CBO: Social Security Now Officially Broke

[roo_ster]

https://www.nationalreview.com/exchequer/258075/cbo-social-security-now-officially-broke

The CBO’s revenue/expenditure estimates now place the program in permanent deficit.

What can I say?  The day that everyone who doesn't have their head shoved up a dark & odorous place predicted would come, has come.

It is a new day, a day when general revenues will prop up Social Security, rather than the other way around.

That sound you hear off in the distance?  That is the sound of a crash.

Cheers!

[Battle Monkey of Zardoz]

Or the sound of a shot heard around the world. 

[SADShooter]

I wish I could put my mandatory state pension contributions into my IRA. Gonna take it from all sides if I live long enough.

[gunsmith]

yup, I am skee roooed.

[lee n. field]

In related news, The Securities and Exchange Commission has launched an inquiry into public statements by Illinois officials about the state's underfunded pension fund.

[HankB]

Right now, this minute, SS isn't broke, there's still a surplus accumulated over past decades; but we are starting to tap into that, and unless we do something, SS will eventually start contributing to the deficit - in a big way.

In my eyes, SS is different from many other "entitlements" because for retirees, it represents benefits that have been earned. There's a moral and ethical claim on benefits that retirees can make. (That claim is a bit tenuous for persons other than retirees who collect benefits.)

Still, that makes SS different than other "entitlements" such as food stamps, WIC programs, EITC, college tuitiion discounts for illegal aliens, midnight basketball, and a whole host of stuff that would probably appall most of us if we knew the full story; too many of these are pure giveaways. And I doubt if the Obamunists would even consider putting those on the chopping block.

[drewtam]

Right now, this minute, SS isn't broke, there's still a surplus accumulated over past decades;

AaaaHa ha ha ha ha ha ha ha ha ha ha.... aaa haa ha ha ha... whew... (reads again) ahaa haaha ha ha ha 

sighhh

I'm not sure if you are aware of it, but all of that money has been spent on general funding. The SSA has a big stack of Treasuries for all that surplus. These IOUs (Treasuries) can't be repaid. SS benefits will be cut, taxes increased, defence cuts, other programs cut, and debt increased to cover the shortfall.

In my eyes, SS is different from many other "entitlements" because for retirees, it represents benefits that have been earned. There's a moral and ethical claim on benefits that retirees can make. (That claim is a bit tenuous for persons other than retirees who collect benefits.)

Still, that makes SS different than other "entitlements" such as food stamps, WIC programs, EITC, college tuitiion discounts for illegal aliens, midnight basketball, and a whole host of stuff that would probably appall most of us if we knew the full story; too many of these are pure giveaways. And I doubt if the Obamunists would even consider putting those on the chopping block.

Yeah, you mean legitimate entitlements like GM and Chrysler bondholders that were short changed outside of normal bankruptcy rights to benefit those with more political clout?
Cause if we are talking about legitimate entitlements, I have full faith that our gov't will do the right thing. (<--- sarcasm)

[roo_ster]

HankB:

You're such a kidder!

drewtam:

I might be wrong, but I think I recall that the SS "surplus" is in super-speshul SS-only IOUs, not even actual treasuries.

<googles>

Heh, I wasn't so far off:
"special-issue securities" that are not marketable.

Where is the ROFL smiley?  Or would I need the ROFSD* frownie?




* Roll On the Floor in Suicidal Despair

[Waitone]

Next up?  Confiscation of private retirement funds.

[roo_ster]

Next up?  Confiscation of private retirement funds.

Don't cry for me, Argentina.

[Battle Monkey of Zardoz]

Next up?  Confiscation of private retirement funds.

Yep. It will happen. And it will get very ugly.

[RevDisk]

Next up?  Confiscation of private retirement funds.

Five years ago, there were seventy million participants with 401(k) alone.  I guarantee the number of people who would be happy with confiscation of their entire retirement assets would be under 5 percent.  Even the most hardcore partisan supporter gets irate when the rules apply to them.  Confiscation of private retirement funds in one blow would be flat out politically impossible.  So is fixing Social Security.

Only political possibility is raising revenues or inflation via inflating the money supply.  I'd lay down cash on inflation, personally.  You'd have to, more or less, double revenue to make the federal budget dead even.  I'm not sure how much you'd have to increase the revenue to cover the Social Security liabilities.  But, you'd have to raise taxes significantly more than double in order to adjust for diminishing returns. 

Even if one does believe in the Social Security securities being "real money", they still must be redeemed with actual money from somewhere.  That's probably going to be from general revenue.  It's basically just an accounting trick to avoid having to say "Yes, we spent the surplus to the last penny."  Now they can say that they used money to buy nontransferable securities, and spent said money but still have those wonderful nontransferable securities.


Honestly, my bet is that they try to do it the "right way" (selling Treasury securities) for as long as possible.  Once the auctions begin to fail, they'll sharply raise interest rates.  At this point, the US ratings will probably be downgraded.  This will continue for a while.  Then investors will either stop buying, or simply not buy enough to keep the federal government operating. 

There's three solutions.  Spend less (not politically acceptable outside of token amounts), take in more (somewhat more politically acceptable, but makes folks unhappy) or cheat (inflate the money supply).  Cheating also have the virtue of not only paying for operating costs, but also diluting previous debt.  Quickest way to get a government out of debt is to devalue the currency to the point that you can trivially pay off your debts.  Also happens to be the worst way of dealing with your debt problems.  I doubt we'd see hyperinflation like the Turkish lira or any number of African currencies, but it'd still be quite painful. 

[RoadKingLarry]

Yep. It will happen. And it will get very ugly.

For a day or two maybe. Then those that protest will be labled as racist, un/anti-american, and/or a handful of other nasty lables.
A new season of American (M)Idol will come on followed by another Survivor reunion and most people will just go on about thier lives. The tiny minority that really protest will get spanked by .gov and be forgotten.

[Jamisjockey]

Next up?  Confiscation of private retirement funds.

401k's for sure.  A few months ago, Wilkow was playing clips of some woman who's wiggled her way into writing financial legislation who supports doing just that.

Five years ago, there were seventy million participants with 401(k) alone.  I guarantee the number of people who would be happy with confiscation of their entire retirement assets would be under 5 percent.  Even the most hardcore partisan supporter gets irate when the rules apply to them.  Confiscation of private retirement funds in one blow would be flat out politically impossible.  So is fixing Social Security.

. 

It won't be quite that obvious.  Hell, it probably won't even be by law.  It'll be done quietly by some agency formed during the "financial reform". Maybe through the new Consumer Protection people.

[HankB]

The point was, SS benefits are NOT the source of today's deficit or today's national debt. The news is reporting that the SS trust fund is still in surplus, and won't run out of money until 2037 - but since we've begun drawing it down already, now is the time to fix it, if we can.

Government has been, and continues to, pirate/steal SS funds for other, NON-SS programs. That doesn't make SS the problem, it makes the rest of government the problem. Pointing to SS "entitlements" as the source of today's deficits and today's national debt is dishonest. (Dishonesty from fed.gov? Who would've thunk it?    )

And they continue to swindle the SS trust fund. Consider how SS retirement benefits are now taxed - fed.gov pays out benefits with the left hand, and then takes back a chunk with the right hand . . . but what they take back doesn't go back to SS, it goes into the general fund.  This way they get to steal the money, launder it through retiree's accounts, and not even pretend they're going to pay it back.

As for confiscating 401(k) or other retirement funds . . . that would become really nasty, and .gov knows it. They may tinker with or phase out 401(k), IRAs, Roths, etc., but outright confiscation? I don't see it. Consider -  if 0.01% (one in ten thousand) of the victims decide to "vote from the rooftops" (to use a euphemism) being a government employee would become a job with greatly reduced long term prospects. And the .gov reaction would be both swift and harsh . . . provoking more violent backlash. A vicious spiral that will spin out of control, with no winners. Very bad for everyone.

[Headless Thompson Gunner]

Five years ago, there were seventy million participants with 401(k) alone.  I guarantee the number of people who would be happy with confiscation of their entire retirement assets would be under 5 percent.  Even the most hardcore partisan supporter gets irate when the rules apply to them.  Confiscation of private retirement funds in one blow would be flat out politically impossible.  So is fixing Social Security.

Apply enough class warfare, go after the rich first, and much of the population would go along with it.

[RevDisk]

Apply enough class warfare, go after the rich first, and much of the population would go along with it.

401(k) and IRAs are predominately for workers.  401(k) caps out at $16,500/yr.  So it's not really feasible to go after the rich people's 401(k)s, as they don't tend to have them. 

[Headless Thompson Gunner]

Meh.  

I think it's a mistake to presume that 401(k)s don't belong to the wealthy.  By far, most private retirement accounts, and most of the assets held in private retirement accounts, belong to white collar workers at the higher end of the income spectrum.  Even at the lower ends, anyone with some retirement savings is still far wealthier than the poor who have nothing but empty SS promises.  

I think it's a further mistake to assume that fact or reality will have anything to do with the politics.  The purpose of this sort of action is never to solve an actual problem with a sensible solution.  It's about convincing voters to give power to the proponents of the plan.  

Does anyone doubt politicians' ability to convince the penniless voting poor that anyone with a quarter or half million dollar retirement account is wealthy?

There's an awful lot of money tied up in retirement accounts, and those who have 'em will fare much better than those who don't.  I think those are the only ingredients necessary for confiscation to be a possibility.

[French G.]

Well, my measly retirement is in the gov't Thrift Savings Plan. I guess at the first sneeze of legislation to finger that I cash it, take the penalty and interest hit and then buy all the TEOTWAWKI crap I need. They have no claim to it, the gov't does not match funds, so every penny is money I kept away from myself. If it comes to that bad of a state, just remember, you can't fight city hall. But with enough gasoline...

[cassandra and sara's daddy]

http://blogs.fredericksburg.com/truthiness/

a few points

[MicroBalrog]

The fact that thing is called 'truthiness' tells us all we need to know about the author's political leanings.

[makattak]

http://blogs.fredericksburg.com/truthiness/

a few points

He's painting a rosy picture and using a number of specious arguments.

The money isn't there and it won't be there when I retire. Why should I be forced to pay into Social Security so that the baby boomers get to keep stealing from their children and grandchildren hoping to push the day of reckoning off onto another generation.

It's a shame we know longer think like this:

"If there must be trouble, let it be in my day, that my child may have peace." -- Tom Paine, 1776

Instead it's, "If there must be trouble, let my children deal with it. I deserve a good life. I've worked for it. Screw the kids."

[cassandra and sara's daddy]

The fact that thing is called 'truthiness' tells us all we need to know about the author's political leanings.

really?  do tell me all about his political leanings?  i wait with bated breath.

[MicroBalrog]

http://en.wikipedia.org/wiki/Truthiness

[Monkeyleg]

The money isn't there and it won't be there when I retire. Why should I be forced to pay into Social Security so that the baby boomers get to keep stealing from their children and grandchildren hoping to push the day of reckoning off onto another generation.

You don't think there's tens of millions of us "baby boomers" (I hate that monicker) who have been screaming about having our money confiscated to support this Ponzi scheme for the last 40+ years of our careers?

I'm one of those, and I don't expect it to be there in just seven years when I would be eligible for full benefits.