly most of the Treasury debt isn't foreign it is domestic. You think the same Americans who just saw the govt default on them (in SSA bonds) will "magically" think these other T-bonds are somehow stronger? You think Moody & S&P and other rating agencies (which drive yield) will keep US at AAA after the largest default in the history of the world? Well US debt rating is single A it won't be carrying no 0% to 3% carrying cost.

[Romulox]

21. OK. But, as I started out saying, the SS surplus does not consist of T-Bills.

:shrug: :hi:

[Statistical]

22. Yes it does. Treasury obligations.

Most of US debt isn't T-bills but rather T-bonds anyways so you "distinction" is dubious.

The point is the issuer is the US and a default will be seen as a default.

Much in the same fashion that if you default on your home your other creditors will lower your credit and raise your interest rates.
They won't really care you "promise" than you are only going to default on your home and not your credit cards or auto loan, or revolving line of credit.

A default makes you a greater credit risk and creditors will demand higher interest and less favorable terms.

[Romulox]

23. LOL. Goalposts moved = argument conceded. The rest is conjecture. nt

[Warpy]

14. I'm saying they're worthless enough they don't want to start cashing them

in sufficiently large quantity because that would seriously alarm the Chinese and everybody else who holds them and cause a panic. They'll squeeze old people to death long before they risk that.

IOW, don't expect a COLA next year, either.

[GTurck]

6. It's COLA...

We too are on Social Security and have to live with the amount we got 2 years ago. Our only complaint is that Medicare costs are not frozen too. But the fact is that the flat economy means that COLA raises don't kick in; same with spouse's pension.
Non of this has anything to do with the viability of SS. If and when the economy starts to expand again and inflation, again, is a factor we will get COLA increases.

[Statistical]

9. Lack of COLA doesn't help or hurt SS (neither does high COLA)

In low inflation environment wages tend to deflate and thus less SS funds are collected so while less increases are paid revenue is growing slower also.
In high inflation environment wages tend to inflate also and thus more SS funds are collected so while more benefit increases are paid more revenue comes in providing an offset.

COLA/CPI-W is used to essentially "balance" SS while providing retirees a hedge against inflation. It was never designed to always go up each year nor is it designed for SS to ever be worth more. It is simply a hedge against inflation and also helps to balance receipts and expenses.

As for why did the nominal SS costs go up? Simple. More people. Many people who are eligible for early retirement but not full retirement yet put it off. That is until the economy tanked and they were out of work for 2 years. At that point "early" is better than nothing.

[mainer]

10. Aren't the first Boomers about to file for benefits?

Since they're about 62 now? That pig in the python is now showing its snout.

[Freddie Stubbs]

17. That began two years ago

The Baby Boom started in 1946, so the first of them turned 62 in 2008.

[jimbaird]

15. SS is as safe as anything else

Simple: neither SS, nor any other government program, can ever "go broke" - for a currency issuer in a floating exchange rate regime, the words have no meaning, since such an entity spends in one and only one way: by changing numbers in bank accounts. The federal government never "has" nor "doesn't have" money: it simply marks up numbers in a spreadsheet which it controls.

The only relevant issue is: will there, at any particular point in the future, be enough real goods and services to allow retirees to be supported at whatever level we decide to support them? If you look at the history of productivty improvements over the last century, along with the technologies that are in the pipeline (robotics, etc.), there's no reason to think there won't be. And (this is important) if there aren't, <i>no other method of supporting retirees will work either</i> - not stocks, not bonds, not "privatized accounts" - all are simply "ways to keep score", and distribute real resources. Retirees cannot subsist on Exxon shares, no matter how tasty they might be.

The whole "SS is going broke" think is a con, just like all the other deficit fear mongering. For an antidote, check out Warren Mosler's blog at http://moslereconomics.com

[Romulox]

18. Except that massive gains in productivity over the last 30 years have left Americans *poorer*

" If you look at the history of productivty improvements over the last century, along with the technologies that are in the pipeline (robotics, etc.), there's no reason to think there won't be."

The mere existence of resources isn't enough. It's how those resources are distributed that makes the difference. The massive increases in worker productivity in the last 30 years have resulted in greater inequality, lower wages, and, ultimately, a lessened ability of workers to contribute to SS. Contrary to your statement, there is absolutely no reason to believe that future increases in productivity will lead to a greater ability for workers to support seniors.

[jimbaird]

29. Inequality is not the issue

You are, unfortunately, missing the point. SS is a transfer mechanism - it is a way for the Federal government to move real goods and services from one group to another. You are talking about financial inequality, which I admit is a problem - but SS is one way to address it!

As long as the real resources are there - however they are distributed, or would be without SS effecting a transfer - the Federal government can use it's taxing and spending power to transfer them from one group to another. That is the real issue. Don't fall for the monetary illusion, which gives money (which is just a means of keeping score) with the real goods it can buy. The federal government, which controls the scoreboard, can - given the right kind of hands at the levers of power - change the score as it sees fit.

[karynnj]

19. Maybe more people collecting it - which is very likely the case

as there are very likely more newly old enough people than there are people on it dying. In addition, with the economy as it is there are likely people who planned to wait until 66 to collect it who are collecting the reduced amount at age 62 due to either losing assets they counted on or a job.

[JuniperLea]

24. At what rate has the cost of living increased in the past year?

Anyone?

[Individualist]

25. ...

Grocery prices have increased: http://www.hpj.com/archives/2001/05fooduppm.cfm

"Medical expenses have 'very steep rate of growth" http://www.usatoday.com/news/health/2010-02-04-health-care-costs_N.htm?csp=34&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+UsatodaycomWashington-TopStories+%28News+-+Washington+-+Top+Stories%29

My local power company has announced electric rates will increase 3-5% next month.

[Statistical]

26. As tracked by CPI-W it has increased by ~1.4%

CPI-W in August 2009 was 211.2
CPI-W in August 2010 was 214.2

214.2/211.2 = 1.014

One may ask then why isn't SS getting a 1.4% increase?

Simple CPI-W in August 2008 was 215.2.
When CPI-W declined to 211.2 in 2009 there was no COLA decrease. In essence a CPI-W of 215.2 is "baked in" to SS checks. When CPI-W exceeds 211.2 then SS will get a COLA increase equal to the difference. Say in August 2011 CPI-W is 217.5 then SS would get a COLA increase of 217.5 / 215.2 = 1.011 = 1.1% increase. That would take effect on Jan 1 2012.

* Technically it is a little more complicated SS uses 3 month average of the CPI-W values for July/Aug/Sep of each year compared to the previous year to compute COLA changes. This was 215.2 in 2008 and 211.0 in 2009. 2010 isn't complete yet (no data for Sep) but is likely to be in the range of ~214.

[JuniperLea]

27. Thanks, Statistical...

This is exactly what I was wondering about because it seems to me inflation has been fairly flat, or fluctuating only slightly. This may vary from area to area, state to state, but it would get way more complicated and pretty damned heated if all the variables were taken into consideration.

Most of us who are working didn't get a raise for a year or two either... it's like getting a cut in pay when prices go up. Gasoline hit us hard here in Cali, but we pay more anyway due to rigid clean air standards. It makes everything else go up too.

[Statistical]

28. Agreed in any evaluation of wealth, prosperity, income the only thing that matter is "real terms"

adjusted for inflation. Over any given period of time if your wage increases are not greater than inflation you are getting paid less in real terms.

The goal of SS is for benefits to never change (in real terms). While the nominal (face value) of the check may rise the buying power remains static. In real terms it is worth the same year to year.