Official National Debt Balance
According to the Treasury Department, the current Total National Debt is $11.1 Trillion. As of 04/03/2009, Treasury breaks down the debt as follows:
Debt Held by the Public: $6.868 Trillion
Intragovernmental Holdings: $4.278 Trillion
The $6.9 Trillion of “Debt Held by the Public” is a full-faith and credit obligation of the United States Government. Its held by the public, foreign and domestic. Obligations of the United States Government which must be paid back (or rolled over to future generations).
The Social Security Trust Fund Explained
As of December 2008, approximately $2.4 Trillion of the $4.3 Trillion in “Intragovernmental Holdings” listed above is held in the Old-Age and Survivors and Disability Insurance (OASDI) Trust Fund.
This $2.4 Trillion is the “non-negotiable/non-marketable I.O.U.s” that you speak of. I believe you are incorrect to assert that there is $7.58 Trillion of these special issue Treasuries. Here’s why.
As you say, the Social Security system is pay-as-you-go. Both the employee and the employer pay 6.2% of gross compensation up to a limit of $102,000, making the total Social Security tax 12.4%. By the early 1980’s the Social Security system needed reform and increased funding.
In 1983, Alan Greenspan chaired The National Commission on Social Security Reform which resulted in the 1983 Amendments to the Social Security programs. The 1983 Amendments excluded the Social Security Trust Fund from the unified budget.
As a result of the tax increases instituted by the 1983 Amendments, over the last 25 years the Social Security system has collected more taxes than it has paid out. Excess Social Security receipts are “invested” in special securities issued by the federal government. These securities are held in the (OASDI) Trust Fund. The Social Security receipts that are exchanged for these special Treasuries have been spent by Congress on general budget items over the last 25 years.
It is currently projected that Social Security tax receipts will exceed Social Security payments until 2017. In other words, the amount of Treasuries held in the Trust Fund will keep increasing for the next seven years. In even more words, payroll tax receipts will exceed Social Security payments for the next seven years.
An analogy for how the federal budget works. Let’s say we have a husband and a wife. Both spouses work. They agree that each is entitled to keep all of their earnings, but they decide to put all their earnings into a joint bank account. If one spouse earns more than they spend, they will put it in the joint bank account where the other spouse can access it. During this whole time, this couple has kept meticulous records of who earns what and who spends what.
For twenty five years, the husband (income tax) spends more money than he earns. Every year, the wife (Social security tax) earns more money than she spends. During that whole time, the couple uses the the wife’s excess income to fund the husband’s excess spending.
At some point, the wife switches to part time and her income goes down. She still earns enough to cover most of her spending but she needs to draw down on “her” savings in order to cover the rest.
Unfortunately, at this point (2017) “her” savings consist of nothing more than IOU’s from her husband. How will this couple continue to live? Either the husband (income tax) will have to find a second job, get a higher salary or borrow the difference.
Drawing Down on the Trust Fund
If no changes are made to system, around 2017 Social Security payments will begin to exceed Payroll tax receipts. Even if changes are made, at some point in the next few decades, payments will exceed receipts.
At that point, the Trust Fund will begin redeeming the special Treasuries. In order to pay these Treasuries back, the U.S. government will either have to raise income taxes or (more likely) borrow additional amounts, i.e., real Treasuries.
Under the current rules, and depending upon future economic growth, the Social Security Trust Fund is projected to be depleted sometime between 2042 and 2052. Once the Trust Fund is depleted, we get to the Unfunded (i.e. $13.6 Trillion) part of our Social Security future.
The only difference between what occurs before the Trust Fund is depleted and after the Trust Fund is depleted is that there are no Special Treasuries to redeem before Social Security payments are made.
That last sentence may seem like hyperbole but its really not. It is the reason why many people say that the OASDI Trust Fund doesn’t exist. The OASDI Trust Fund is, in many ways, just an accounting of the relative relationship between Social Security payments and Social Security tax receipts.
How Big is the Debt Burden?
The 2008 OASDI Trust Fund Report provides us with a best guess (and it really is a guess) at what the future of Social Security looks like as of today.
The projected 75-year actuarial deficit in the combined Old-Age and Survivors and Disability Insurance (OASDI) Trust Fund is 1.70 percent of taxable payroll ($4.3 trillion in present value terms)…
The projected actuarial deficit in the OASDI Trust Fund over the infinite future is 3.2 percent of taxable payroll (1.1 percent of GDP), or $13.6 trillion in present value terms.
Over an Infinite Horizon
Let’s start with the biggest number: $13.6 trillion. I believe that this is the Trustees’ current version of the $12.8 Trillion number that you keep referencing. What is this number? It is the Discounted Present Value of the shortfall that the Social Security program faces after the exhaustion of the Trust Fund and following current projected demographics and tax rates over an infinite horizon. Forever. To the end of time.
So, when the CATO Institute says that “Social Security is already $12.8 $13.6 trillion in debt,” they do not mean that we have borrowed $13.6 Trillion from Social Security. They mean that, over the infinite horizon, we face a shortfall of $13.6 Trillion in addition to the $2.4 Trillion “sitting” in the Trust Fund.
If demographics and tax rates stay the same, then expected future spending on Social Security will be $16.0 Trillion (OASDI Trust Fund balance plus Unfunded) greater than expected Social Security receipts. We will need to either raise taxes or lower benefits by NPV $16.0 Trillion in order to meet expected Social Security obligations over the infinite horizon.
The Next 75 Years
As I said earlier, I don’t believe that accounting for Social Security over an infinite horizon is a very good way to examine the problem. Its simply too long a time frame. If we can’t predict tomorrow’s weather or the economy for the next five years then we certainly can’t grasp/predict the future of Social Security over an infinite horizon.
I prefer to look at the problem using 75 year data. I know. Examining the data over 75 years suffers from most of the same problems that we encounter on an inifinite horizon. It is an improvement however.
Using a 75 year horizon allows us to examine the issue from the perspective of a ten year old child today. An American child that hasn’t started to pay into the system but is going to have to. Seventy-five years from now that child will be eighty-five and getting towards the end of their life. They will have paid into and received payments from the system. If we can focus on keeping the system solvent through that child’s lifetime, then twenty-five or forty years from now that child can re-adjust the system to reflect new realities.
So what does the next 75 years look like?
The projected 75-year actuarial deficit in the combined Old-Age and Survivors and Disability Insurance (OASDI) Trust Fund is 1.70 percent of taxable payroll: NPV $4.3 trillion. That means that in addition to depleting the amounts in the OASDI Trust Fund ($2.4 trillion), the Social Security system is expected to payout an additional NPV $4.3 Trillion more than it takes in through 2083.
That’s a total of NPV $6.7 trillion through 2083. That’s a total of NPV $6.7 trillion in tax increases or benefit cuts through 2083.
Conclusion: That in my opinion, is the real problem we need to get a handle on: NPV $6.7 trillion over 75 years.
Social Security as a % of GDP
One last note. Perhaps a more instructive way to view the projected cost of Social Security and Medicare is to compare the financing required to pay all scheduled benefits for the two programs with GDP. Costs for both programs rise steeply between 2010 and 2030 because the number of people receiving benefits will increase rapidly as the large baby-boom generation retires.
Beyond 2030, Social Security costs increase slowly for about 5 years, reaching a peak of 6.1 percent of GDP in the middle of the decade. Costs then decline slightly over the following decade to about 5.8 percent of GDP where they remain for the last 35 years of the projection period.
Social Security outflow amounted to 4.3 percent of GDP in 2007 and is projected to increase to 5.8 percent of GDP in 2082.
Note: To give you some idea how difficult it is to work with these numbers, the 2007 projections put Social Security outflow at 6.3 of GDP in 2081. In other words, in 2008, the Trustees are predicting that GDP will be a bit bigger in 2081 than they thought it would be in 2007. How do you really predict GDP 75 years out? You can’t, but we do it anyway.
A Few Random Thoughts
I wanted to include this here:
- I am generally opposed to increases in the payroll tax, as opposed to the income tax. Why? Because the Baby Boomers are going to retire leaving a substantial SSI problem. Raising the payroll tax leaves that burden solely upon the working young. Raising income taxes places that burden upon all age demographics (but only wealthiest ~60% of society).
- From a young person’s perspective, is the delay of Social Security reform really such a bad thing? If we aren’t willing to raise taxes by a certain amount now, do you really think we’re going to be more likely to raise them later? If reform is delayed, isn’t there the real possibility that we’re actually reducing the burden on future generations because a consensus might grow around the need to reduce benefits for wealthy?
- Along the same lines, is the decline in housing prices really such a bad thing? At least for future generations that haven’t bought a house yet? Or bought stocks? A lot of the chickens that the financial crisis is bringing home to roost are more relevant to the Baby Boomers than they are to me or future generations of Americans.
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You have a good point. I was in error on total federal debt by either $7.58 Trillion. The current National Debt = $11.17 Trillion.
However, according to this web-site, http://zfacts.com/p/461.html, $7.58 Trillion = $2.42T for Social Security and $5.16T is for Medicare.
Also, BOTH Social Security and Medicare are pay-as-you-go. There is no money in the Trust Funds (only non-marketable/non-negotiable I.O.U.s). The I.O.U.s are non-marketable treasuries certificates.
Now, $12.8 Trillion has been borrowed from Social Security and Medicare surpluses (leaving them BOTH pay-as-you-go), according to CATO Institute (www.socialsecurity.org/reformandyou/faqs.html#2).
But $7.58T of the $11.17 Trillion National Debt is also $7.58T of $12.8 Trillion borrowed from Social Security and Medicare.
Therefore, $11.17T – $7.58T = $3.59 Trillion that is National Debt that is not counted part of the $12.8 Trillion borrowed from Social Security and Medicare.
Therefore, $12.8T – $3.59T = $9.21 Trillion that is not counted as part of the $11.1 Trillion National Debt.
So, CATO Institute asserts that an additional $5.22 Trillion (i.e. $12.8T – 7.58T) were borrowed and spent from Social Security and Medicare. If we go without the CATO’s $5.22T in more debt, the total federal debt = $11.17 Trillion (as displayed here: zfacts.com/p/461.html). If we go with the CATO’s $5.22T in more debt, the total federal debt = $16.39 Trillion = $3.59T + $7.58T + $5.22T
So, the real total federal debt is either $11.17 Trillion or $16.39 Trillion (depending on the widely displayed value of $11.17 Trillion or CATO Institute’s $12.8 Trillion figure of Social Security and Medicare debt).
Now, only considering the $11.1 Trillion, that debt per-capita is $35,807, which is 65% higher than the National Debt per-capita ($21,719 in 2008 dollars) in year 1945 after World War II, and 664% higher than the National Debt per-capita ($5,396 in 2008 dollars) in year 1941 (about the of end of the Great Depression).
But if the total federal debt is $16.39 Trillion, then the debt per-capita is $52,871, which is 243% higher than the debt per-capita ($21,719 in 2008 dollars) in year 1945 after World War II, and 972% higher than the National Debt per-capita ($5,396 in 2008 dollars) in year 1941 (about the of end of the Great Depression).
At any rate, even the more widely accepted national debt of $11.17 Trillion is disturbing enough, since it would require long-term fiscal discipline for many decades (if not centuries) to ever pay down so much debt.
At only 2.5% interest, it would take 222 years to merely pay down 33% of $11.17 Trillion dollars. See amortization. What are the odds of having the extraordinary fiscal discipline for so long to achieve that?
And if the total federal debt is really $16.39 Trillion, it’s even worse. I’m not sure whose telling the truth, $11.1 Trillion by itself is not very comforting. And the surplus money siphoned from Social Security and Medicare has already been spent and to simply borrow more, tax more, and create more new money will simply make it worse.
Dan, you are in error on the entire $12.8 Trillion. The United States federal government has borrowed $11.1 trillion. That’s it. $6.8 trillion of it is in public hands. $4.3 trillion of it is owed to government trust funds.
The CATO Institute is not alleging that there is some secret borrowings going on. They are simply saying that if the Social Security system is not changed, then it is underfunded by $12.8 Trillion. That underfunding is in the future. Not the past. They are using this amount to scare people. While it is in fact a real estimate of future obligations, for the reasons that I outlined above it is a very, very unrealistic number.
More importantly, it is not debt. It is an obligation of the federal government if, and only if, there are no changes to the Social Security system.
There is a big difference between “debt” and “future obligations” and it is important to recognize that difference. The Cato Institute website that you site does not differentiate between the two. Debt is a full faith and credit contract with the federal government upon which there is very little chance of it ever defaulting. The “future obligations” of Social Security and Medicare are whatever Congress says they are.
That is a big difference.
Debt Held by the Public: $6.868 Trillion
Intragovernmental (Trust Fund) Debt: $4.278 Trillion
Unfunded Social Security Obligations: NPV $4.3 trillion
Unfunded Medicare Obligations: NPV $53 trillion
Congress can’t just wipe out the first two line items because they are Debt. But if tomorrow Congress passed a law which cut Medicare benefits, the Unfunded Medicare Obligation listed above would immediately be reduced.
My opinion? You’re using websites that have an agenda. Maybe its the right agenda, I don’t know. But the numbers are readily available from the Treasury department and Social Security websites. Contrary to how politicians or think-tanks with agendas might talk about it, the government bureaucrats are actually quite forthright with the data. The data, if you read it correctly, gives you everything you need to know.
I admit the $12.8 Trillion figure by CATO Institute is suspect. They clearly call it current debt, but that number is $5.22 Trillion higher than the $7.58 Trillion in the so-called Social Security ($2.42) and Medicare Trust ($5.16) funds (source: http://zfacts.com/p/461.html , $7.58 Trillion) which is added to the Nationa Debt to create the $11.17 Trillion National Debt.
However, that $11.17 Trillion National Debt is still disturbing.
So, for only the $11.17 Trillion National Debt, the debt per-capita is $35,807 ($11.17 Trillion / 310 Million people), which is 65% higher than the National Debt per-capita ($21,719 in 2008 dollars) in year 1945 after World War II, and 664% higher than the National Debt per-capita ($5,396 in 2008 dollars) in year 1941 (about the of end of the Great Depression).
But even more disturbing is the current total nation-wide debt of $57 Trillion dollars (see break-down below).
That’s current debt; not future debt; not unfunded liabilities.
$11.17 Trillion = Total federal government debt (which includes $3.1 trillion federal government owes foreigners, $3.3 trillion debt owed U.S. domestic public, $4.2 trillion surplus siphoned from and owed to Social Security and Medicare Trust funds; 3/31/2009);
$2.2 Trillion = total state & local government debt;
$13.8 Trillion = total household debt;
$11.1 Trillion = total business debt;
$17.2 Trillion = total domestic financial sector debt
$1.9 Trillion = other debt (foreign debt)
___________________________________________
$57.37 Trillion (TOTAL)
Source: http://mwhodges.home.att.net/debt-summary-table.htm
See unfunded liabilities on that chart. Those could run as high as $174 Trillion.
That nation-wide debt has more than quadrupled from 100% of GDP in year 1956 to 411% of GDP today (using GDP=$13.86T in year 2007).
At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , . . . , at least until that finally becomes too painful).
HHMMMMmmm . . . see this site:
http://www.ShadowStats.com
At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , . . . , at least until that finally becomes too painful).
But it isn’t cash.
They are non-marketable/non-negotiable I.O.U.s.
Some people say “so what if the so-called Social Security and Medicare surpluses are only I.O.U.s?”.
Well, here’s why it does matter. Those I.O.U.s will eventually have to be funded with more taxes, borrowing, debt, and/or new money (and inflation), since there is actually no money in those funds. And regardless of where it comes from, it will cause more debt, and/or taxes, and/or inflation. Wealth can’t simply be created out of thin air.
Did you see the following?
At only 2.5% interest, it would take 222 years to merely pay down 33% of $11.17 Trillion dollars.
See amortization: http://One-Simple-Idea.com/$11Trilion.jpg
What are the odds of having the extraordinary fiscal discipline for so long to acheive that?
Prior to the financial crisis I was not a big worrier about the U.S. public debt. Here’s a few reasons why.
First, the government is not like a person or a business. The United States government will (hopefully) never have a day of reckoning. The government doesn’t die. The government doesn’t go out of business. If you’re the United States government, the government which presides over the most dynamic, productive and innovative economy in the world, you have every reason to expect that you will, in effect, live forever.
Pick any point during the next 75 years. If, at that point, government debt levels are still where they were pre-financial crisis, then there is no reason to believe that the government won’t be able to continue to roll over the debt that it carries.
Second, I don’t mean to continue the squabble, but I do think this is important. I prefer to use the public debt number that I arrived at in the last article: $9.1 trillion in public debt as of 2011. Given the current economic situation and Obama’s budget proposals, I believe we should begin to talk about the debt issue as if these things have already come to pass. Because they are going to come to pass.
$9.1 trillion is definitely a lot scarier than the current $6.8 trillion. I’ll give you that.
The reason I believe that the public debt number is more accurate is because it helps us look at the Social Security issue the correct way. This statement is an example of how I think the public discussion of this issue is wrong-headed:
You focus on the idea that there are no funds in the Social Security Trust Fund. While this is correct, it only confuses the issue. You look at the Social Security Trust Fund and see a deficit of $2.4 trillion. Looking at it this way ignores the unfunded obligation issues which arise after the Trust Fund is exhausted.
I’ll repeat it one more time for effect: The only difference between what occurs before the Trust Fund is depleted and after the Trust Fund is depleted is that there are no Special Treasuries to redeem before Social Security payments are made.
Simply put, the Trust Fund does not matter. The number that should be focussed on is the $6.7 trillion funding shortfall that is predicted for the next 75 years.
In some ways, this expected shortfall is less scary than the $9.1 trillion public debt because these obligations are amendable by act of Congress. In other ways, they are cause for more concern. Unlike the $9.1 trillion in public debt, the $6.7 trillion in Social Security obligations cannot be rolled over. If we make it to 2075 and if, as a percentage of GDP, the public debt is at or below the level that it will be in 2011, I don’t think that people will be all that worried about it. They will continue to roll it over, as we do.
Yes, there is a point where that debt is too high. Maybe Obama is going to get us there. But prior to the financial crisis, I did not believe we were there.
In 2007, total governmental debt amounted to 60.8 percent of GDP. The CIA ranked the total percentage as 22nd in the world. I take issue with the numbers that I’m giving (public debt as a % of GDP would place us far lower) but I’m giving them anyway.
(% of GDP)
(% of GDP)
Prior to the crisis we were more or less in the same boat as the other OECD countries. Arguably we were in better shape if you compare our demographics to Europe’s and Japan’s.
Dan, I want to thank you for the discussion. As a result of this discussion I’ve been able to put into focus in my own mind how I view the public debt vis-a-vis intragovernmental debt vis-a-vis unfunded social security obligations.
My take on the proper way to look at it is to separate intragovernmental debt from the public debt and to look at all social security obligations going over the next 75 years as a single number.
Based on this source: http://zfacts.com/p/461.html
The Social Security Trust fund is $2.42 Trillion.
The Medicare Trust fund is $5.16 Trillion.
Those two combined are $7.58 Trillion
But BOTH Social Security and Medicare are pay-as-you-go.
That web-site’s claim that public debt is $6.005 Trillion is based on the $11.17 Trillion National Debt – $5.16 Trillion Medicare Trust fund.
But why, if Medicare is also pay-as-you-go?
There is no money in Medicare; only more I.O.U.s
If Medicare is pay-as-you-go, why is its $5.16 Trillion not included in the public debt (i.e. $6.005 + $5.16)?
If those Trust Funds are real, then why does almost everyone say the National Debt is $11.17 Trillion dollars?
The point is, the reason they report the debt as $11.17 Trillion, is because that truly is the National Debt at this instant.
For example:
(1) http://www.treasurydirect.gov/NP/BPDLogin?application=np
(2) http://www.brillig.com/debt_clock/
Something doesn’t make sense here.
It makes perfect sense if the $7.58 Trillion in the Social Security and Medicare Trust funds are considered as debt.
Here’s the thing.
Money flows into the Social Security and Medicare systems, but that money is spent on something else, and an I.O.U. is put in its place.
I.O.U.s are considered debt.
It does not matter that the federal government and Federal Reserve can borrow and create new money. There is still $7.58 Trillion of I.O.U.s in the Social Security and Medicare Trust funds, and the other $3.59 Trillion of federal debt comes to a total of $11.17 Trillion, which is the number displayed practically every where.
Now, some people are choosing to look at those $7.58 Trillion of I.O.U.s as future debt, but every definition I’ve ever seen of I.O.U. = DEBT
Likewise for “PROMISE TO PAY”, or any other words used to describe some amount of money owed.
Source: http://en.wikipedia.org/wiki/IOU
So, we may not agree on this, but I think the numerous web-sites currently displaying the total National Debt as $11.17 Trillion is accurate and that amount should be considered as debt (not future debt).
Now, the fact is, the federal government has made promises for Medicare benefits that it can’t meet. Those are unfunded liabilities, and the final amount varies on many factors and time. But that is future debt. Likewise, as the numbers of people eligible for Social Security grows due to an aging population and increased longevity, the additional costs may exceed cause more future debt. That is, those so-called Social Security and Medicare surpluses will grow, and that most certainly won’t mean the debt is decreasing.
Lastly, there will be a price for more debt, borrowing, and creating new money from thin air.
So, there will be a price for those growing Social Security and Medicare I.O.U.s
Also, there will be a price for this $3.8-to-$11. Trillion created out of thin air: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZchK__XUF84
At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , . . . , at least until that finally becomes too painful).
Thanks for the discussion too. I learned of an error. That CATO Institute data doesn’t make sense.
However, I’m still convinced that the Trust Funds only exist as debt (I.O.U.s), due to the spending, revenues, and annual deficits. I think they are spending the Social Security and Medicare funds. That means more borrowing, and/or taxes, and/or creating new money later. Of course, if Social Security and Medicare are scaled back (or discontinued), then it’s no longer a debt. Also, fortunately, there is no interest on those Social Security and Medicare debt.
At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , . . . , at least until that finally becomes too painful).
Thank you for this discussion. Thinking of the guidance that says “save $100 a month and in 45 yrs you’ll be a millionaire,” there should be enough today to take care of the survivors (and more). I guess I’ve learned the money went in, and out to somewhere else. Why do so many people seem to think those who paid into it and expected a just return were stupid and are now whiners? Isn’t it an obligation the federal government must meet for the money it took?
Every week, biweekly, and monthly employers sent 12.4% of their wages to the US Treasury for social security and they also send 2.9% for medicare to the US Treasury for a total of 15.3%. As of February 27, 2009, there is still more money coming in instead of going out right. But the US Treasury owes IOU’s to the two trust programs as of today what are those figures? To me a IOU is DEBT. If it is not a DEBT then I guess I do not owe anybody any money. Was’t the Social Security trust fund set up as a separate fund and all the money from the employers went to that trust fund.US Government could not use the money in the trust fund except for Social Security. But sometime in the 1960’s or 70’s, Congress passed a bill that the Trust Fund money in Social Security would be in the General Fund and if the Congress took the money and put in the General Fund, they would leave a IOU in the place of the money. Medicare money is also in the General Fund and also has IOUs for what the Government as taken. When the Government in Washington DC says that we have to either raise taxes or cut benefits because Social Security and Medicare is running out of money. Why won’t the Government say that Social Security and Medicare Security has this amount of money in it and this is the amount of IOUs and then say what we need to do to keep the two trust funds solvent over the next 50 years. In the real world, the Government is taking the citizens tax money for Social Security and Medicare and using it for something else and the real world this is called stealing. I know that Washington DC doe not think this since they think they are under a different set of rules than the citizens of the United States of America
I’m curious about something.
Lets not look at Social Security as debt at all because it is really isn’t. Social Security in fact has money in it. The money may be the form of I.O.U’s but it has money as does Medicare.
Now if Social Security did not “purchase” treasury bonds and you had that money physically in hand would Social security work? Would it still be “crippled”? I was of the impression that S.S is still bringing in more money then it is paying out. At what point will it “break” even?(In case of confusion, bring in the same amount of money going out.) Again, pretend like it is still gaining 6% interest off the money. What date is slated to be the day that social security without any adjustments “breaks even”?
Also, I’m assuming the figures used include the rise of income that people would make which intern more money is put into the system.
One more thing, what would the percentage increase be for social security to continue to work as it was intended not a revenue department for congress.
It seems that are focus is really to use social security as a funding agent(tax) but that is not what its intended purpose was. It appears that we now classify it as a debt because congress used the money for other ventures. In all reality it is not SS that is broke it is the US Government/People. We have simply used SS as a scape goat. SS is really us paying credit cards with other credit cards. If we were not able to balance our budget with social security and were forced to get money else where would it(SS) work?
If so then really our problem is coming up with a solution to our $11 Trillion debt. Our debt isn’t in Social Security. Just because I spend the Banks money on school doesn’t make it there debt unless i don’t pay my debt back. So is the problem really the Government is telling us that they really aren’t planning on paying the debt off. I realize it would require money from some where but why give us a false sense of everything really.
Reminds me of the fine print used to screw people. We pay for what we use it is as simple as that. The only thing taking money from SS has done is give Americans a false sense of worth. We under value the true cost of living.
OK, money comes in to Social Security and Medicare (by mandatory withholdings from our earnings) and money goes out to recipients, understood. At present there is more coming in than goes out, so the same Government, (that mandatorily takes our money from our payroll), steals a portion of that excess every year and leaves us I.O.U.s, how sweet is that! I say steal because it will never be able to pay it back. So the fund remains solvent for now but its surplus is being constantly pilfered by the Congress, funds that are supposed to be sacrosanct. So, why not do this, we only pay into the fund just enough to keep it solvent, not a penny more! That way Congress (Republicans and Democrats) cannot steal from us anymore! (And by the way, shouldn’t this be a felony? It is for you and me!) We can then use this additional income to run the thieves out of capitol hill at the next election! Yeah, I know, FAT CHANCE!, but we can dream can’t we? Seriously, if I understand it correctly, this deal really stinks and smacks of TREASON! Something should be done!
Thanks for the discussion. As usual, the facts are subject to interpretation, and the politicians will interpret to their cause or benefit.
People talking like this DO NOT KNOW. Lay out the facts. Get ready for the distortions — one side or the other, or maybe both.
As an octogenarian I appreciate Social Security and Medicare very much. Perhaps if more respondents to the question were in my age group, there would be more interest in why these programs do fulfill the objectives of the law.
Simple solution: when the pay- out for one or both of the programs exceeds inflow, change the kind of national debt.
By the time this is projected to happen each year, we may have agreed to some good economic solutions to the problem.
It is quite simply madness to screech “national debt” and seek to change Social Security and/or Medicare to reduce the shortfall.
I am prejudiced since both programs work well for me and for many people I know. As complainers become eligible for benefits, their song may change.
As late as my 35th year I was opposed to any kind of health insurance, and considered social security payments a waste. Then reality struck my family in the form of cancer and cystic fibrosis and diabetes and eventually Alzheimer’s Disease.
When one is of average means, Social Security and Medicare are a blessing.
So — what I say cannot be considered factual, only self serving. Yes, I guess so.
I am amazed that the term “non-marketable, non-negotiable IOU’s” is used so freely. When that figure is removed from my check each year IT IS CASH!
Now the Government can change terms the way they feel is necessary but the fact is that in the beginning it was cash….my cash and has been used without my consent.
When 401-k’s were first implemented some companies used the money in those accounts for their own gain and forced new rules to be written to stop this thievery. Why are we not talking about the Congress (stealing) our money and expecting us to pay for it in higher taxes?
So much for the question asked, HOW MUCH MONEY HAS THE GOVERNMENT BORROWED FROM SSI? Does anyone know or are you quessing? If you don’t know keep your commenets to yourselfs so hopefully someone that has the correct answer can post it!
HOW MUCH MONEY WOULD BE IN THE SS SYSTEM NOW IF IT HAD NEVER BEEN PILFERED? I AM BETTING THAT SS RECIPIENTS WOULD BE GETTING LARGER CHECKS BY FAR THAN THAEY ARE NOW. HOW DO I FIND OUT? THHE BEST QUESTION FOR AN INCUMBENT DURING A DEBATE WOULD BE TO ASK HOW MANY TIMES YOU VOTED TO BORROW FROM SS,
This is a crime what congress has done and they have even admitted on TV that it is a crime the run the dept up on our children.I have 20 years study and practice in Federal Civil Law and I am a original independent stonemason by trade, who’s son was abducted by these craft members. Not only have they done it to others but they have done it unto me. RE: ST MATT 21 verse 42
I am no intellectually adept persona as some are, and can’t boast of Master Degrees here and there. yet this seems pretty much a lame duck session once again.
Basically what everyone is saying and everyone else in government is accepting as a norm is this:
Since there was originally in the past a surplus with Social Security and Medicare, laws were passed allowing the government to borrow that money through “I.O.U.’s”
The government has to date decided that it has not yet been required to pay that money back since it is not yet needed, and also because the government can’t afford to pay it back without making some financial burdens upon the American public and businesses.
Yet it sounded to me what some proposed to be the case here in these comments, is that the government, if required to pay those funds back in later decades, would not only consider raising taxes, or disallowing certain tax cuts, but also consider lowering benefits to social security and Medicare recipients.
Now recently, President Obama said that it wouldn’t be fair to decrease current Social Security benefits (however he didn’t swear an oath that this would not happen).
Already plans are proposed to have Medicare handled through private sources, and thus costs would increase to individual present current Medicare recipients.
So too, I do not doubt that teh governemnt would find the words and the way to lower benefits for Social Security in order to getout of paying trillions in I.O.U.s
What I can’t understand is this:
Since when could you borrow money with an IOU, and then say, the loan provider got other money or funds through other sources, and you could then claim you did not owe the original principle amount of the IOU?
Social Security was signed into law, and Medicare set to provide, for the people of the United States under congressional act and legislature.
It is not within the government’s power to take that money, not under it’s “justified power” I should rather say, when we have paid into the trust fund to a surplus, then claim that since it is suffering from a deficit, that it has the right to then lower benefits, or adjust the payout or declare a need to raise Social Security taxes or anything of the like while it still owes that money.
The question I must ask is, and please explain with patience as I am not as familiar with all the facts and figures as most of you are:
If the government had left the trust funds alone, would Social Security and Medicare have been suffering their own individual plights as forecast?
I have paid social security taxes for 60 years. My employers have matched this amount and paid it in.
No one, not in government or anyone else has the right to take any of this money that I gave them to put in trust. If they take this money, it is theft. In 1850 a man rode a horse for transportation. Anyone who stole that horse if caught was hanged. I want to see those responsible for robbing my trust fund hung, Publicy right in front of the House of Representatives and Senate. Yes I am one of those bible carring gun toting citizens.
While social security is NOT part of the budget, it is part of the debt. The Gekkos and the Wahabis out there keep trying to say that SSI needs to be fixed as part of the budget problems we have. SSI is not part of the budget and therefore someone is lying. The problem lies in the fact that we keep electing sociopathic conartists into the congress and senate. It is up to us to make sure these people live up to the oath of office they took before collecting that nice, fat paycheck and all the nice benifits that go with it.
As the Congressional Research Service noted in a report on May 5, 1998:
“When the government issues a bond to one of its own accounts, it hasn’t purchased anything or established a claim against another entity or person. It is simply creating a form of IOU from one of its accounts to another.
According to the Office of Management and Budget under the Clinton Administration in 1999:
These [trust fund] balances are available to finance future benefit payments and other trust fund expenditures–but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. 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
4.5 trillion of the 14 plus trillion that is subject to the debt limit as above described consists of “intergovernmental obligations” namely bookkeeping entries from Treasury to the Social Security and Medicare “trust funds”.
If part or all of the so called intergovernmental debt is forgiven and written off the books of Treasury the national debt would be lowered by that amount TOMORROW MORNING and the entire CRISIS would be resolved subject to supplying approximately 200 billion to these entities in 2011-2012 to make up for the shortfall of premiums and taxes paid relative to required benefits to recipients. This amount will be paid by treasury from the general fund and from borrowings regardless, as was necessary in 2010.
The special obligation Treasury bonds are bought and sold by only Treasury and no one gets hurt by writing them off no banker, no citizen, no market fund…period, for the simple fact that no one owns any of them except the Trust Funds.
Millions of dollars in staff studies, comment, publicity and speeches on this debt limit issue needlessly. No one will fail to pay these benefits because they would risk their entire political position.The tax and premium receipts and any required Treasury funding will insure these payments. By budgeting the required shortfall every year the trust fund scam is not even needed.
In return for lowering the public debt subject to the limit and freeing at least 3 trillion for borrowings, the congress and White House should approve spending cuts and close tax subsidies totaling an additional net 3 trillion toward balancing the budget and reducing the debt in three consecutive annual budgets, the first being 1.5 trillion, the next 1 trillion and then another 1 trillion. Simultaneously in a non-crisis mode SS and MC can be reformed to insure their longevity. These actions will assist in accomplishing the balanced budget issue as well.
This entire shameful episode is a disgrace and has exposed the disingenuous statements of all parties in leadership. It could have been resolved in one day by forgiving this phony, paper debt.
My guess is that you will not check this out and simply go along with the current dumb butt politicians and no-nothing frauds.
P.S. Every shortfall means that is how much real debt is incurred to the Chinese in the conversion of phoney debt to real debt. Last year it was aabout 50 billion.
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Keith A. Eaton
Dear Mr. Eaton:
Please, try your system with a bank. Try to borrow 100k and tell them your solvent, but can’t secure the loan because of all the phoney debt you have.
“When the government issues a bond to one of its own accounts, it hasn’t purchased anything or established a claim against another entity or person. It is simply creating a form of IOU from one of its accounts to another,
This is an insane statement, it is real money, have you used DE bookeeping? What happens when these entries are so many that their value exceed your real money?
I can’t get the sense of your comment. I repeat the government will continue to pay all the benefits consistent with the SS and MC statutes regardless of whether the so called intergovenrmental debt obligations are on the books or forgiven. 90% is currently payable from current income and 10% shortfall from general revenues..this will get worse unless the systems are reformed. The point is that currently the so called Trust Fund Debt entry is used to calculate our total National Debt subject to our Borrowing Limit thus the panic to raise the limit, create emergency legislation, arguments ad finitum, wasted time and likely a higher debt limit..needlessly. You can varify the calculation by looking at the Treasury Website at your leisure. We will borrow more over next year for sure but only up to the PRESENT limit under my plan,,not against a much higher limit…needlessly.
I choose to avoid a phony crisis and deal with the reforms and cuts and tax overhaul as a separate issue in calm waters not a phony panic.
Congress needs to pay back the money they took from social security. That money was not theirs to touch. That was paid by the hard working people of this country. Politicians used it and need to pay it back and stop with the fund is expensive. Why did they think the money was theirs? You stole the money now put it back. Congress needs to have limits placed on it and money in funds are not able to be taken bac once deposited. Congress makes the money problems for this country, and feel they are above the people with their actions.