From a ridiculous gloom and doom press release from a right wing group:
Social Security will face a cash shortfall for the first time in decades next year, according to a little noticed report released late last month by the Congressional Budget Office (CBO).As a result, seniors could face benefit cuts in as little as three years. Congress could instead raise taxes or authorize new borrowing to close the shortfall, but has never before addressed a Social Security deficit through long-term borrowing.
Since the Social Security trust funds as shown by the graph above have over $2.5 trillion in them, I think that retirees are going to be safe three years from now. Maybe the people issuing this press release were the same people yelling about how the President was going to indoctrinate school children with Socialism.
6 comments:
If you believe there is a trust fund with anytghing other than IOUs in it, you must be fron another planet.
Trust Funds are nothing but paper IOUs. There is no vault of Trust Fund money. This money will need to be borrowed from countries like China and with the cost of the health care "reform" that in some shape or form will probably get passed, along with the TARP and Stimulus debt, not to mention the money Medicare needs, how long before these countries stop lending us money. Then the fecal matter will hit the fan.
Suggest people read what David Walker, former head of the GAO has written on the subject.
The US government securities held by the Social Security Trust fund are not IOU's in the normal sense of the word. US Savings Bonds, the 10 trillion dollar US debt, and the dollar bill are not just IOU's either. Do the previous posters expect Fort Knox to have 2.5 trillion dollars worth of gold bullion held for future social security beneficiaries? The rest of government may be overspending (mostly due to wasteful wars and tax cuts for the rich, not health care), but Social Security isn't.
"The rest of government may be overspending (mostly due to wasteful wars and tax cuts for the rich, not health care), but Social Security isn't."
The Social Security program might have money on paper, but when the time comes to pay benefits it will need to be borrowed, since as you admitted there is no gold in a vault to back it up.
Yes it would be good that the U.S. government had gold to back up the money that's printed. We are lucky that the world's currency right now is the dollar, but if countries decide to switch to say the EURO for transactions, we are SOL.
It is true that the securities that the gov't gives Social Security are NOT savings bonds in the traditional sense (they are certificates kept in a vault in Parkersburg, WV at the Bureau of the Debt's co-national HQ, courtesy of Sen Byrd). They are much WORSE. They are not negotiable; they have no cash value on the street. The government only may redeem them. Every cent that Social Security takes in above what it pays out is now given (lent) to Uncle Sam in these special IOUs. We don't have enough to run the government now, even with the Social Security borrowing. We are still borrowing a lot from other countries. What makes anyone think that we will be able to not only replace the Social Security asset with more foreign borrowed money, but ALSO borrow even more to redeem the IOUs so benefits can be paid? It will make Ponzi look like a piker when it all blows up.
So where do you propose that the agency invest the trust funds if not in government securities? In banks? Funds would either be insured by the federal government or not insured. In the stock market? How many billions or trillions of $ value would have been lost in the past two years?
There is also the possible manipulation of the market by private investors who monitor when SS would need to liquidate investments to pay benefits.
SSA would be solvent for at least 75 years if all wages were taxed, not just those up to $106,800.00.
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