Social Security Con Artists Are Lying About One of the Strongest Arms of the Program

Social Security Con Artists Are Lying About One of the Strongest Arms of the Program
AlterNet / By Joshua Holland

September 23, 2010 | You’ve no doubt heard about how the Social Security Trust Fund is projected to run out of cash a few decades down the line. What you may not have heard is that it might not run out at all; in fact, it may well continue to back-stop the popular program indefinitely.

If you want to know just how contrived the Social Security "crisis" really is, consider that the trust fund, created by a bipartisan act of good governance that’s almost inconceivable today, is doing exactly what it was designed to do, and more so. It is nonetheless cited by “entitlement” fearmongers as evidence that the program is unsustainable, a fiscal trainwreck just waiting to happen.

In fact, the opposite is true. In 1983, when we still had a somewhat functional Congress that was capable of tackling real problems facing the nation, Democrats and Republicans got together to address a very modest shortfall in funding for the Social Security system. But they went a step further. They thought long-term, raised payroll taxes and in doing so created the Social Security Trust Fund, a surplus that could be drawn down as the baby-boomers reached retirement age. Today, with $2.5 trillion worth of assets, the fund is so fat it’s projected to continue growing on just its own interest decades into the future.

The “reforms” were a victory for neither side -- Republicans agreed to a tax hike on businesses, and Democrats accepted a regressive tax on working people, while giving up an issue they had used to win 26 House seats in the 1982 midterms.

But it was a far-sighted act of governance. At the time, the oldest boomers were 37 years old, and the youngest were just 19. In 2037, when the fund is projected to be tapped out, the oldest baby boomers still kicking will be 94 and the youngest will be 83 years old. Not to be morbid, but given that the life expectancy of Americans is 78.1 years today, that means that the “glut” of baby-boomers receiving benefits will be receding in the nation’s rearview mirror. In other words, the trust fund will have done exactly what it was intended to do.

Fund is another creditor of the U.S. government. We are currently testing whether the U.S. government will treat all of its creditors fairly including the Trust Fund. Anytime some jackass starts talking about changing Social Security, ask them if the U.S. government intends to default on their debt? If not, then why are we having this discussion?

The alternative to default is paying back the debt.

I have been searching for many years now for an answer to how that might be done. From what best I can gather, there is no plan to ever pay back, or even pay down, the debt.

If I took out a loan that I had no intent to ever pay back, that would be a felony (fraud).

If I took out a loan that I did intend to pay back, but had no way of ever doing that, at some unavoidable point in the future it would necessarily default.


So in answer to your question, I believe the US government does in fact intend to default on the national debt, whether consciously or by neglect or by simple inability to keep up with the payments.

The key problem is that the big four mandatory spending/entitlement programs consume the ENTIRE tax revenue of the federal government (and then some, but the two numbers are nearly equal percentages of the overall budget). That means everything else - including interest on previous debt - is borrowed.

What happens to a person's finances when they start to borrow to pay previous borrowing costs? Have you ever known someone who managed to pull that off without going bankrupt?

They exist in the form of special bonds redeemable only by Treasury, which doesn't have the cash.

A funny thing about 'assets', when that term is used regarding ANY OTHER SUBJECT it is understood that the value of an asset depends on what you can get for it if you sell it on the market.

The problem is, these special bonds that SS has, they cannot be sold on the market. So what has really happened here is that the federal government has pulled a bait-and-switch, and replaced the nation's retirement savings with a huge pile of additional debt.

Only a fool or a liar would call that an 'asset'.

means precisely *nothing*.

the fact is, treasuries sold to the public & ss treasuries both represent money the us government has borrowed & spent. there's "no money" for *any of it*.

unless you think the us has no productive assets, which is clearly false, and that the productive power of the us is exhausted, also clearly false -- those are the assets which generate the "money" which will redeem the ss treasuries. & clearly, since "investors" are parking their money in us treasuries at historically low rates, they don't believe what you're selling.

You come off like you're arguing with me but you confirm the essential point - the money taxed specifically for the purpose of funding SS is gone, spent.

The only 'asset' that SS has backing it is the same asset that backs the whole US government's books, which is the ability to extract wealth from the citizens of the country.

Let's see how well that one is going to fly, when the very purpose for having to tax more to fund SS is that the last tax imposed for that purpose was consistently misappropriated, year after year, for decades.

See, the root problem is that all the taxes that can possibly be raised are already being spent on something or other. We can't even fund 60% of current federal government operations with tax revenues. Saying we can just raise more taxes is a flippant and anti-rational approach, as it fails to account for the basic fact that there are no tax hikes that can possibly be made that can make up the difference.

All that we await now is the day when interest rates go through the roof, putting an end to the borrowing-to-fund-government game for good.

So something (actually several somethings) have to go, because bankruptcy is fast approaching.

a claim upon.

too bad interest rates aren't following your scenario.

because this is a deflationary environment, not an inflationary one, & not likely to be inflationary anytime soon. if interest rates went up, that would imply a growing economy with better investment opportunities elsewhere -- which would = more jobs & more tax money.

so much bullshit in one post. of course we can raise taxes: rescinding the bush tax cuts on the top 2% alone will do nicely. the main cause of the deficit is the bush tax cuts & the war. not social security. as just came out today, 400 us taxpayers take home 2% of us gdp.

and barring that, the us can just print money & send it to ss recipients. in a deflationary environment it would do nothing but stimulate the economy and production.

First calculation - how much can possibly be extracted through additional taxation. Then compare that to the size of present and projected deficits and tell me how much of an impact that would have. You'll find it is not much and doesn't at all change the basic problem, which is government spending levels that are completely disconnected from the ability of the economy to support it. The US government is insolvent now, this very instant - it borrows to pay its borrowing costs, a classic bankruptcy spiral from which escape is improbable in the extreme.

Second calculation - let's say that by some magic the government can hold together without radical spending changes under present conditions. At zero interest rates, how much money does a person need to save in order to be able to live a middle class quality of life after retirement, and at what age will an average wage-earner be able to do so? You'll find there is NO age at which a person can retire until they know when they will die! Zero interest rates = zero returns on savings = nothing for a retired person to live on without eating their seed corn and setting a certain date on their own death or destitution. At 1-2% interest rates the retirement age for the average individual far exceeds life expectancy.

Simple mathematics tells us that what we are doing now cannot be sustained - and if it wasn't clear on paper, surely the spreading economic devastation should convince any rational person thereof.

unraveling. false premises.

I'd like to hear what you think I'm assuming that is incorrect.

Obviously more tax revenue possible

rid of social security, medicare and the VA all together. What they want to do is turn it over to Wall street so those crooks can get their hands on all that money coming in. And the people like the tea bags who are probably one of the largest groups on social security are too rabid to understand. Just what in the hell would have happened to our monthly checks if wall street had social security in their grasp the way Bush wanted.

We would all be homeless like a lot of those who lost their retirement and 401K's.

This shows you the republicans don't give one hoot about the people in this country, it is all about filling their pockets and supporting corporations. And they throw this "free market" crap up when they say it is best to privatize our programs.

When the DLC was founded, "Privatizing Social Security" (giving it to Wall Street) was one of their main goals as an organization.
They don't talk about it openly since The Crash, but they haven't given up the idea.

The DLC.

The ponzi machine is still hungry.

of our retirement, I am one of them, 53yrs old here :grr: -I would be SOL.