The money from the payroll taxes is suppose to go into a "trust fund"...

[WCGreen]

But what happened in the sixties as the income tax rates for the top brackets started to drop, the political figures realized they could expand spending and cut taxes because the treasury could borrow the mounting surplus in the SS Trust Fund.

In fact, the only place the extra money collected each year by SS can go is to be borrowed by the US Government.

This was done to supposedly protect the money in the "trust fund" from being lost in market based investments.

The idea was that the IOU's from the Government in the "trust fund" would be payed back at a later date thru increased income taxes caused by the ever expanding economy.

Oppps!

What appears to have happened is the US political folks have realized, or planned, some might say, that the only way out of this debt was to default on the money owed to that trust fund.

So by "realigning" the way we dole out the money from the "trust fund" to the people who paid in to it, the political figures we have entrusted with our future, by voting for them, to act as fiduciaries of our "investment" in the future, think they can lower the money re-payed to that "trust fund" by rejiggering the way funds are distributed.

They also want to tax more of the money received as income so that part of the money paid out of the "trust fund" will come back to the treasury in the form of income tax.

Right now, the part of the tax on people who have taxable income of over $32k and also receive SS is actually supposed to flow back into the "trust fund".

I believe they want to have that money flow into the treasury and placed in the general fund.

Anyway, each time they go after the SS "trust fund", they are slowly eroding the trust we have in that fund as beneficiaries and so they want to portray that fund as depleted so that they can cancel the program and use that money to pay off the debt or, more likely, buy some more military toys or give it back to the rich in the form of off setting tax cuts.

That's the way I see it.

[lumberjack_jeff]

1. in 1974 the trust fund was only $46 billion, it was depleted to $25 billion in 1982.

In 77 and 78, the federal government paid $5 billion each year to redeem securities to the SSTF.

It wasn't a cash cow until 1983 and the Greenspan commission. They used the FICA tax hikes as cover to lower income tax rates.

[WCGreen]

6. The only reason I brought up the sixties is because that is when they

started in ernest to drop income ta rates on the top earners.

They knew based on projections that the outflow from the trust fund would not be a problem as long as the economy kept humming along.

[CaliforniaPeggy]

2. It IS complicated.

But they sure as hell are eroding our trust in it, and in their stewardship of it.

Of course, they want us to trust them...so they can continue to fool us.

They don't think we'll catch on.

They must be stopped.

I have less and less confidence that we can. I'm not worried for myself, or my generation, but for my kids and grandkids.

Recommended.

[sad sally]

3. How about these "intragovernmental" bonds? More ponzi schemes?

Besides Treasury bills, much of the rest of the U.S. debt is held in Treasury notes, which mature in terms of 2 to 10 years; Treasury Inflation-Protected Securities (TIPS), which mature in terms of 5, 10 and 30 years; and Treasury bonds, which mature in terms of 30 years.

Most of the remainder is in the form of 'intragovernmental' bonds that the Treasury has given to others parts of the government - like Social Security - as 'I.O.U.s' after raiding their accounts.

Read more: http://www.dailymail.co.uk/news/article-1394315/China-unloads-97-cent-short-term-U-S-Treasury-debt-owns-1-2TRILLION-American-deficit.html#ixzz1RlncuFmI?du

[girl gone mad]

4. We're not on a gold standard anymore.

Some days I feel like the beer and travel money guy, but I think it's important for all people to understand how our monetary system functions.

A sovereign government doesn't need to save in its own currency so the idea that anything other than bonds should be held in the Trust Fund is nonsensical. Saving is an act performed by households who are financially constrained and therefore must consume less in the short term in order to be able to consume more later. A sovereign currency government never has to give up spending in the short term in order to acquire the capacity to spend more later.

There is some truth to what you are saying, but the government literally cannot default on any of its debt unless our politicians choose to do so. They may well be after the Social Security funds because they are wrongly concerned about deficits or because it suits their neoliberal agenda, but there is no true financial constraint involved.

[WCGreen]

5. The opbligation from the trust fund is to the people..

If they change the way money is distributed that means their is a better chance of "canceling" some of the debt owed to the trust fund by paying less out that anticipated.

I believe that is what they want to do.