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What, Didn’t Some FDL’ers ALREADY Debunk This Myth?
Is this scare tactics, or some kind of reality to do with healthcare revisions in play?
"Unless changes in Social Security are enacted, the retirement fund will be depleted in 2037, four years sooner than projected last year. The Medicare trust fund is in even worse shape. It is projected to become insolvent in 2017, two years earlier than expected."
Is this accurate? I’m confused, and will appreciate input from the pups on this article. My blood boils reading this stuff.
13 Comments
I don’t have a link, but it’s total bs.
Summers and Geithner wants to use funds dedicated to SS and Medicare to bail out their super rich buddies.
Sure, if Obama lets Summers and Geithner continue to give away our future, TWELVE TRILLION in loans and guarantees to the money center banks, everything is in trouble.
As is clear from their comments, SS and Medicare are on a much more sound financial footing than the US banking system which is in default right now. If we pull in that TWELVE TRILLION dollar credit line SummersGeithner gave to the banks, and for example stop shipping $600 billion a year overseas for oil and for example cut defense spending; we’ll be able to invest in education, single payer health care, sustainable jobs/energy and infrastructure. In that scenario, provided we make prudent decisions, SS and Medicare will be just fine.
If the government honors its commitments to pay the surpluses which were run up in Social Security taxes, then the program will cruise out to 2037 or whenever. At that point, even with no changes, like increasing income caps, the system will still be able to pay, last I saw about 74% of benefits from about 2040 to 2080. The real question with Social Security is whether the government is going to welch on paying back the surpluses since in about 2017 shortfalls will begin to occur and surplus money will have to be paid back out of general revenues.
Not sure that “insolvent” has any meaning anymore given how banks act and are allowed to act but Medicare may begin experiencing some shortfalls in the not too distant future. It will still be able to cover most of what it covers now, but Medicare’s financial problems, i.e. that it is underfunded (given that it must take care of an older, sicker population) is an excellent reason to move to single payer universal healthcare.
Another thing I don’t have a link to is the GOP legislation back in the Reagan years? that shifted the burden for paying into Social Security away from the wealthy and more onto the backs of the middle class and the poor. Just another tax-break for the rich, because it trickles down, don’t you know.
Boo and Hugh, great responses, and thanks . . .
Stuff Like This, That Continues To Throttle Me
Somehow, I see these issues as related to how ‘the system’ is responding to the times.
I’m not sure I like the responses, to date, be it financial, military, domestic or foreign policy wise.
What I see, is a desperate attempt to save the old school.
And I think, we need a NEW school across the board . . . . will Obama make it thru one term to the next?
Thanks all . . . . .
If you go to the 1980s section of the wiki you can find a very brief discussion of the 1983 reform.
http://en.wikipedia.org/wiki/Social_Security_(United_States)
What I always like to point out is that Greenspan was the one calling the shots in the 1983 refoms. These reforms were based on a fundamental lie: that surpluses were necessary. In fact, the government could have committed to funding Social Security from 2017 to 2040 and not taxed Americans for any of the trillions in surpluses. But you see both parties wanted that money to play with and more importantly spend. So they set up this false exchange whereby they needed the surpluses now but would pay them back from 2017-2040. But of course they weren’t really going to pay back the surpluses, the American people were. It was all a scam, a backdoor tax on the lower and middle classes. Between 1983 and 2017 Americans will have paid out trillions in surpluses which the government (again both parties have been behind this all along) spent. Then from 2017 to now 2037, Americans will be funding shortfalls in Social Security. So basically what Greenspan did, crook that he is, is that he got Americans to pay twice for what they only should have paid for once, and he delivered trillions over the years for Congress and the various Presidents to spend, and all this money from the surpluses was used to make the government’s deficits look smaller than they otherwise would have been. They did this because indeed the surpluses were simply an added (undeclared) tax on Americans which created revenue for the government which the government duly spent.
Now because the government in 2017 or thereabouts has to start actually spending money out of general revenues to cover that obligation that it would have had even if there had not been one penny of surplus, well this is the reason we are hearing that Social Security needs reform–because the politicians don’t want their carry around money of discretionary spending messed with. So that’s why there is all of this buzz about decreasing benefits and increasing retirement age. This would continue to allow them to spend discretionary funds the way they want. Unsurprisingly, given how our ruling elites are identical with the rich, taking off the income caps on Social Security only gets talked about by the likes of us.
Phoenix Woman rippin it just a week ago.
and last friday our Jane reported on the congressional atmospherics of the current push – underscoring Hugh’s point quite nicely
firedogs know this is yet another campaign in a never ending war – we will be there with our facts when the battle is joined
Additional questions often not asked or answered in the discussion.
1. What are the actuarial assumptions used by the trustees in determining how much money is/will be in the trust fund over the period 2009-2037?
My understanding is that, by law, the trustees use a very pessimistic assumption, something on the order of sustained growth at 1.4%, which is well below actual growth rates over any period in the laast 60 years. This is one of the reasons that the DEMISE OF SOCIAL SECURITY that has been predicted regularly for the past 20+ years by the right wing has never come to pass. I can remember hearing supposedly knowledgeable people assuring us that Social Security would go belly up in the late 80s, then the early 90s, then the late 90s, then right after the turn of the millenium, then in 2009, then in 2011, then in 2020 and so on and so on. Each time the prediction was made with the utmost certainty and each time it proved to be bogus. So what reason is there that we should believe this latest prediction of doom?
2. What effect does the current economic crisis have on the assumptions?
In other words, now that so many peoples’ 401Ks are in the crapper to the point that a lot of folks will not be able to retire any time soon. Does this change anything? They are not retiring so they are continuing to pay into SS. They are not retiring so they won’t begin drawing SS when they thought they would. Does this combination of extended pay-in and postponed payout change the numbers in any meaningful way?
Hopefully the SSA March 2009 report can cast some light on this debate re. Social Security (rembering that Medicare elements were stripped out for separate reporting a while back.
Here is the link: http://www.socialsecurity.gov/OACT/TR/2009/
The projections, especially the longer range ones depend on some tricky assumptions (e.g. declining mortality rates in the 65+ age year group due to lower cancer, and – especially problematic – projected immigration rates).
Some interesting tables & charts dervied appear at: http://www.socialsecurity.gov/…..tml#329232
which outline the medium & longer term projections.
The summary chart: Figure IV.B5.—OASDI Annual Balances: 2008 and 2009 Trustees Reports shows the difference between the SSA’s projections between March 2008 & 2009. The recession started in IV Qtr. ‘07 and deepened condsiderably in IV Qtr. ‘08. The resulting decline in the 2009/2035 projected trust balances is particularly notable but longer term differences, 2045/2085, are insignificant.
All this suggests that lower employment in 2008/2011 -> lower trust receipts/greater payouts (earlier retirment rates), while continued longer term high immigration rates will offset this farther out. However, changes in such assumptions can have a pretty substantial impact in longer term projections.
” The following excerpt is from the 1998 Senate Budget Committee session.
HOLLINGS: Well, you know his plan. Look you think he’s going to spend less than a hundred billion more?
GREENSPAN: I will wait to see what the numbers look like.
HOLLINGS: Well, the truth is…ah, shoot, well, we all know there’s Washington’s math problem. Alan Sloan in this past week’s Newsweek says he spends 150%. What we’ve been doing, Mr. Chairman, in all reality, is taken a hundred billion out of the Social Security Trust Fund, transferring it over to the spending column, and spending it. Our friends to the left here are getting their tax cuts, we getting our spending increases, and hollering surplus, surplus, and balanced budget, and balanced budget plans when we continue to spend a hundred billion more than we take in.
That’s the reality, and I think that you and I, working the same side of the street now, can have a little bit of success by bringing to everybody’s attention this is all intended surplus. In other words, when we passed the Greenspan Commission Report, the Greenspan Commission Report only had Social Security in 1983 a two hundred million surplus. It’s projected to have this year a 117 million surplus. I’ve got the schedule, I’ll ask to put in the record the CBO report: 117, 126, 130, 100, going right through to 2008 over the ten year period of 186 billion surplus. That was intended; this is dramatic about all these retirees, the baby boomers. But we foresaw that baby boomer problem, we planned against that baby boomer problem. Our problem is we’ve been spending that particular reserve, that set-aside that you testify to that is so necessary. That’s what I’m trying to get this government back to reality, if we can do that.
We owe Social Security 736 billion right this minute. If we saved 117 billion, we could pay that debt down, and have the wonderful effect on the capital markets and savings rate. Isn’t that correct? Thank you very much, Sir. Thank you, Mr. Chairman. “
http://whatreallyhappened.com/…..udget.html
Here is an analysis by Robert Reich at TPM.
http://tpmcafe.talkingpointsme…..ial-se.php
For more detailed analyses, Bruce Webb has some posts up at Angry Bear blog, for Wed May 13.
http://angrybear.blogspot.com/
Webb finds some funny stuff in the trustee’s assumptions -for example, they have decided to assume that there will be a growing gap between per capita economic growth and hourly money wage income growth, which will reduce contributions (that is payroll tax revenues) into the program. The close tracking of the two have been the basis for long term projections on socisl security health ever since it was started. Which is a reason I think removing all caps on payroll tax, broadening the definition of income taxable as wage income, and introducing progressive rates wth income is best way to go, since that will close that gap, even if we do not correct the rising inequality of income. That approach is also most consistent with the function of social security as a social insurance program (For every young Bill Gates who got filthy rich, there are hundreds who did not make much of anything extraordinary, so all potential older Bill Gates pay at least a constant fraction of their income into social security, no matter how rich they get. They all get a little checky in mail, no matter how rich they are too. If some ignorant or innumerate person objects, you need to explain to them how social insurance works, rather than doing stupid incoherent things to the program)
Sudden big blips in the results of these reports are usually due to changing assumptions by the trustees, or revisions in long run economic assumptions. I would be very interested to know how the recent economic crisis has affected the most recent assumptions about long run growth rates.
In any case, 90% of the hoo-haw about this report in the press will be pure BS.
Also, I think the concerns about the long run viability of Medicare are valid. But that is something that was very well known before today’s report. Anyone who says crud like “wake up call for medicare” on the baisis of this report or suchlike is just BS-ing.
The reasons for sudden changes from preivous trends in the Mecicare report need to be studied closely for the effect of channging assumptions of the analysis, and likelihood that changes in trendlines from previous reports will continue into the future. Just as for social security.
Hollings was being only half honest or half understanding the underlying issue. The obvious question is: Where could you ever invest trillions of dollars of Social Security surpluses? Stock markets? If you did, Social Security would now own a substantial chunk of not just Wall Street but American industry. The answer is that the surpluses never were meant to be saved or invested. They were meant to be spent and they were. If the surpluses had never existed, the commitments to fund shortfalls to Social Security between 2017 and 2037 would still be there, and it still would be the American taxpayer who would still be on the hook to pay them.
Great comments all, and thank you for same.
There’s a battle brewing (ongoing) and I smell kerosene on the fire . . . .
This is not the reform admin I voted for . . . .