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Saturday, January 22, 2011

Social Security Propaganda

"We are very concerned about some of the false misperceptions being perpetuated about Social Security. Social Security has not contributed to our deficit problem and is not in any crisis. It is fully funded through 2037 and will still be able to pay out about 76% of promised benefits after this date even if no changes to the program are made. With moderate tweaks to raise additional revenue, as in our Protecting Social Security plan, Social Security can continue to provide peace of mind for Latinos and all Americans for another 75 years and beyond." LULAC
Statements like that make me wonder. They also make me point and click my way over to the SSA website to see whether I can find numbers to support those bold statements. There should actually be a "Trust Fund" for Social Security, since for years the system has pulled in more than it has paid out, and on paper there is, indeed, a "Trust Fund". A big, fat, retirement piggy bank. Every year, the Feddies take the social security receipts that are left and deposit them into the piggy bank. Right?  There is an enormous stash of cash tucked away built up by years of surplus social security receipts. No. The piggy bank contains nothing but IOUs as is shown here:
Note there is no column marked "Cash or Gold or Securities or Canadian Government Bonds" There are simply Bonds and Certificates Of Indebtedness. "Well those are interest bearing assets!" you say. "Why yes they are!", I say, but ask you "Who issued those Bonds and COIs and who is paying the interest?" If you answer "The United States Government", you will be correct. As it states on the Social Security Administration website:
The Social Security trust funds, managed by the Department of the Treasury, are the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds. Since the beginning of the Social Security program, all securities held by the trust funds have been issued by the Federal Government.

"Securities issued by the Federal Government" is another way of saying "The Federal Government borrowed the money and gave the SS Trust Funds an IOU." When the SSA "collects" the interest, the Federal Government has to pay it. Since presumably the Federal Government did not take the money it acquired from the Trust Funds when they purchased the "securities" (bonds/debt) and create a second trust fund, interest and principle payments must be paid out of their current income and should therefore be included in the Federal budget as an expense. When the Feddies are running a deficit, anything listed in the expense section of their budget is by definition, contributing to that deficit.

Up until now this has not been a problem, because Social Security was still raking in more in taxes than it was paying out in benefits (checks sent to retired people). In 2010, this changed - and because Grandpa wants a check he can deposit into his bank account, rather than a bond certificate to stick in his safe, real dollars left the Feddies piggy bank and were carried by the US Postal service to Grandpa's house and put in Grandpa's mailbox.

So how then, can LULAC claim that Social Security is not contributing to the deficit? How can they say there is no crisis when there is not enough money coming in to send everybody their check? We are borrowing money to pay for Baby Boomers' retirement. It is most certainly contributing to our Federal Budget deficit and it is going to get a lot worse, because this year happens to be the first year that the first Baby Boomers reach retirement age. It is an enormous number of people.

Get this through your heads: THERE IS NO SOCIAL SECURITY TRUST FUND. THE MONEY HAS ALREADY BEEN SPENT.

RH

Update: In stark contrast to the gaping hole of empty created by the geniuses in Washington, I submit the government of Norway and their pension fund. Their pension fund has actual assets in it. Norway... a country frequently made fun of here for being "Socialist". Our politicians can't even manage to be proper leftists.

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