• "This corresponds to factory orders up by 3.1 % in January. The next question from the supply- siders (who won't acknowledge the good news)"

    Question: Did the extension of the Bush Tax Cuts have anything to do with this "good news"?

    March 5, 2011 at 11 a.m.

  • I need to correct a mistake I made in my last post – yes that’s right a mistake. The “SS debt” is NOT like the debts owed to China and other countries. The Treasury is legally required to pay those debts. On the other hand the Treasury has no legal obligation to honor or pay the debt owed to the SS trust fund. Congress can change the benefits or anything else associated with SS at anytime for any reason.

    So what is the SS trust fund? It’s a government account that records the accumulated revenue and expenses associated with SS – that’s it! It has no bearing on future obligations or the ability of the government to pay benefits – it looks good but it is totally worthless. SS is “pay as you go” so each year is a whole new rodeo.

    Now since the SS trust fund is not a real debt, why does it show up in the federal debt? Well it shouldn’t because it’s really not a debt. I have to chuckle at the facade that is put up about paying the interest on this “debt” with more pieces of paper that have IOU written on them – they must think we are pretty dumb.

    And finally the SS Disability Insurance is also in the red. There are hundreds maybe thousands of lawyers who make a living challenging the denial of disability claims by the SS administration. I’m going to take a wild stab at this but I bet there is wide spread corruption associated with this program – sore back anyone?

    March 5, 2011 at 9:23 a.m.

  • You are up to your old "smoke and mirror" tricks. There is no money in the SS trust fund, there never has been. All revenue collected from FICA tax is spent by the government as general revenue. In fact I heard the SS Administrator testify in a Congressional hearing that SS revenue must be spent as it comes in as general revenue - it CANNOT be accumulated in a "trust fund."

    What the "trust fund" has is a bunch of IOU's from the US Treasury. It is a debt the federal government owes just like any debt to China, or anyone. To pay off that debt they will have to use money from general revenue. Since we are currently running huge unsustainable deficits this money will have to be borrowed. So "inter-government debt" will be converted into "publicly owed debt." The other alternative particularly now is for the Treasury to sell the "SS trust fund securities" to the fed and monetize this debt. So talk about a "trust fund" is really just so much rubbish.

    From Wikipedia:

    "These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense.... They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits. (from FY 2000 Budget, Analytical Perspectives, p. 337)"

    Whether SS is in the red or black, it still is a huge financial burden on workers in our economy. It is a regressive tax on of all things employment - it is difficult to imagine anything more stupid than that.

    March 4, 2011 at 2:39 p.m.

  • 1. Social Security adds to the deficit...Myth

    Social Security, by law, cannot add to the deficit. It is a separate program, paid into through FICA contributions, with benefits paid only from the revenue it raises. If the trust fund were to be exhausted and current contributions were not adequate to pay benefits, Social Security could not borrow from the general budget. Federal law prohibits Social Security from borrowing.

    2. Social Security is broke, and there is no “Trust Fund.”

    Conventional wisdom among Social Security skeptics is that the program is out of money now and that there is no Social Security Trust Fund. This is fueled largely by the fact that Social Security did begin to pay more in benefits than it received in taxes earlier than was projected due to the depth of the 2008 recession. Regardless of this fact, The Social Security Trust Fund currently runs a $2.5 trillion surplus. The Economic Policy Institute estimates the surplus will peak at $4.2 trillion in 2024 [7]

    March 4, 2011 at 1:34 p.m.

  • The financial outlook for Social Security is little changed from last year. The short term outlook is worsened by a deeper recession than was projected last year, but the overall 75-year outlook is nevertheless somewhat improved primarily because a provision of the ACA is expected to cause a higher share of labor compensation to be paid in the form of wages that are subject to the Social Security payroll tax than would occur in the absence of the legislation. The Disability Insurance (DI) Trust Fund, however, is now projected to become exhausted in 2018, two years earlier than in last year’s report. Thus, changes to improve the financial status of the DI program are needed soon.

    Social Security expenditures are expected to exceed tax receipts this year for the first time since 1983. The projected deficit of $41 billion this year (excluding interest income) is attributable to the recession and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink substantially for 2011 and to return to small surpluses for years 2012-2014 due to the improving economy. After 2014 deficits are expected to grow rapidly as the baby boom generation’s retirement causes the number of beneficiaries to grow substantially more rapidly than the number of covered workers. The annual deficits will be made up by redeeming trust fund assets in amounts less than interest earnings through 2024, and then by redeeming trust fund assets until reserves are exhausted in 2037, at which point tax income would be sufficient to pay about 75 percent of scheduled benefits through 2084

    March 4, 2011 at 1:22 p.m.

  • Too bad the Social Security Trustees, actuaries all, do not agree with you. But, then again, what Liberal has ever been swayed by facts when comforted by his own delusions?

    March 4, 2011 at 1:09 p.m.

  • Observer as long as the intakes from Social Security are more than than the payouts then by definition "does not add to deficit."...The payroll deduction was cut from 6.2%-4.2% for one year to help stimulate the economy,so cash flow was not a problem..As for LBJ,several administration have followed using the same tactics and it really doesn't matter if you think about it.....Rand Paul (no left wing liberal) agrees that raising the age of eligibility and some means testing will make Social Security solvent for another 75 years.

    March 4, 2011 at 1:01 p.m.

  • "I think since Social Security does not add to the deficit...". Really? Because of the "Trust Fund"? Where have you been for the last fourty years, in a cave isolated from civilization? Thanks to LBJ and his "Unified Federal Budget", the Social Security Trust Fund consists of special Federal Bonds, and all the money in that imaginary Fund has long since been spent. When Social Security passed the line last year and began paying out more than was coming in, they began redeeming those Bonds. Guess where the money to redeem the bonds comes from -- the taxpayers. If that does not constitute adding to the deficit, I am hard pressed to imagine what would.

    March 4, 2011 at 12:39 p.m.