Apr 26, 2012

Oh Lord! Please Don't Let Me Be Misunderstood

     From Reuters:
It's rare to see a federal official publicly beg reporters to get a story right, but the commissioner of the Social Security Administration seemed ready to get down on his hands and knees at a Monday press briefing. Michael Astrue was cautioning journalists not to scare the public about the meaning of the word "exhaustion."

"Please, please remember that exhaustion is an actuarial term of art and it does not mean there will be no money left to pay any benefits" he warned in issuing the trustees' annual report on the financial health of the Social Security program.
"After 2033, even if Congress does nothing, there will still be sufficient assets (from payroll taxes) to pay about 75 percent of benefits. That's not acceptable, but it's still a fact that there will still be substantial assets there," Astrue insisted.


Anonymous said...

Good for Michael. This is an oft-overlooked but extremely important point. The ability to pay "full" benefits may cease, but the agency can still pay 75 plus percent of benefits due after the "Trust Fund" is "exhausted."

Anonymous said...

If SSA "trust funds" have run surpluses (that for years have been used to float the Federal debt) for generations then is what is the problem about running a (current net incomre) deficit for a few years by the SSA fund?. Real World business do not always make a profit every year.

Anonymous said...

Astrue is obviously not an accountant. If the fund is exhausted, there can not be "substantial assets there". There are only projected cash inflows that cover 75% of projected cash outflows.

Don Levit said...

Anonymous at 8:48:
What you said makes sense, in the context you said it. There is no question that the trust fund is due the money back it loaned.
The problem is that the money was not supposed to be loaned in the first place.
Rather, the excess dollars were supposed to remain in special-issue Treasury securities, reserved solely for Social Security beneficiaries. It was not designed to loan these excess dollars to the Treasury. Roosevelt wanted the system to be self-supporting, with no use of general; revenues.
If that had happened, the trust fund would still run out of surplus money, under the present system, but it would have all been surplus money.
Now, what we have is a cash deficit, and have had one since 2010. If the trust fund had remained intact, we would not have a cash deficit until the trust fund is exhausted.
Don Levit