Keep Your Fucking Hands Off My Social Security

[unhappycamper]

Social Security, until now a huge lender to the government, will begin demanding repaiment to its trust fund to cover the shortfall. If fully repaid, the trust fund can fully finance benefits until 2036, when people currently about 40 years old will begin to retire. Once the trust fund runs out, monthly benefits will decrease by about a quarter.



The debt fallout: How Social Security went ‘cash negative’ earlier than expected
By Lori Montgomery, Published: October 29

Last year, as a debate over the runaway national debt gathered steam in Washington, Social Security passed a treacherous milestone. It went “cash negative.”

For most of its 75-year history, the program had paid its own way through a dedicated stream of payroll taxes, even generating huge surpluses for the past two decades. But in 2010, under the strain of a recession that caused tax revenue to plummet, the cost of benefits outstripped tax collections for the first time since the early 1980s.

Now, Social Security is sucking money out of the Treasury. This year, it will add a projected $46 billion to the nation’s budget problems, according to projections by system trustees. Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits.

~snip~

Social Security is hardly the biggest drain on the budget. But unless Congress acts, its finances will continue to deteriorate as the rising tide of baby boomers begins claiming benefits. The $2.6 trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.



unhappycamper comment: If you sorry assholes had actually put my Social Security into a lockbox and kept your fucking hands out of the lockbox, we would not be having this discussion again. And again. And again.

[pinboy3niner]

1. K&R

[LARED]

2. What happened to

the lock box :sarcasm:

[Firebrand Gary]

3. I'm with you on this. K&R

I'd like to know who voted for legislation that borrowed from the SS trust? I'd bet its all of them.

[MannyGoldstein]

4. PS: the meme that Social Security will need to cut benefits in 25 years is bullshit

It's based on cooked figures showing US GDP growth slowing to 2.1%, and staying that way forever. We've never had a sustained growth rate anywhere near that low. Last year, which sucked, had a 2.1% growth rate.

Also, the current "shortfall" is not a shortfall at all. It's simply a portion of the interest payments due on the borrowed monies. The Social Security Trust Fund is continuing to grow, and is predicted to grow to over $4 trillion in the next decade or so.

Social Security's financial health is excellent.

See my sig for details.

This is purely a scam by the 1% to steal the $2.6 trillion in the Social Security Trust Fund.

[whathehell]

13. Agreed...Baby boomers and beyond need to HANG TOUGH on this. n/t

[woo me with science]

31. Excellent sig. Thank you. nt

[Hissyspit]

42. CEPR Responds: Washington Post Discards All Journalistic Standards In Attack on SS

http://www.cepr.net/index.php/blogs/beat-the-press/washington-post-discards-all-journalistic-standards-in-attack-on-social-security

Washington Post Discards All Journalistic Standards In Attack on Social Security

News outlets generally like to claim a separation between their editorial pages and their news pages. The Washington Post has long ignored this distinction in pursuing its agenda for cutting Social Security, however it took a big step further in tearing down this barrier with a lead front page story that would have been excluded from most opinion pages because of all the inaccuracies it contained.

The basic premise of the story, as expressed in the headline ("the debt fallout: how Social Security went 'cash negative' earlier than expected") and the first paragraph ("Last year, as a debate over the runaway national debt gathered steam in Washington, Social Security passed a treacherous milestone. It went 'cash negative.'") is that Social Security faces some sort of crisis because it is paying out more in benefits than it collects in taxes.

This "treacherous milestone" is entirely the Post's invention, it has absolutely nothing to do with the law that governs Social Security benefit payments. Under the law, as long as their is money in the trust fund, then Social Security is able to pay full benefiits. There is literally no other possible interpretation of the law.

MORE AT LINK

(Hat-tip: Petrus)

[chill_wind]

66. Thanks Hissyspit. I consider Dean Baker

and those at his web site the ultimate watch dogs on this issue. Nobody has constantly monitored, exposed and refuted WAPO's endless misinfo/dysinfo on the subject than him, I don't think.

[Marazinia]

43. Sad

Gotta love people so greedy they steal from the elderly and disabled.

And what does K&R mean?

[CaliforniaPeggy]

52. K&R=kick and recommend.

When you post a remark in someone's thread, your remark "kicks" or moves that thread up to the top of the page. My remark to you will temporarily move this whole thread back up to the top of the page in General Discussion.

Recommend just means you approve of the thread. If the thread gets five or more recommendations, it will show up on the Greatest Page. See the gold star at the top of this, and every page. Click on that to see the Greatest Page threads.

Welcome to DU!

:hi:

[Marazinia]

59. Thank you!

I've skated through here before, but had a primary site for political discussion elsewhere, and I don't even remember noticing that before!

[pasto76]

50. I wish more people would know this!

[Harmony Blue]

60. I find it funny that those leading the charge

for wanting to privatize social security are the most bullish about the U.S. economy and stock market. They know deep down, that U.S. growth can't stay at 2.1% for 25-50 years.

[99th_Monkey]

67. Didn't Bush ALREADY steal the SS Trust blind, leaving only worthless "IOU"s?

I think that's one of the points of the OP, is that this $2.6 trillion that is supposedly in the trust fund, is really
not there at all ... just IOU's from the Bush raid on it.

[MannyGoldstein]

71. IOUs like any other Treasury Bonds. Are the bonds we sold to

the Chinese also worthless? Because they're backed by the exact same collateral as the bonds held by Social Security.

[99th_Monkey]

74. I'm not saying I don't think the US Gov't is responsible for paying them.

Just that paying back all those SS reserves will bankrupt the gov't,

I remember this from during Bush years, hearing how they raided the SS
Reserves and just left IOU's in there and it wasn't a great idea, unless
of course you happened to be the one making off with all that loot.

I can't help but think this is why RWers are now saying SS is in
"trouble" even tho on paper SS is good until 2037; but maybe i'm
wrong.. wouldn't be the first time. ;-)

[NNN0LHI]

5. Reason for this is because the workers who make our imported stuff don't contribute to SS/Medicare

We need to change that with an import tax on these products to make up for this shortfall that goes directly into financing these programs.

If we don't do that we will be screwed.

Don

[andlor]

14. +1

[Major Hogwash]

16. Yeah, but import taxes aren't allowed by the WTO.

So, I guess we'll all end up eating cat food eventually.

[NNN0LHI]

17. Think Brazil

http://online.wsj.com/article/BT-CO-20110919-708810.html

SEPTEMBER 19, 2011, 12:43 P.M. ET.

UPDATE: Brazil's Government Confirms Import Tax Plan Proposal

<snip>Brazil's government has taken a series of steps to try to prevent the currency from appreciating as well as to help manufacturers. Last week the government announced an increase of 30 percentage points in a tax on imported vehicles, and in July it announced a tax on certain types of currency derivatives.

In May, the WTO accepted a Brazilian proposal that it begin a two-year study into the very specific relationship between trade and currencies. Although the question of currencies was included in the WTO's mandate when it was established in 1947, it has never been discussed in that forum.

[Marazinia]

45. Please, we don't have to follow WTO guidelines

We never have when it didn't suit our rulers, so why should we after the rulers are deposed?

[Marazinia]

44. I approve of this solution

For so many reasons.

[sabrina 1]

6. SS is NOT sucking money out of the treasury. This article is

not accurate. SS gets revenue from three different sources. It gets interest on the bonds, which have continued to be paid, and even though taxes did not cover the pay outs, SS still produced a surplus this year and last year.

So, it is not a drain on the Treasury. And if the morons who we foolishly put in charge of this country would have bailed out Main Street instead of saving Henry Paulson from prosecution for his crimes, using it instead to put people back to work in the Public Sector and screw the Private Sector who take their money overseas, there would be enough money in there right now to cover the next 75 years.

Then, if we ended the 300,000,000 a day wars they got us into, more jobs could be created and more money would be flowing into the SS fund.

And additionally, if we lifted the cap, or better yet, removed it altogether we would not have to worry about SS, and could increase the payments, for the next 100 years.

The only way SS will have a problem, even now, is if these stupid, morons default on the American People. And if they do that, their other creditors will not be happy and will start demanding their money back.

They are pretending there is a problem with SS, using the current finacial disaster to do so, because they want to privatize it.

This is what needs to be done. They need to INCREASE payments to those on SS and SSI right now. That would stimulate the economy. The need to end the Wars, Immediately, we can't afford them, and no more bailouts. There are going to be more bank failures, let them fail. Break them up and regulate them.

So sick of all this, the lies, the deception and the threats always to the poorest people, while what they are really doing is trying to take even more of our money.

Oh yes, and prosecutions need to start now, and the money they stole found and returned to the people.

Other than that, I totally agree with the post! HANDS OFF SOCIAL SECURITY AND MEDICARE AND MEDICAID. Let them get what they need from the criminals who caused the problems.

[MannyGoldstein]

7. +6.02x10^23

[Admiral Loinpresser]

62. + Avogadro's number! n/t

[russspeakeasy]

21. Sabrina 1 ..Thank you for your sanity and an informed post..

As usual, you are spot on.

[woo me with science]

32. Thank you. Again. nt

[Enthusiast]

70. Right on, Sabrina!

This is the true security issue of the American people, not these ridiculous wars.

[Flatulo]

75. I agree wholeheartedly with raising the income cap - I just wonder

if those paying more in will demand a higher benefit, resulting in little or no growth in in the fund.

[Scuba]

8. Kicked for rebuttals by Manny and Sabrina. n/t

[unhappycamper]

9. It's difficult to refute facts. n/t

[MannyGoldstein]

10. But other than facts, your side's got NUTHIN'

Admit it.

[unhappycamper]

15. Believe me, ANYTHING the Washington Post prints is not on my side.

I am a dyed-in-the-wool progressive.

[Mimosa]

64. Operation Mockingbird was the source of WAP and NYT 'journalists'

I bet you already knew it, UnhappyCamper.

Many don't know that many successful careers in journalism and politics started with 'Company' funding. ;)

[blkmusclmachine]

11. .

Stand Together, Or Fall Together. It's Our Choice.

[Warpy]

12. Declaring selected t-bills worthless

is going to cause a run on them, something this country can ill afford as nations like Canada and China dump them as fast as they can.

There was never a lockbox. They thought they could stash worthless t-bills forever while working people paid double to support the government and the rich and the corporate retained their ridiculously generous tax breaks.

The only moral thing to do at this point is remove the income cap on payroll taxes until the emergency is over. Then they can reset it at a more logical point while dropping the tax to its pre-Reagan level. This would have the added benefit of giving high earners that flat tax they all claim to want. My guess is that they'll be squalling over it in a month.

Unfortunately, they own the government, as we can tell from the garbage emanating from that farcical supercommittee.

It's beginning to look as though the revolution will not be allowed to be nonviolent.

[sarcasmo]

19. The corporate overlords have already stolen the future social security and the revolution

will need to be violent.

[Faygo Kid]

18. Lori Montgomery is the Judith Miller of domestic reporting. This is War!

Don't kid yourselves: This "article" is the declaration of War against Social Security. Here come the Kochs, and they believe that the Dems can be bought, and Social Security can be destroyed, once and for all.

If you receive it now, you may lose it. If you are 60, you may never see it. They are out to destroy it, thanks to the Post.

[stillwaiting]

20. They KNOW the Dems can be bought.

They have been for some time.

The Dems need to LEARN to fear the people (as politicians often do in Europe) more than they enjoy the perks of their capitulation and corruption to monied interests.

Kicking them out of office so that they can enjoy the perks of their selling us out by reaping tremendous financial gains doesn't seem like much of a punishment to me. I don't think most give a damn if they lose their elections. They do much, much better financially after having lost if they've catered to the elite financial interests. Once elected, they're set for life. They know it, and we know it.

Ultimately, unless the system is changed to prevent the outright corruption and bribery that is currently legalized, I believe that nothing will change. We will continue to be sold out. Different names, different faces, different excuses, and a rotating cast of villains that prevents us from reversing our slide to third world status.

So, with that said, my hope is that OWS can find some way to address changing the SYSTEM. And as much as many around here can't imagine working WITH the Tea Party, I believe it's our only hope to changing the system.

When we put down ideological differences and demand changes to the system and put our intents and efforts on recreating our country so that our politicians serve the will of the PEOPLE who elected them (and not Wall Street) then we will begin to see legislation passed that is beneficial to the people's interests. The Tea Party wants this too. Ultimately, we're going to have to work together across political divides to regain representation in our government. If that movement ever begins, many on both sides (ideological purists and status quo engineers both) will attempt to derail the movement because it truly does represent the biggest threat (imo) to the current status quo.

It also represents the path to Reclaiming America...

We need a better America for all. America 2.0.

If OWS began focusing on changing our SYSTEM and LAWS of governance and invited ALL Americans to join them in reclaiming our country from established monied interests, THAT is the movement that I've been waiting for.

[russspeakeasy]

22. "Democrats can be bought".?

They can also be rented.

[Faygo Kid]

24. They're going to sell us out. I can feel it in my bones.

They stand for virtually nothing, except to grab all the campaign cash they are able to do so.

We used to have Dems that stood up for us. Now we look to Bernie Sanders for decency, and he's an independent.

[cyberpj]

23. I know. But Republicans had so much fun with Al Gore and that "LOCKBOX" word people didn't get it.

God, I've run out of ways to imagine how things would be better if 2000 election hadn't been stolen and given away by The Supremes to the Bush Family Empire.

[Kaleva]

25. The Trust Fund has a zero sum effect on our total debt.

This statement isn't entirely true:

"The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing."


For every dollar the Trust Fund cashes in to pay benefits reduces our national debt by a dollar. Thus the Treasury can borrow another dollar. The govt. doesn't have to raise taxes or cut spending to fund the Trust Fund.

However, the interest paid on the Social Security Trust Fund notes does add to our national debt and some of that money borrowed will have to come from foreign investors.

[ooglymoogly]

26. Another criminally inspired, clap trap article from the folks trying to steal

the SS fund and cover their tracks.

With minor adjustments, this fund will be solvent and pay benefits plus generous increases
into perpetuity.

Just eliminating the cap takes care of seniors forever and provides an even bigger boondoggle for a profligate government to "borrow" from.

Borrowing with no intention of paying what is borrowed is fraud, theft and is a crime.

[Faygo Kid]

27. Yes, clearly The Post is advancing an agenda - like they advance war.

This article, by the always execrable Lori Montgomery, is clearly a declaration of war on behalf of the Kochs and Pete Petersen.

[NorthCarolina]

28. Your Social Security has long since been deposited in the pockets of the 1%. nt

[emilyg]

29. Amen. K/R

[woo me with science]

30. Hear hear!

With a perfect thread title, too. K&R

[hfojvt]

33. sorry Sammy

even a three lock box would not help

That's a bad idea.

Let's say it had been done.

Now, over here on the left you have $2.6 trillion in a three lock box. It is earning zero percent interest and being devalued by inflation. Now look over to the right and there is $2.6 trillion that the Government has borrowed, with interest, from rich people over the last twenty years. And actually, the trust fund would be smaller than the debt, since perhaps .5 trillion of the trust fund comes from interest that the government has added to the principle.

Do you think the Government is better off under that scenario?

I don't.

The only way it might be was that if the Trust Fund was added to the debt instead of used to create an imaginary surplus, that might make it politically harder to cut taxes for rich people.

MIGHT

But look what happened in 2010. There was no surplus, and the politicians, Obama and many Democrats included, STILL voted to give tax cuts to rich people, and Republicans are STILL basing their Presidential campaigns on TAX CUTS. Obama too, though, every time he speaks to the nation in a State of the Union, he brags about cutting taxes.

[Fire Walk With Me]

34. K&R!

[ellenrr]

35. repayment not repaiment

[Liberal_in_LA]

36. k&r

[Vincardog]

37. Key phrase "The government has borrowed every cent " that happened when WE invested our SS funds in

TBills. Do they want to default on their obligations? Fuck that

[Lasher]

47. Yes, they do - but only the Social Security Trust Fund T-Bills.

They want to honor all other T-Bills, such as those held by China and other foreign governments. They don't plan to be so obvious about it though. They want to slash Social Security benefits so much that there is never a need to redeem the bonds in the trust fund. Mission accomplished.

The best thing to do with Social Security is nothing at all, until all the Trust Fund bonds have been redeemed by the general fund as planned for the past thirty years.

[varelse]

38. K&R

[spanone]

39. i predict the super committee will cut nothing but 'entitlements'

republicans in congress will block any meaningful pentagon reductions.....you betcha

[bhikkhu]

40. The whole OP is based on misinformation

Social Security is in pretty good shape, as it has been for decades. The GOP is selling the whole "panic mode" thing to push their agenda - don't buy into it!

[lumberjack_jeff]

41. Every time I hear the phrase "now must raise taxes, cut spending or borrow more heavily"

I visualize a homeowner worrying about a leaking roof.

Now we must either get on the roof and fix it, burn the house down or sell the children into prostitution. And clearly there's no political will to climb a ladder.

[csziggy]

46. Is that negative rate caused by the payroll tax cuts in SS revenues?

If so, those need to be repealed. Back when those were instituted, they were unpopular here at DU and people predicted that they would be used as a way to "demonstrate" that SS was a drain on the budget.

[RB TexLa]

48. My??? Social Security? My God, how egotistical can you be? Once the money went to the

government it's no longer yours. You should like a God damn teabagger screaming about what is being done with "my tax dollars"

[Samantha]

49. Not just Social Security but Medicare as well

have surpluses. To begin with, baby boomers PREPAID for their retirement benefits (and medical) through the bipartisan agreement reached in the early 1980s. For the past two decades plus a few years, this overpayment to pave the wave toward the biggest drain on the system -- the boomers' retirement -- is what built up that surplus. Therefore, there is no rational reason anyone in the government can use to defend cutting any baby boomer's retirement if that beneficiary has participated by overpaying the premiums for a number of years.

These trust funds -- Social Security and Medicare -- are invested in U.S. Treasury Notes, supposedly touted as the safest investment in the world. We hear this all the time. Additionally, we hear the politicians constantly complaining about our debt to China, Japan, etc., as though this is part of the reason we must settle this deficit issue. The truth of the matter is the number one debt holder of the United States Government invested in U.S. Treasury Notes is its DOMESTIC BOND HOLDERS, the bulk of which is that 2.6 trillion Social Security trust fund, as well as the Medicare Trust Fund, plus some smaller holdings by U.S. investors. The problem is the Government has spent these funds and cannot afford to repay them when the bill comes due (in other words, right now). In order for either of these Trust Funds to flow into the system, the U.S. Government must go out and find the equivalent amount of investors to replace that which is taken from the Trust Funds. This is extremely difficult during these times to do.

By the way, the total of the amount owed by the U.S. Government to its DOMESTIC BOND HOLDERS, i.e., mainly the Social Security and Medicare beneficiaries, is 5.3 Trillion Dollars. Read that amount again -- 5.3 trillion dollars. So what is going on behind the curtain? People like Paul Ryan are floating the idea these programs should be privatized or in some cases, Rick Perry as an example, they should be ABOLISHED. Bernanke himself in an open Senate hearing broadcast on CSPAN made the remark the Social Security act could be REPEALED. I heard him say it and I thought it was jaw-dropping.

The bottom line here is that if this debt is not paid back by the U.S. Government, it should be considered what it is: a clear default. I for one am prepared to say that loudly and often. And if enough U.S. citizens start calling it what it is -- a default -- how exactly do government officials plan to explain that away to the world when asking new investors to buy U.S. Treasury Notes? How will it be able to continue to say its U.S. Treasury Notes are the safest investment in the world after many of its senior citizens say it has defaulted on its debt to them?

And btw, isn't that exactly what is happening with the U.S. Postal Service. Hasn't it built up a vast reserve in its retirement and health programs (thanks to a law passed in 2003 requiring it to prepay 75 years ahead for its pension and medical programs). Where exactly are those funds invested (that surplus) and can the U.S. Government cough that up when the time to do so arrives? Or is that why privatization is being floated for that service as well?

Sam

Edited to add this from my thread at this location: http://journals.democraticunderground.com/Samantha. Check out the link cited below for information on to whom the U.S. government is indebted and to what degree.

During my research last night, I found a very interesting slide show at this link: http://www.cnbc.com/id/29880401/The_Bigges... . If you click on the link, hopefully you see slide the 16th of 17 slides. The slide show starts with the smallest of 16 debt holders and as it progresses to the 16th slide, we find the biggest holder:

1. Federal Reserve and Intragovernmental Holdings

US debt holdings: $5.351 trillion

I suspected this before I saw it. It hit me when I landed at that intersection referenced in the first paragraph. THE LARGEST CHUNK OF U.S. DEBT IS INTRAGOVERNMENTAL HOLDINGS. IN OTHER WORDS, NOT CHINA, NOT JAPAN, NOT ANY FOREIGN INVESTOR - ALL DOMESTIC HOLDINGS.

So then I took another step to confirm the term "Intragovernmental Holdings, and found exactly what I thought I would find:

"In the United States, intragovernmental holdings are primarily composed of the Medicare Trust Fund, the Social Security Trust Fund, and Federal Financing Bank securities. A small amount of marketable securities are held by government accounts.

The value of intragovernmental debt holdings as of February 2010 for the United States is roughly US$4,500,000,000,000."

[orbitalman]

51. K & R

[ProfessionalLeftist]

53. And Obama instituted tax cuts for workers and companies that also

reduce the amount of money going into SS. These are SS CUTS. Wise? No. HELL no.

"Replacing cash lost to a one-year payroll tax holiday will require an additional $105 billion. If the payroll tax break is expanded next year, as President Obama has proposed, Social Security will need an extra $267 billion to pay promised benefits."

[bvar22]

54. How is the Payroll Tax "Holiday" Obama is pushing in his "Jobs" Bill...

...going to help this situation?


You will know them by their WORKS.

Solidarity99!
--------------------------------------------------------------------------------------------------------------------------------

[MissDeeds]

55. K&R x 1000

Could not agree more.

:thumbsup:

[Yon_Yonson]

56. Could not have said it better myself ...

[unkachuck]

57. K&R....n/t

[OwnedByFerrets]

58. HUGE K AND R

[eridani]

61. Excuse me, but payouts are now SUPPOSED to exceed revenues

The surplus was deliberately generated starting in the 80s to PREPAY the boomers' retirement, making us the first generation to do that and also pay for our parents at the same time. The trust fund was designed to be empty by the time that the last boomers die off, whereupon it is to go back to pay as you go.

[Mimosa]

63. Wars suck money out of the common Treasury. N/T

[999998th word]

65. RW (S)hit piece. Look who wrote/published it-nuff said P.E.R.I.O.D.

[JustAnotherGen]

68. tax me!

You can extend the full benefits and NOT have to cut it by 25% in 2036 if the government extends the amount I pay into SS beyond 106K and change. Seriously - I didn't miss the money I paid in the first six months of the year. They stopped my contributions in June.


I'm 38. If I pay into the till the full amount - my friends who don't make as much as me so they can't save at the rate I do will NOT be eating hot dogs and cat food in 30 years. It's called doing the right thing for others and not being selfish.


Yep - I want the government to legislate from a place of Dont Be A Selfish Jackass!

[ScottLand]

69. K&R

[jtown1123]

72. Lori Montgomery wrote a full out attack on Social Security chock full of lies

thanfully, a bunch of folks tore her a new one:


Social Security Bait And Switch, A Continuing Series-NEW YORK TIMES. Dean Baker is angry at the Washington Post for spreading disinformation about Social Security. He’s right, of course — and it’s shocking that a well-known fallacy is the subject of a “news analysis” that purports to inform readers. http://krugman.blogs.nytimes.com/2011/10/30/social-security-bait-and-switch-a-continuing-series/

Washington Post Discards All Journalistic Standards In Attack on Social Security-CEPR. This "treacherous milestone" is entirely the Post's invention, it has absolutely nothing to do with the law that governs Social Security benefit payments. Under the law, as long as their is money in the trust fund, then Social Security is able to pay full benefits. There is literally no other possible interpretation of the law. As the article notes the trust fund currently holds $2.6 trillion in government bonds, so it is nowhere close to being unable to pay benefits. The whole point of building up the trust fund was to help cover costs at a future date when taxes would not be sufficient to cover full benefits. Rather than posing any sort of crisis, this is exactly what had been planned when Congress last made major changes to the program in 1983 based on the recommendations of the Greenspan commission. http://www.cepr.net/index.php/blogs/beat-the-press/washington-post-discards-all-journalistic-standards-in-attack-on-social-security

Boo! WaPo Dresses Up Like a Newspaper to Tell a Social Security Ghost Story-HUFFINGTON POST. The piece's author sits us down by the campfire, holds the flashlight up to her chin, and spins a yarn filled with quotes from right-wing ideologues from both parties. Most of her "sources" have a long history of trying to gut Social Security, often under the employ of billionaire former Nixon Cabinet member Pete Peterson (whose own organization, Fiscal Times, provides financial journalism services for the Post. Coincidence? You decide.) How many quotations are included from the organizations and groups defending Social Security? None. http://www.huffingtonpost.com/rj-eskow/boo-w-post-dresses-up-lik_b_1066178.html

[econoclast]

73. How SS actually works and it's impact on the debt and deficit...

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.