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ImperiumWatch: Social Security--Clearing the Air

This benefit is not a budget buster.

Comments (2)
Tuesday, January 15, 2013

Since there’s a lot of intentional and unintentional misinformation going about Social Security, it’s worth it to get down to a few basic facts that dispel errors.

First, Social Security doesn’t contribute to the deficit. It doesn’t belong in discussions of the deficit. Under the law, Social Security can only give out money from the Social Security trust fund. So the idea that reaching into other funds to pay Social Security benefits is going to break the country has no basis. Social Security and the deficit are apples and oranges. As for the program’s being expensive to run, its administrative overhead is only a minuscule 1 percent.

In the year 2010, though the economy was collapsing, Social Security still had a $2.6 billion surplus, enough to pay benefits through the year 2037 with no adjustments. Social Security’s surplus has to be invested in U.S. Treasury securities; it can’t be used to play the stock market or be “offshored” to invest in other countries.

Social Security cannot borrow, but the government can borrow from Social Security. Once the George W. Bush administration had run through the surplus that was left after Bill Clinton’s second term as president, it borrowed plenty from the program: $98,700,000,000.

As former U.S. senator Don Riegle and his wife Lori Hansen, who served on the Social Security Advisory Board, have pointed out, opponents of Social Security “never mention how much our government has borrowed from Social Security. In fact, the government has borrowed more from the Social Security surplus than it has from any other source in the world, including China. As a result, Social Security now ‘owns’ nearly 18 percent of the federal debt, making it the largest single holder of U.S. debt. The government owes almost twice as much to Social Security as it does to China and Hong Kong” (Huff Post Politics, April 5, 2011).

It’s no secret that financial interests would like to take the increments of retirement money that Americans now salt away into Social Security and harness them to Wall Street. But Riegle and Hansen offer another rationale for opposition to Social Security: that some people don’t want the government to have to pay back the huge sum it owes the fund, a fund derived from Americans’ earnings from work.

In other words, when some express the fear that Social Security will contribute to the deficit, what they really mean is that the government could be in even more financial trouble if it complied with the law and paid back the money (more than $2 trillion borrowed since 1984) that belonged to Social Security—read: the American worker—in the first place.•

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"Since there’s a lot of intentional and unintentional misinformation going about Social Security, it’s worth it to get down to a few basic facts that dispel errors.

First, Social Security doesn’t contribute to the deficit."

Wrong, right out of the gate. It used to be true that the Social Security Trust Fund ran an annual surplus but those days are past. The program is now running a deficit pegged at $75 billion in 2013, paid for out of the general budget.

"In the year 2010, though the economy was collapsing, Social Security still had a $2.6 billion"

Trillion

"surplus, enough to pay benefits through the year 2037 with no adjustments."

Yeah, that was two years ago. The date of exhaustion is now 2033 whereupon Social Security will only pay about 75% of promised benefits. Sorry kids.

"Social Security’s surplus has to be invested in U.S. Treasury securities; it can’t be used to play the stock market or be “offshored” to invest in other countries. Social Security cannot borrow, but the government can borrow from Social Security."

This betrays a fundamental misunderstanding about how the Social Security program works. By law, the FICA taxes collected must be invested in Treasury bonds which the Federal government then uses to fund the government. There is no “borrowing” – those funds are automatically funneled into the government with a promise to pay back special bonds in the future. If you want to call it “borrowing” then every President since FDR has been raiding the Trust Fund. And Obama didn’t play the stock market but he used that “borrowed” money to throw away cash on Solyndra and General Motors.

"Once the George W. Bush administration had run through the surplus that was left after Bill Clinton’s second term as president, it borrowed plenty from the program: $98,700,000,000."

Of course, no Advocate article would be complete without a gratuitous swipe at Dubya. Let me state this as clearly as possible: both the premise of this statement and the number are COMPLETE FICTION. It has NO basis in fact. I tried to look up the $98 billion figure and it seems to have originated from a tweet which was then posted to a left-wing blog with nary a thought as to the source. It is false. I look forward to your correction.

"It’s no secret that financial interests would like to take the increments of retirement money that Americans now salt away into Social Security and harness them to Wall Street."

There’s a reason for this urging: according to various news reports a person contributing to Social Security today will get back less money over retirement than he/she puts in over a lifetime. In other words, Social Security now has a negative rate of return. It’s the retirement program so great, they had to make it mandatory.

"But Riegle and Hansen offer another rationale for opposition to Social Security: that some people don’t want the government to have to pay back the huge sum it owes the fund, a fund derived from Americans’ earnings from work.

In other words, when some express the fear that Social Security will contribute to the deficit, what they really mean is that the government could be in even more financial trouble if it complied with the law and paid back the money (more than $2 trillion borrowed since 1984) that belonged to Social Security—read: the American worker—in the first place."

Gobbledygook. The U.S. government could no more default on Social Security bonds than it could on any other claim that has ballooned the national debt to over $16 trillion. Oh, that money will be paid until the Trust Fund runs dry and then twenty years from now millions of Americans will see their benefits shrink. A progressive media might point out that this is a Ponzi scheme meant to enrich current retirees at the expense of younger and less affluent American workers, but that would betray the Party Line.

Posted by Murray Latimer on 1.16.13 at 16:57

24 Public Laws from the 111th Congress have included amendments to sections in 12 Titles of the Social Security Act.

111-3

02-04-09

Children’s Health Insurance Program Authorization Act of 2009

111-5

02-17-09

American Recovery and Reinvestment Act of 2009

111-8

03-11-09

Omnibus Appropriations Act, 2009

111-63

09-18-09

WIPA and PABSS Reauthorization Act of 2009

111-72

10-13-09

[Extension of Medicare DME Accreditation Deadline for Certain Pharmacies]

111-92

11-05-09

Worker, Homeownership, and Business Assistance Act of 2009

111-115

12-15-09

No Social Security Benefits for Prisoners Act of 2009

111-118

12-19-09

Department of Defense Appropriations Act, 2010

111-127

01-27-10

Emergency Aid to American Survivors of the Haiti Earthquake Act

111-142

02-27-10

Social Security Disability Applicants’ Access to Professional Representation Act of 2010

111-144

03-02-10

Temporary Extension Act of 2010

111-148

03-23-10

Patient Protection and Affordable Care Act of 2010

111-152

03-30-10

Health Care and Education Reconciliation Act of 2010

111-157

04-15-10

Continuing Extension Act of 2010

111-192

06-25-10

Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010

111-226

08-10-10

FAA Air Transportation Modernization and Safety Improvement Act

111-242

09-30-10

Continuing Appropriations Act, 2011

111-255

10-05-10

Improving Access to Clinical Trials Act of 2009

111-280

10-13-10

WIPA and PABSS Extension Act of 2010

111-286

11-30-10

The Physician Payment and Therapy Relief Act of 2010

111-291

12-08-10

Claims Resolution Act of 2010

111-296

12-13-10

Healthy, Hunger-Free Kids Act of 2010

111-309

12-15-10

Medicare and Medicaid Extenders Act of 2010

111-318

12-18-10

Social Security Number Protection Act of 2010

Posted by Private Security on 8.13.13 at 7:34
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