Sunday, November 18, 2012

Social Security Trust Fund is a Fraud

You know there's nothing in the $2.6 Trillion Social Security "trust fund" don't you?  Hat tip to a Forbes article called "What Happened To The $2.6 Trillion Social Security Trust Fund?" on this subject.

Yes, the social security trustees have assured you that the program is self-funding until 2025 or thereabouts with assets of $2.6 Trillion. The problem is that there's nothing there but IOUs (government bonds). The cash money has been spent long ago.

Why else, at the height of the last debt ceiling "crisis" in 2011, Obama said that he's not sure that the checks will go out, that "there simply may not be enough money in the coffers to do it"?   If there were $2.6 Trillion in an account somewhere, then the checks most certainly would go out regardless of the debt ceiling talks.

The President's own White House Office of Management and Budget director Jacob Lew intentionally misleads by writing in the USA Today in February 2011 that:
Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries.
According to the most recent report of the independent Social Security Trustees, the trust fund is currently in surplus and growing. Even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits for the next 26 years
When more taxes are collected than are needed to pay benefits, funds are converted to Treasury bonds — backed with the full faith and credit of the U.S. government — and are held in reserve for when revenue collected is not enough to pay the benefits due. We have just as much obligation to pay back those bonds with interest as we do to any other bondholders. The trust fund is the backbone of an important compact: that a lifetime of work will ensure dignity in retirement.
It's basically all a lie.  There is no trust fund with any real cash assets--that budget category is just full of IOUs (bonds). Those bonds need to sold for cash to pay benefits (The the same mechanism as deficit spending).  

Bonds held by the government are a liability not an asset!  Another way to look at it is, how well off are you if you owe $1 million to yourself?

Social Security is a pay-as-you-go program depending on current payroll deductions to pay current benefits.  Social security payroll taxes now automatically roll into the Federal Government's general fund and bonds are put in the "trust fund" as an accounting gimmick. It's already paying out more than it takes in, so it's a net drain on the nation's finances and will be for the next 20 or so years.   Social Security benefits are already adding to our deficits now to the tune of $36 billion in 2010 and will increasingly do so for the next 20 years as more and more baby boomers retire.

So, for Congress and the President to not include discussions of Social Security along with Medicare and Medicaid in our current budget crisis is derelict.  Let's see, Lew, the director of Budget and Management knows nothing about budgeting and management or is just another"liar'.  But the President had it right--the money isn't there.

The fact is the President hasn't mentioned ANYTHING about spending cuts or reform of ANY of these ENTITLEMENTS since his re-election and during any public speaking about the "fiscal cliff".  He continues to provide ZERO leadership in the most important national discussions.  In fact, he's already distracted and flown off to "look presidential" in Thailand and Myanmar.  It doesn't matter, his input has already proven to be irrelevant.

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