Why can't The People have a class action suit against The Government to repay $$ 'borrowed' from SS?

[cyberpj]

It's my understanding the SS Trust Fund has been raided since the 80's and they need to repay the $2.6 trillion that Congress has borrowed for many years now.

And wouldn't it be embarrassing for the Republicans if Democrats exposed the fact that the $2.6 trillion borrowed from Social Security is the same amount the Bush tax cuts have cost over the past 10 years.

Can't we sue them to get it back?

And if we can't sue the government - we should at least keep firing this information into the argument for all those that aren't aware of it.

[midnight]

1. This is interesting....

[sinkingfeeling]

2. Because the government replaced the cash with Treasury bonds and so far they haven't defaulted on

those bonds.

[cyberpj]

6. So when they say SS will run out at some point, are they including future bond cash due? nt

[Jim Lane]

9. Yes.

The 1983 FICA tax increase was designed to build a surplus. For years, Social Security's receipts exceeded expenditures. That's how the Social Security Trust Fund was built up.

When Bush was advocating privatization, he was pushing this "Social Security bankruptcy" idea. It was based on projections that, sometime in the 2020's, the system's annual surplus would turn into an annual deficit. At that point, continued payment of full benefits would require the Social Security Administration to begin redeeming the bonds that were in the Social Security Trust Fund. The bonds would be completely redeemed, and the Trust Fund exhausted, sometime in the 2040's. At that point, the system's current receipts from FICA taxes would be adequate to pay only about 75% of benefits.

The projection Bush favored were criticized as being based on unreasonably pessimistic assumptions about long-term economic growth. As it turned out, the projections were too optimistic in the short term, not having included the Bush recession. For the long term, the uncertainty is, necessarily, even greater. It's possible that the Trust Fund will never be exhausted.

[jtown1123]

10. They don't mean SS will run out, just the surplus.

[sad sally]

14. Another wool pulled over the eyes. These aren't protected bonds.

See the story linked below about bonds. These are "intragovernmental" bonds - IOU's. The government can't sell the IOUs because they're not marketable - they have no cash value. The IOUs simply represent a debt of one branch of the government (the Treasury Department) to another branch of government (Social Security). They cancel each other out.

Chimpy Bush was right when he took a trip to the basement of the treasury department, opened the drawers and said there wasn't any money. Just IOU's. So who's been snookered? Us! The federal government, under the leadership of both Democratic and Republican administrations, has looted the Social Security system.

www.dailymail.co.uk/news/article-1394315/China-unloads-97-cent-short-term-U-S-Treasury-debt-owns-1-2TRILLION-American-deficit.html#ixzz1Sm6P3BIK?du

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.

[econoclast]

15. nothing was "raided"

The program has difficulties enough without the "SS was raided" canard.

The program was DESIGNED THIS WAY back in the thirties. Surpluses - BY LAW - have to be invested in special issue (non marketable ) US Treasuries. That's how the program was designed. That's how it works. Nobody "raided" the SS Trust Fund.
You can look it up.

[sad sally]

17. Do you think Senator Moynihan's anger in 1990 over this "raid" was unfounded?

6) In 1990, Senator Daniel Patrick Moynihan of New York, a member of the Greenspan Commission, and one of the strongest advocates the the 1983 legislation, became outraged when he learned that first Reagan, and then President George H.W. Bush used the surplus Social Security revenue to pay for other government programs instead of saving and investing it for the baby boomers. Moynihan locked horns with President Bush and proposed repealing the 1983 payroll tax hike. Moynihan’s view was that if the government could not keep its hands out of the Social Security cookie jar, the cookie jar should be emptied, so there would be no surplus Social Security revenue for the government to loot. President Bush would have no part of repealing the payroll tax hike. The “read-my-lips-no-new-taxes” president was not about to give up his huge slush fund.

-snip

President Obama is the fifth president to participate in the great Social Security scam, but he has the dubious distinction of being the president, on whose watch, the Social Security time bomb, activated 25 years ago by President Reagan, will run out of time. All of the previous administrations knew that spending Social Security revenue, as if it were general revenue, was wrong and was a violation of both federal law and the public trust. But, they all had the luxury of knowing that the raided Social Security money would not be needed to pay benefits while they were still in office. However, President Obama learned early in his presidency that, unless the government ended the raiding and began repaying the money that had already been raided, Social Security would face a major financial crisis during his presidency.

http://ampedstatus.org/how-your-social-security-money-was-stolen-where-did-the-2-5-trillion-surplus-go/#oba?du

[econoclast]

18. Moynihan & SS. A delicate topic on DU I think

Moynihan is a Democratic Legend
So some of his SS ideal may be grating on DU

In 1990 the SS Trust fund was still "on budget". (I was incorrect in earlier posts when I said the "on budget" thing started with LBJ and ended in the late 1980s. It didn't get put back "off budget" until the early 1990s ... During Bush 1 )

So Moynihan's ire in 1990 was directed at the "on budget" accounting. They called it the unified budget. With the SS surplus "on budget" SS surpluses DID reduce the stated budget deficit.

Moynihan desperately wanted that money Saved fir the beneficiaries. But there the argument gets kind'a circular.

We have to invest the surplus for the future
Ok. Invest in what? Something very safe. Ok. What is the safest thing there is? US Treasuries! What happens when you buy Treasuries? The federal government gets General Revenue! You are right back where you started.

Which us why Moynihan advocated some ideas that might not be DU appropriate.
1. Supported ditching CPI for COLA and using chained CPI. (sound familiar?)
2. Supported cutting SS taxes 2% across the board and letting people invest those proceeds in tax defered private accounts (yikes-privatization?!?!?)
This would cut into the SS surplus but that was OK by Moynihan because it only ended up in the General Revenue bucket anyhow. ( note not because it was "raided" but because that is where the money from selling Treasuries goes)

Like I said. Delicate issues here at DU

[sad sally]

19. But the social security surplus hasn't been invested in US Treasuries.

The intragovernmental bonds aren't the same as other treasury instruments. If they were, then we wouldn't have any worries as to where the surplus went and if it will be replaced.

From the AmpedStatus report and validated by Clinton administration in his 2000 budget.


The Social Security surplus revenue should have been saved and invested in public-issue, marketable Treasury bonds. These bonds are “good as gold” and default-proof. They are the kind of U.S. Treasury bonds that are owned by China and Japan, Bill Gates, pension funds, and every other serious investor that owns Treasuries. If the Social Security surplus had been invested in public-issue marketable Treasury bonds, as it could have been, and should have been, Barbara Kennelly would be correct in saying that the Social Security holdings are “as solid as what we owe China and Japan.” Unfortunately not a single dollar of the surplus Social Security revenue was saved or invested in anything. It was all spent, and, once money is spent, there is nothing left to invest.

The government cannot, and will not, ever default on any of its public issue, marketable Treasury bonds because of the panic it would create in world markets and the damage it would do to the nation’s worldwide credibility. But Congress has the legal authority to default on its debt to Social Security, and, if it should do so, the outside world would probably view it primarily as an internal matter between the United States Government and its citizens. One of the least known facts about Social Security is that, although the government does have a moral obligation to pay Social Security benefits to those who have earned them, the government does not have a legal obligation to do so.

In a 1960 ruling by the United States Supreme Court, the court ruled that nobody has a “contractual earned right“ to Social Security benefits. Section 1104 of the 1935 Social Security Act specifically states, “The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.” According to the above strong language, Congress could do whatever it wanted to do with regard to changing or even eliminating Social Security.

[econoclast]

22. SS surpluses are in special issue Treasuries

The only difference between these and garden variety Treasuries is that they are non-marketable. That is the SS administrators can't just call Merrill Lynch or Citi or whomever and sell them in the market. To turn them into cash they have to be redeemed directly by the treasury. And if held to maturity there is no difference whatever between the two kinds of securities.

True, if the securities in the SSTF were marketable then SS would not be dragged into the current debt ceiling debate because to raise the needed cash to meet the August payments the SS trustees could sell some in the market. This would not impact the debt ceiling. As it stands, the non marketable securities have to be redeemed thru the Treasury. If they don't have ample cash on hand then the Treasury would have to borrow additional finds on the market which runs afoul of the dent ceiling.

But regarding whether or not garden variety Marketable US Treasuries would eliminate the government spending the money .... No. When SS has a surplus it is by law invested in some kind if US treasuries. Regardless of the type of USTreasury instrument the government sells the USTF.... The result is that the Trust fund gets a Treasury security and the federal government gets cash. That cash goes into the General revenue bucket. Which gets spent.

That's the way the program was originally designed.

[PoliticAverse]

3. It wasn't 'raided' in the sense that it is operating as designed...

It's operating exactly as Congress set it up to operate.

Ultimately Congress can do pretty much whatever it wants to Social Security, see:

http://www.ssa.gov/history/nestor.html

Also so far the Social Security trust fund has always been paid pack the money that
was borrowed whenever the trust fund needed the funds.

[Recursion]

4. Because it wasn't raided. SS is a red herring; even Ryan's plan didn't touch it

Social Security invests excess money in treasury bonds; that means it's been artificially cheap to borrow money for the past 30 years. The only sense in which Social Security is part of the debt problem is the fact that because the trust fund won't be buying bonds, it's going to be more expensive to borrow. The trust fund has treasury bonds which it will redeem over the course of the next few decades; in the worst case, we'll borrow money for that and wind up with the same amount of debt.

[sad sally]

20. Not treasury bonds that can be redeemed - they're intragovernmental

bonds, an IOU from one agency (Treasury) to another (Social Security).

The Social Security surplus revenue should have been saved and invested in public-issue, marketable Treasury bonds. These bonds are “good as gold” and default-proof. They are the kind of U.S. Treasury bonds that are owned by China and Japan, Bill Gates, pension funds, and every other serious investor that owns Treasuries. If the Social Security surplus had been invested in public-issue marketable Treasury bonds, as it could have been, and should have been, Barbara Kennelly would be correct in saying that the Social Security holdings are “as solid as what we owe China and Japan.” Unfortunately not a single dollar of the surplus Social Security revenue was saved or invested in anything. It was all spent, and, once money is spent, there is nothing left to invest.

The government cannot, and will not, ever default on any of its public issue, marketable Treasury bonds because of the panic it would create in world markets and the damage it would do to the nation’s worldwide credibility. But Congress has the legal authority to default on its debt to Social Security, and, if it should do so, the outside world would probably view it primarily as an internal matter between the United States Government and its citizens. One of the least known facts about Social Security is that, although the government does have a moral obligation to pay Social Security benefits to those who have earned them, the government does not have a legal obligation to do so.

[brooklynite]

5. You wouldn't have standing in Court...

...because you haven't been denied a promised payment. As for what the payment should be, you wouldn't have standing because the governing legislation allows adjustments to the amount paid out.

[metalbot]

7. What would you prefer they do with the money, rather than loaning it to the government?

If you put it in a bank account, you're loaning it to the bank. If you want to dump the money in a safe and not touch it until it's needed, then you'll need to drastically reduce benefits, since there will be absolutely no growth in the money that any individual puts in. Even at very low yields, treasury bonds do grow your money slightly. For someone who works from ages 16-66, there's 50 years of interest that their savings generates towards the government's ability to pay them back.

[econoclast]

8. No "raiding" was done. Except maybe by LBJ

Ok. Here is the history. Since the inception of SS in the thirties the rules have ALWAYS been thus :

SS tax receipts (box 4 on the W2) are used immediately by SS to pay current benefits.     A surplus exists if SS collects more in current taxes than it pays out in current benefits. 

SS is "off budget". The budget deficit does NOT include SS in any way. ( except perhaps the interest paid to the SSTF on their holdings of US Treasury securities ... I have to check that out ). But if the budget deficit is 500 billion dollars and SS has a 100 billion surplus, that does NOT reduce the deficit to 400 billion dollars. What it DOES do is reduce the amount of the 500 billion deficit that the government has to borrow IN THE MARKET. 

The deficit is 500billion, but they only haveto raise 400billion in the market. The rest comes from selling 100 billion to the SSTF. This is how it was designed. Really. You can go to the SS website and search for the official historian. They have one. There you can see for yourself that it has been like this sinse the 30's

So nobody "raided" anything.    The program is working as designed by FDR

FYI. For a period starting in the LBJ administration and ending in the Reagan administration SS WAS "on budget" and SS surpluses WERE put "on the budget" and any SS surplus did reduce the reported budget deficit. They called it the "unified budget". (There is a school of thought that thinks LBJ did this to hide the true cost of the Vietnam war.)   But that stopped in the 1980's and SS was again put "off budget". 

What about when SS itself has a deficit? IE SS takes in less in taxes than it pays out in benefits. I think this is the first year that will happen. Then, the process works in reverse.

Suppose the government budget deficit is 300 billion dollars. But suppose SS has to pay out 80 billion in benefits in excess of what they collected in taxes. Where do they get the money? They redeem 80 billion of their treasuries. Ok. Where does the treasury get the money from if the government already has a deficit. They borrow it in the market. So, the budget deficit is 300 billion but they have to go to the market to raise 380 billion dollars. 300 to finance that year's budget deficit and 80 to pay off SS

So, SS doesn't impact the budget deficit, but does impact how much the government has to raise in the market.

To turn the 2.4 trillion in assets in the SSTF into the cash needed to make future payments, those assets have to be redeemed. Which means that, since the government seems likely to continue running budget deficits, to get that cash the government will have to borrow an additional 2.4 trillion dollars in the market. That is an additional 2.4 trillion on top of what they need to borrow to cover the annual budget deficits.

So the question is....is there a limit to how much the US can borrow at reasonable interest rates?    Is the well bottomless?     And if it is not,    What will interest rates have to be to attract enough cash to meet our borrowing needs?

In a sense, the current crisis atmosphere around the world plays into our hands as it increases demand for Safe assets.    And nothing is safer than US treasuries.    So the "flight to quality" helps keep rates down and US borrowing costs relatively low.    

[sabrina 1]

11. The interest on the bonds is still being paid and no one has

said that if SS needs to cash in the bonds, they won't be able to.

What they are doing is lying to the people, claiming that SS will not be able to meet its obligations, which is NOT true so long as, if there is a shortfall, the bonds can be cashed in. They always leave that part out.

They want to do two things. Cut benefits in order to keep a surplus in the fund so they can use it for wars etc. And mostly they want to privatize SS so they can invest it in Wall St. although right now that is not going to be very popular.

The bottom line is there is no problem with SS, UNLESS the Govt says outright that are going to default on the Bonds and they cannot say that without scaring all the other creditors, like China.

Iow, we are being lied to.

I wish we could sue, maybe we should to force them to have to tell the truth if nothing else. Because the lies are absolutely infuriating and the media does nothing to correcgt them, nor does the Dem. Leadership. We know the Republicans won't do it.

[econoclast]

13. Cashing in the bonds .... Maybe easy breezy ... Maybe not

To turn the 2.4 trillion in assets in the SSTF into the cash needed to make future payments, those assets have to be redeemed. - They have to cash in the bonds - Which means that, since the government doesn't have 2.4 trillion in cash sitting around and seems likely to continue running budget deficits, to get that cash the government will have to borrow an additional 2.4 trillion dollars OUT IN THE MARKET. That is an additional 2.4 trillion on top of what they need to borrow to cover the annual budget deficits.

So the question is not one of having to default but rather ....is there a limit to how much the US can borrow at reasonable interest rates? Is the well bottomless? And if it is not, how high will rates have to be to attract enough cash to meet our borrowing needs?

[sabrina 1]

16. True, but that is the business of the borrowers, the Fed. Govt.

Those bonds, and not just the SS bonds, all US Treasury Bonds are backed by the full faith and credit of the US Govt. Therefore they have a huge responsibilty not be even giving the impression that we should no longer have faith in their ability to keep that promise, to all their Creditors, including the American people.

It is not that hard to fix. The debtors, the US Govt in this case, have assets. If they are having problems meeting their obligations, then THEY must start using those assets.

1) Create jobs and give no tax breaks to Corps that send jobs overseas.

2) Raise taxes on the wealthy, sorry there is no other way they have to pay their fair share. End the Bush tax cuts which cost over 2 trillion dollars and created no jobs

3) Raise the cap on SS taxes

4) End the wars and cut the Pentagon Budget in half if necessary. Also, investigate the huge amount waste and corruption in the Pentagon which alone could probably solve a lot of the Govt's problems.

Just doing those few things would solve the Fed. Govt's problems.

But to talk about cuts to SS? How would that do anything other than encourage them to borrow even more from the Fund, which would only increase the debt?

I don't know how to force Congress to quit lying to the people and to start doing their jobs, other throwing all those who won't, out of office.

[AngryAmish]

12. Short answer: Sovereign immunity. But that is not the real answer.

Real answer: The People spent the money. We got flu vaccines and bridges and MRE for the troops. Old people got their medical bills paid for and young people got cheaper student loans.

The farce is this: SS is a pay as you go system. WHen the President said he could not pay SS checks this farce was revealed. We lived high on the hog and now it is time to pay the fiddler, to mix some metaphors.

[Kaleva]

21. Supreme Court has already ruled it isn't our money and we have no rights to it.