T Nation

Social Ponzi Scheme Dying


$45 BILLION in the red.


(CNSNews.com) â?? The Congressional Budget Office (CBO) reports that Social Security will effectively run a $45-billion deficit in 2011 and continue to run deficits totaling $547 billion over the coming decade.

The admission comes in the CBOâ??s semi-annual economic review that projects federal spending, debt, and economic growth. In the report, the CBO also examines the impact of projected economic performance on the trust fund that nominally funds Social Security.
â??Excluding interest, surpluses for Social Security become deficits of $45 billion in 2011 and $547 billion over the 2012â??2021 period,â?? the CBO reported.

This means that in order to pay benefits Social Security will need $45 billion more than it will collect in payroll taxes this year, and $547 billion more over the next decade.

The â??interestâ?? the CBO mentions is the interest that the federal government owes to the Social Security trust fund because the trust fund is legally obligated to take Treasury bonds â?? federal government debt â?? in exchange for the cash revenues raised by Social Security payroll taxes.

The CBO uses the interest payments on the bonds to account for the difference between what Social Security collects in taxes and what it pays out in benefits, if benefit payments exceed tax receipts.

Normally, payroll taxes are used to pay current Social Security benefits, with any excess revenues being exchanged for Treasury bonds. Because the Social Security trust fund is populated with these bonds, the federal government essentially owes interest on those bonds to itself, providing the CBO with another apparent source of revenue for the funds.

However, the fund is not taking in enough money to pay out its obligations, nor will it for the foreseeable future, according to the CBO. Adding the interest owed by one government account â?? the general fund of the U.S. Treasury â?? to another â?? the Social Security trust fund â?? is merely an exercise in moving money from one part of the federal budget to another. It does not mean that there is extra money available to pay Social Security benefits.

Adding in the transfer payments makes Social Security and other federal entitlements appear to be fiscally sound.

â??That surplus is bolstered by interest receipts and other sums transferred from elsewhere in the [federal] budget,â?? the CBO explained. â??Such intragovernmental transfers â?¦ reallocate costs from one category of the budget to another but do not directly change the total deficit or the governmentâ??s borrowing needs.â??

In other words, Social Security is not taking in enough money in taxes to pay current or future benefits and instead will have to rely, in theory, on future federal borrowing to meet its needs.


Let is not forget in it's supposed money in the bank they have 2.5 trillion of it is IOU's.


I basically feel like money is not real anymore, or at least it's not treated as such.


inb4 gold rant


So what is your take on the issue of Social Security dying?


Its a choice between public and private debt, or everyone's standard of living will decrease.

I guess when you run massive trade deficits for decades all the money to keep partying has to come from somewhere.

If only we could have seen this coming...


The nation probably should have listened to that one guy in 92.


Hayek, Rothbard, Mises, were writing about this waaaay before 92'.

In fact, these pyramid schemes based on sovereign credit were obvious as fuck, even to my formerly communist(USSR expat) grandmother.
She receives SS, medicare, medicaid and knows it's all bullshit.
If a 73 year old formerly communist woman with the beginning signs of the dementia understands that SS promises are just "government doublespeak nonsense"(roughly translated from Russian) then I think it's safe to say it's not difficult to understand.
However, after decades of keynesian economic hysteria most people in the U.S. will not be able to overcome the brainwashing in time to avoid impoverishment.


I agree with everything you are saying. I was responding to his post, which is right, in saying that in 1992 there was a guy in the Presidential race that was talking about it.


Watch the media spin on this. Nothing to see here, pay no attention....


Ok so what I don't get, we no how much revenue we generated last year in taxes, from that number we deduct what we plan on paying towards the debt (more than just interest), the left over gets divided in previously assigned proportions to a part of the budget. And that is the government and it's bureaus operating budget for the year.

If they can't fund something it doesn't get funded. It may be a simplified form, but that is what should happen.




NPR has been covering the issue.


But Harry Reid says Social Security is sound as a pound!

Obviously you guys are nothing but intolerant racists, just hating on a black man in the White House. Shame on you.


Yeah, my calculator hates him too.




Yeah. They tend to steer away from hysteria but they acknowledged this ones gonna have to hurt to get fixed.


Wait- so Congress voted numerous times to borrow against SS when it was making shitloads of money, but now that they've finally fucked it up so badly, it's the program's fault?

I think not.

It was ALL the politicians.

Cut military spending and plug the holes in one of the few worthwhile programs our government has.


You realize that this 45 billion is going to go way up next year and the year after that right? As more and more baby boomers jump in this thing is going to go higher and higher. I agree we should cut the military but there is no amount of money that is going to save this program.


And you thought that politicians in a democracy would do what exactly?