April 3, 2009

Latest Pajamas Media Post (‘Social Security Crisis To Arrive Six Years Early’) Is Up

Filed under: Economy,Soc. Sec. & Retirement,Taxes & Government — Tom @ 8:18 am

It’s here.

It will go up at BizzyBlog on Sunday morning (link won’t work until then) when the blackout expires.

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I’m posting the two graphics from that column to extend points made in the column:

CBOdeficitDetails1986to2008

SocSecDeficit0209

The first graphic, straight from publicly available information at the Congressional Budget Office, shows the amount of money — $2,331.6 billion — Uncle Sam has taken from Social Security through Democratic and Republican administrations and Congresses to fund the rest of the government during the past 23 years. Technically, Uncle Sam has “borrowed” it.

The second graphic’s original purpose was to show how February “went negative” (i.e., tax receipts were less than benefit payouts plus expenses).

But it also shows that total “assets” (i.e., the balance of the “trust fund”) are $2.434 billion. That amount is only about $100 billion more than the amount of money Uncle Sam has borrowed from it.

This means that over 95% of the so-called “assets” of the “trust fund” consist of IOUs from the rest of the government, which is itself over $11 trillion in debt.

Now that we’re only a year or two away from when current operations of Social Security “go negative” on an annual basis, as described in the column, Social Security is going to have to turn those IOUs into cash. One of three things will have to happen:

  • The rest of the government will have to borrow more money to come up with the cash.
  • The rest of the government will have to raise taxes.
  • The rest of the government will have to decide to cut Social Security benefits.

Oh, there is a fourth possibility: Ben Bernanke can just print more money and inflate the currency.

Before the POR (Pelosi-Obama-Reid) Economy, now known as the POR Recession As Normal People Define It, began, Social Security projections showed benefits outstripping costs by over $100 billion a year during much of the 2020s and 2030s. Now those large system deficits are on track to arrive many years sooner.

Those who claimed “there is no crisis” during the past quarter-century since the Greenspan Commission supposedly “fixed” Social Security (all it did was raise taxes and push the retirement age up by a whole two years — big whoop) were lying all along. The lies turned into super-sized whoppers during the past decade as the impending problems became ever more obvious. Those who knew the truth and lied anyway need to explain to us, and especially our kids, grandkids, and generations yet unborn, who will have to bear the burden of their lies, why they did it.

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10 Comments

  1. Any perceived cut in SS benefits to existing recipients would lead to a Rostenkowski moment, you remember the seniors bouncing his car while he was in it (1988)???? Classic populist response to taking from “my” pie or in his case the appearance of taking.
    http://www.nytimes.com/1989/08/19/us/house-panel-leader-jeered-by-elderly-in-chicago.html

    Dems just don’t have the stomach for a scene like this.

    I’m thinking they will attempt to confiscate the 401ks and the like, which might produce the same popular outcry.

    My prediction: Since liberals made SS a third rail, they won’t dare attempt anymore modifications but instead be forced to jettison the cap & trade economy killer ideas because they know (now if they didn’t before) SS funding is integrally tied to the economy. They instead will go after the other problem child of Medicare and Disability. Your own chart shows the DI fund is what currently is sopping up the positive cash flow. This is why I previously commented on Medicare and DI together where the so called national health care reform will roll everyone together and force the premium payers to subsidize any potential negative cash flow. This is also why I asked the question of what would become of the billions in IOUs once such a solution was undertaken. I submit Congress will conveniently forget all the taxes we, the workers, paid into the program thus effectively stealing literally billions of dollars.

    Comment by dscott — April 3, 2009 @ 10:45 am

  2. Wow. Looking at those numbers laid out is quite scary. We are in troubling times and they don’t seem to be getting better anytime soon. That is why it is important to ban together. A campaign promise of Bipartisanship needs to be pushed further. http://www.newsy.com/videos/budget_battle/ looks at how the parties aren’t working together at all, especially on this last bill.

    Comment by Christie — April 3, 2009 @ 2:03 pm

  3. As a follow up to the DI trust fund: http://www.socialsecurity.gov/OACT/TR/TR08/lr5c5.html

    Notice the ramp up of people drawing disability and also the number of children getting payments for support. There are over 9 million people suckling on the teets of government. Some of them to be sure are justified because they are actually disabled, the rest are getting welfare under the guise of disability. I had a guy work for me a few years ago who was getting SS disability because he claimed he was mentally ill. He wasn’t, he was just very crafty in his self centeredness.

    Comment by dscott — April 3, 2009 @ 2:20 pm

  4. #2, I don’t know how you “cooperate” with people who want to recklessly bankrupt us and seem not to care at all.

    The Newsy report treats bipartisanship as a value unto itself, regardless of the circumstances. It’s also one-sided. Almost no one ever put pressure on the Democrats to be “bipartisan” when Bush was in office.

    Comment by TBlumer — April 4, 2009 @ 7:10 am

  5. #3, the rise in disability prevalence is an insult to our intelligence. Even age-adjusted, it’s gone up by one-third. Given medical tech improvements and the availability of more non-physical jobs, that’s ridiculous.

    Comment by TBlumer — April 4, 2009 @ 7:16 am

  6. My plan to end SS in 40 years:

    Everyone below 40 loses SS and what they paid in, BUT they no longer have to pay in. Everyone above 40 gets the same option. When the last person currently above 40 dies, SS is ended. The disability payout is privatized. So everyone has at least 25 years to plan.

    I think it will work, be politically feasible, and our unfunded debt would plummet.

    Comment by Joe C. — April 4, 2009 @ 8:39 am

  7. I’ll take that deal, though I’m well above 40. Even if I have to work to a later age, even if a much later age, it saves my kids and grandkids from an unbearable burden.

    Comment by TBlumer — April 4, 2009 @ 10:58 am

  8. Did you read comment #45 on the pjm thread?
    http://pajamasmedia.com/blog/social-security-crisis-to-arrive-six-years-early/#comment-45

    This underlines the extent of the theft committed by Congress from the American people and then wasting $2.5 trillion with zero to show for it. Can you imagine the economic activity there would have been had the money been “invested” in capital expansion in plant and equipment instead of pissed away on liberal “investments” in welfare programs. It could have been a win/win scenerio producing millions of jobs throughout the years with virtual zero unemployment since those who sponge from the government would be contributors to society. Some half a trillion dollars a year are pissed away enabling people to be non productive cost centers.

    We all complain about taxation, but the fact is politicians if they had been representing their districts instead of themselves government would NEVER run a deficit except in time of war. I think many people are coming to the realization that the weakness of our Republic form of government is that it is too easily hijacked by the self serving and it’s laws are too easily manipulated and contorted by the judges and law enforcement yielding arbitary enforcement of the law and we have become second class citizens. It’s becoming clear that Fascism is what rules the day and Obama, Reid and Pelosi have successfully pulled off a bloodless coup.

    A new form of governance is required, one where a group of people like we have now are prevented from taking power in the name of their agenda by deceiving voters. Where judges and law enforcement are under strict controls to apply the law consistently without regard to who the accused is. Where the law as passed is the law that is enforced. We speak of consent of the governed as the cornerstone of self governance, but the current system no longer is run according to their consent but according to some PC agenda. A Republic form of government requires an informed electorate, being deceived is not being informed.

    I propose a better form of self governance, the original idea of Democracy as found in the Council of 500. “Citizens” should be selected randomly throughout the country, serve two to four years and then be replaced with no chance of holding power in their lifetimes. Service to your country is a responsibility of citizenship, not some jackpot as it is currently.

    Comment by dscott — April 4, 2009 @ 10:00 pm

  9. #8, True assessment, and I’ve heard worse ideas.

    It’s akin to Bill Buckley, who said he trusted the wisdom of people selected from the phone book more than that of the political elite.

    I think Council members would have to be 40 or older, not have a criminal record, and not be dependents of the state.

    Comment by TBlumer — April 5, 2009 @ 9:04 am

  10. #9, Bill Buckley was absolutely correct. The qualifications for public service you listed are good ones, especially the age since even 30 year olds have a lot of growing to do in terms of maturity.

    Personally, I’m getting to the point that voting is over rated given the sleazy behavior of politicians lying to the public to save themselves and line their nestegg. Representation can be achieved in other ways than two or more politicians blowing smoke in everyone’s eyes.

    The only way a Republic can work is for those who are elected are held accountable. Simply trusting a politician by taking their word is just not working. Holding them accountable every 4 years just doesn’t cut it. We need a strong enforcable recall mechanism that can’t be blocked by meddling judges.

    Comment by dscott — April 5, 2009 @ 5:47 pm

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