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| Economy |
| Next in line for a bailout: Social Security |
| 2010-02-04 |
| NEW YORK (Fortune) -- Don't look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system. A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits. Instead of helping to finance the rest of the government, as it has done for decades, our nation's biggest social program needs help from the Treasury to keep benefit checks from bouncing -- in other words, a taxpayer bailout. No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week. The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116). This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30. Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn't provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance. Social Security hasn't been cash-negative since the early 1980s, when it came so close to running out of money that it was making plans to stop sending out benefit checks. That led to the famous Greenspan Commission report, which recommended trimming benefits and raising taxes, which Congress did. Those actions produced hefty cash surpluses, which until this year have helped finance the rest of the government. |
| Posted by:Besoeker |
| #9 Our Social Security Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised: 1.) That participation in the Program would be completely voluntary, No longer Voluntary. 2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the Program, Now 7.65%. 3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year, No longer tax deductible. 4.) That the money the participants put into the independent 'Trust Fund' rather than into the general operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, Under Johnson the money was moved to The General Fund and spent. 5.) That the annuity payments to the retirees would never be taxed as income, Under Clinton & Gore, up to 85% of your Social Security can be Taxed. Since many of us have paid into FICA for years and are now receiving a Social Security check every month -- and then finding that we are getting taxed on 85% of the money we paid to the Federal government to 'put away' -- you may be interested in the following: Q: Which Political Party took Social Security from the independent 'Trust Fund' and put it into the general fund so that Congress could spend it? A: It was Lyndon Johnson and the democratically controlled House and Senate. Q: Which Political Party eliminated the income tax deduction for Social Security (FICA) withholding? A: The Democratic Party. Q: Which Political Party started taxing Social Security annuities? A: The Democratic Party, with Al Gore casting the 'tie-breaking' deciding vote as President of the Senate, while he was Vice President of the US. Q: Which Political Party decided to start giving annuity payments to immigrants? A: Jimmy Carter and the Democratic Party. Immigrants moved into this country, and at age 65, began to receive Social Security payments! The Democratic Party gave these payments to them, even though they never paid a dime into it! Then, after violating the original contract (FICA), the Democrats turn around and tell you that the Republicans want to take your Social Security away! AND CONGRESS GIVES THEMSELVES 100% RETIREMENT FOR ONLY SERVING ONE TERM!!! |
| Posted by: gorb 2010-02-04 22:10 |
| #8 Democrats don't believe in the Laffer Curve. They feel that they can just tax their way into increased revenue and at the same time balance out inequities. |
| Posted by: rjschwarz 2010-02-04 21:25 |
| #7 RJ, real wages have stagnated or declined in the past 40 years for 90% of US workers. The top 1% have done well and the top 0.1% have done fantastic. It's a consequence of destruction of the real US economy and the consumption in one generation of 400 years of accumulated wealth. Now the liquid portion of wealth is gone and even the top 0.1% will see the bottom fall out. |
| Posted by: ed 2010-02-04 16:19 |
| #6 And a new phrase will enter to lexicon: Too big to bailout. |
| Posted by: ed 2010-02-04 16:01 |
| #5 There idiots actually must think there's a Magic Money Tree™ behind the White House. >:-( Actually Barbara, there IS, it's called a printing press, and this kind of misuse causes Zimbabwe style inflation. I've long noticed that prices today are almost exactly 10 times 1960 prices, simply add another zero behind anything in 1960 and you have a 2010 price. Example, in 1966 My father bought a new home (In Auburn Alabama) a brick three bedroom two bath split level (Front to back) For the astounding price of thirteen thousand dollars, Exactly one year's pay at the time. (Highway department Engineer, Building the Interstate 65 from Montgomery, to the Georgia line) Now I can't find such a house for under 130.000 anywhere today. I remember both ten and fifteen cent Hamburgers (15 If you wanted tomato and lettuce) and cokes were a dime |
| Posted by: Redneck Jim 2010-02-04 15:59 |
| #4 Oh, everybody you say! |
| Posted by: JohnQC 2010-02-04 15:06 |
| #3 Oh, everybody you say! |
| Posted by: JohnQC 2010-02-04 15:06 |
| #2 Instead of helping to finance the rest of the government, as it has done for decades, our nation's biggest social program needs help from the Treasury to keep benefit checks from bouncing -- in other words, a taxpayer bailout. Thought this money was supposed to be in trust and untouchable. Stupid me. So who robbed this fund? |
| Posted by: JohnQC 2010-02-04 15:04 |
| #1 Bail out WITH WHAT MONEY?? There idiots actually must think there's a Magic Money Tree™ behind the White House. >:-( |
| Posted by: Barbara Skolaut 2010-02-04 14:21 |