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HatterasJack

60% +/- of the posters voted that SS will be there for them - guess what?

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Social Security crunch coming fast

 

Here's a frightening prediction: The public pension system's trust fund could go into the red in the next year, far sooner than expected. Will it get the next huge bailout?

 

 

By Bill Fleckenstein

MSN Money

 

The debate over health care has captured everyone's attention, but it appears the next big government program that needs to be addressed will be Social Security. That's the focus of the July 30 article "The next great bailout: Social Security" by Allan Sloan, Fortune's senior editor at large.

 

 

Those who've been paying attention have long known there is no money in the Social Security Trust Fund -- it's all been spent. Thus, former Vice President Al Gore's famous assessment that Social Security receipts should be placed in a "lockbox" was actually correct.

 

 

Given that so few people really understand the Ponzi nature of the current Social Security financing scheme -- created in 1983 by a commission chaired by none other than the world's greatest serial blower of bubbles, Alan Greenspan -- I decided to reprise Sloan's article. (The Social Security problem is especially important because it likely will put additional pressure on the dollar and on bonds, and exacerbate the funding crisis down the road.)

 

The story begins: "In Washington these days, the only topics of discussion seem to be how many trillions to throw at health care and the recession, and whom on Wall Street to pillory next. But watch out. Lurking just below the surface is a bailout candidate that may soon emerge like the great white shark in 'Jaws': Social Security.

 

"Perhaps as early as this year, Social Security, at $680 billion the nation's biggest social program, will be transformed from an operation that's helped finance the rest of the government for 25 years into a cash drain that will need money from the Treasury. In other words, a bailout."

 

Could Social Security's number be up?

 

As I've already noted, there is no money in the Social Security Trust Fund -- just IOUs from the government to itself. What is liable to spark debate and grab headlines is that instead of producing its biggest surplus ever in 2009-10, the trust fund could start running deficits in the next year, primarily because the weak economy is generating less tax revenue.

 

 

That's years earlier than expected. Social Security wasn't supposed to go into the red until around 2015.

 

Past projections were for a cash-flow surplus of about $87 billion this year and $88 billion next year. But new projections show those figures may drop to around $18 billion or $19 billion, which could easily go negative. And once the red ink starts spilling (a temporary bounce into the black in the next couple of years notwithstanding), that deficit will grow for the next 20 or so years unless something is done to halt it.

 

 

In order to better illuminate what has transpired and how misleading government accounting is, I would like to use the example from Sloan's article to explain what has happened: "The cash that Social Security has collected from my wife and me and our employers isn't sitting at Social Security. It's gone. Some went to pay benefits, some to fund the rest of the government. Since 1983, when it suffered a cash crisis, Social Security has been collecting more in taxes each year than it has paid out in benefits. It has used the excess to buy the Treasury securities that go into the trust fund, reducing the Treasury's need to raise money from investors."

 

In other words, the government spent it. Throughout all those years in the 1980s and 1990s, when folks worried about the budget deficit, it was reported to be lower than it would have been had the Social Security Trust Fund's money not been going into government coffers, thereby reducing the size of the deficit. Also untenable is the projected worker-to-retiree ratio, which will jump from 30 Social Security recipients per 100 workers in 1990 to 46 per 100 in the next 20 years.

 

The next (orthopedic) shoe to drop?

 

And Social Security funding isn't the only time bomb. Sloan notes that "when it comes to problems, Medicare makes Social Security look like a walk in the park, even though at about $510 billion this year, it's far smaller. Not only are Medicare's financial woes much larger than Social Security's, but they're also much more complicated. . . . Medicare is more convoluted, because the health-care system is much more complex than Social Security. Which, when you think about it, involves only money."

 

 

(I've discussed some of the health care proposals, by the way, in my daily column on my Web site; a subscription is required.)

 

Summing up, Sloan cautions: "Social Security may not make it onto the agenda until next year. But it's going to show up sooner or later, and probably sooner, because the numbers are so bad that something's got to be done."

 

 

All of these future funding issues will come under scrutiny in the next couple of years as the budget deficit explodes and worries about how it will all be financed take center stage.

 

---------------------------------------

 

I don't know which is worse -

 

the financial position of the Fed

 

or New Jersey

 

HELP !

 

cwm31.gif

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SocSec = PONZI scheme

 

 

too bad Bush was unsuccesful in his bid to give some measure of control to individuals who contribute to SS

 

****ing whiny liberal ***** in the media didnt even give it a chance

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I would really like to see what the numbers look like for this proposal...

 

 

Every person current collecting SS as of 12/31/09 keeps on collecting. That remains on the books as an obligation but now it inherits a sunset provision.

 

Every living person as of 12/31/09 who has paid anything into SS gets their money back (plus some simple interest calc 2-3%)

 

SS contrubutions cease as of 12/31/09.

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View PostI would really like to see what the numbers look like for this proposal...

 

 

Every person current collecting SS as of 12/31/09 keeps on collecting. That remains on the books as an obligation but now it inherits a sunset provision.

 

Every living person as of 12/31/09 who has paid anything into SS gets their money back (plus some simple interest calc 2-3%)

 

SS contrubutions cease as of 12/31/09.

 

 

How is this possible? The money is gone! Your money was paid out to your friends and relatives that collect Social Security, just like the money they paid was paid out to their friends and relatives before them.

 

 

You can not stop collecting the Social Security taxes, that is the whole theory behind a ponzi scheme, you must keep collecting in order to pay the people who will continue to collect social security, per your first statement.

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"As I've already noted, there is no money in the Social Security Trust Fund -- just IOUs from the government to itself."

 

I don't understand this statement because it clashes with the statement below made a few lines down.

 

"That's years earlier than expected. Social Security wasn't supposed to go into the red until around 2015."

 

If there were only IOU's then the fund would already be in the red. I have seen where right now the fund brings in more money than what is handed out but that the fund would go into the red rather quickly because of the baby boomers flooding into the system over the next 10 years. The second statement seems to be the truth but eitherway I'd agree SS is going to collapse rather quickly without reform. It's simple numbers. I already know I will be screwed out of 100% of the money I have put in so far....

 

John

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"How is this possible? The money is gone! Your money was paid out to your friends and relatives that collect Social Security, just like the money they paid was paid out to their friends and relatives before them."

 

"You can not stop collecting the Social Security taxes, that is the whole theory behind a ponzi scheme, you must keep collecting in order to pay the people who will continue to collect social security, per your first statement."

 

This is all true from what I know. If you have any thoughts of where's my money I have been putting into SS you need only look at grandma shopping at the supermarket. It's not in some pot or vault, or account. It's already been paid out. The actual fund has a surplus right now. Meaning there is more money being collected than handed out but that is going to change and change very fast.

 

The only way SS was ever going to work would be in a perfect system where the population of working tax payers was growing faster than the amount of people retiring. Couple the facts that people live longer because of medical advances, along with a population spike(baby boomers), along with an economy moving away from manufacturing and into a service sector and you can see SS is not going to work. At some point growth slows or even stops which kills the ponzi scheme. Factor in inflation and inflation adjusted payouts and now we're really screwing things up......

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View Post"How is this possible? The money is gone! Your money was paid out to your friends and relatives that collect Social Security, just like the money they paid was paid out to their friends and relatives before them."

 

"You can not stop collecting the Social Security taxes, that is the whole theory behind a ponzi scheme, you must keep collecting in order to pay the people who will continue to collect social security, per your first statement."

 

This is all true from what I know. If you have any thoughts of where's my money I have been putting into SS you need only look at grandma shopping at the supermarket. It's not in some pot or vault, or account. It's already been paid out. The actual fund has a surplus right now. Meaning there is more money being collected than handed out but that is going to change and change very fast.

 

that surplus initiated back around '83 when they put a bandaid on SS by raising the SS tax rate and raising the eligible age(s) for collecting

 

think of it in the near future as an inverted ponzi scheme ... like an inverted pyramid

 

and the young folks on the bottom of that pyramid are going to be paying through the nose!

 

 

The only way SS was ever going to work would be in a perfect system where the population of working tax payers was growing faster than the amount of people retiring. Couple the facts that people live longer because of medical advances, along with a population spike(baby boomers), along with an economy moving away from manufacturing and into a service sector and you can see SS is not going to work. At some point growth slows or even stops which kills the ponzi scheme. Factor in inflation and inflation adjusted payouts and now we're really screwing things up......

 

 

redface.gif

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I could be wrong but my understanding is that SS taxes that are currently collected go to pay current benefits and the rest, the so called trust fund, is taken for the general fund and this is the money the IOU's are issued for.

 

This is why when you here that the rich pay almost all the taxes they never include SS taxes even though much of the money is used for current non SS related items.

 

The majority of middle class people in this country don't know that you only pay this tax on Income up to around 100K and that's it. I pay the same as Bill Gates.

 

As a percentage of income the very wealthy pay far less in Taxes than the middle class...... it's not even arguable.

 

 

The SS system will never go broke, all you have to do is make everyone pay the Tax on 100% of there income like the average guy. Currently over 15% for me being self employed.

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View PostSocSec = PONZI scheme

 

 

too bad Bush was unsuccesful in his bid to give some measure of control to individuals who contribute to SS

 

****ing whiny liberal ***** in the media didnt even give it a chance

 

 

 

What happens to the money going in now? If , as stated, there is no money in SS????

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View PostWhat happens to the money going in now? If , as stated, there is no money in SS????

 

what goes in, goes right back out ...

 

 

there is very little left over in SS which is referred to as the "surplus"

 

 

and what once was a nice sized "surplus", is now a bunch of IOU's

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How is it possible. I mean If I put in money, I should get that money back right with some intrest? Am I wrong here.

 

OR REALITY-I put money my bs account, gov gives it to people that did and didnt put enough in the past if any, and they in turn screw the next guys down the line. HMMM What does that sound like. Didnt someone just go to jail for 150 years for the same thing? But its ok because the Gov is doing it.

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View PostHow is it possible. I mean If I put in money, I should get that money back right with some intrest? Am I wrong here.

 

OR REALITY-I put money my bs account, gov gives it to people that did and didnt put enough in the past if any, and they in turn screw the next guys down the line. HMMM What does that sound like. Didnt someone just go to jail for 150 years for the same thing? But its ok because the Gov is doing it.

 

 

congressional procrastination!

 

no one in congress wants to touch this issue with a 10 foot pole

 

political suicide cause any way you look at it - it will require "negative" change and that means voter anger in the polling stations

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