Before I get started I find it wise to point out all the social programs under the amended Social Security Act, because many individuals believe the act only relates to retirement checks from social security. It actually covers: · Federal Old-Age (retirement checks based upon contributions and require at least 40 quarters of payments) · Survivors (pays children till the age of 18 when a parent dies) · Disability Insurance (pays individuals that become disabled and unable to work) · Unemployment benefits · Temporary Assistance for Needy Families · Health Insurance for Aged and Disabled (Medicare) · Grants to States for Medical Assistance Programs (Medicaid) · State Children's Health Insurance Program (SCHIP) · Supplemental Security Income (SSI)
Most of us are aware that these programs were suppose to be funded through payroll taxes. Most taxpayers realize revenues for these programs are placed in a non-interest bearing account.
However, the Social Security Fund is kind of like a Ponzi scheme. Investers (working taxpayers) pay into the fund today, so earlier investors(taxpayers) are paid “dividends” (benefits) now. All go well as long as there is a constant flow of investment funds to met the pay outs. The working population paying payroll taxes must not decrease and the contracted pay outs must not increase.
Also, the scheme crashes when payroll revenues decrease, or the program is expanded to cover more individuals, or the program increases the benefit checks of individual benefits. Many of us are aware that Congressional Budget Office (CBO) just last year reported the Social Security Fund had sufficient funds and revenues to ensure the solvency of the program until 2016.
Even MSNBC’s online site had an article that fears that the Social Security Fund maybe coming unstable was unfounded. The CBO has gotten a lot of press related to the recently passed healthcare reform bill in which it reported the bill would reduce the federal deficit.
“The New York Times” reported Wednesday that Stephen C. Goss, chief actuary of the Social Security Administration, disclosure the 2009 CBO report was wrong and within months the Social Security fund would be paying out more in benefits than it collected.
The same day Media Matters for America website reported, “Hannity falsely claims Social Security and Medicare are "bankrupt".
Why is the Social Security Fund going broke?
Revenues to the Social Security fund has hit an all time dip; unemployment is still high, underemployment is high, many individuals are going back to college, and many of the programs have been expanded. And recently we have seen the Obama administration increase the number of weeks unemployment benefits are paid and an expansion of the SCHIP program.
The Obama Administration last year froze the benefits paid to individuals at their current levelfor two years, this should help the programs. But the recent health care reform bill will hit hard the Medicare and Medicaid programs under the Social Security Act. The 3.8% Medicare surtax in the health care reform bill does NOT put those funds directly towards Medicare, but to the General Fund, instead. The U.S. Treasury must determine when to do so and how much to transfer to Medicare.
Also, the bill expanded the number of individuals that will quality for Medicaid.
Now we are seeing a push for amnesty for illegal aliens. If this occurs we will see more individuals on programs under the Social Security Act.
Increases in employment in the private sector and the GDP are not expected to occur anytime soon. Yet, the CBO once again projects that the Social Security Fund will become balanced in 2018; until then the funds shortages will have to come out of the general budget fund.
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