By Jason Sattler

So-Called Social Security ‘Crisis’ Solved With Facts

February 6, 2013 3:08 pm Category: Memo Pad, Politics 81 Comments A+ / A-
So-Called Social Security ‘Crisis’ Solved With Facts

If you’ve been following the debate over a so-called “grand bargain” to cut the long-term deficit, you may have been surprised to hear Social Security mentioned by both the GOP and the president, as if the program is part of what Republicans call our “spending problem.” It isn’t.

“Under the law Social Security is not supposed to be part of the budget,” writes Dean Baker, an economist and the co-director of the Center for Economic and Policy Research. “It is an entirely separate program financed on its own.”

And as a self-funded program, it has sufficient funds to pay full benefits until 2033. After that, it is funded to pay 75 percent of obligated benefits.

Basically, there isn’t a crisis now and won’t be for 20 years.

The problem is, not enough Americans seem to know this. But a new study from the National Academy of Social Insurance (PDF) shows that when citizens are informed about the realities of Social Security, they’re comforted and willing to make changes to make the program solvent into the future.

A majority initially responded that Social Security was in “crisis.” But once informed of the slight increase in payroll taxes needed to save the program, 3 out of 4 said there is no crisis.

And while 82 percent of Americans are willing to pay higher taxes to save Social Security, there is, of course, an even more popular alternative.

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So-Called Social Security ‘Crisis’ Solved With Facts Reviewed by on . If you've been following the debate over a so-called "grand bargain" to cut the long-term deficit, you may have been surprised to hear Social Security mentioned If you've been following the debate over a so-called "grand bargain" to cut the long-term deficit, you may have been surprised to hear Social Security mentioned Rating:

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  • http://www.facebook.com/people/Rich-Birkett/100000480147182 Rich Birkett

    If Social Security is solvent, why did President Obama say Social Security checks would be delayed if the debt ceiling isn’t raised? Either Obama is trying to scare voters into backing the raise, or he doesn’t know all the facts, or he’s lying.

    • Urbane_Gorilla

      Probably trying to fire up retirees to make the GOP look bad….As if they could look worse. Politics. But your point about the President not knowing all the facts, or lying applies equally to Congress.

      14th Amendment : Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

      In other words, if Congress has approved debt, they can’t not pay it.

      Facts don’t seem to get in the way of Congress these days do they?

    • http://www.facebook.com/dominick.vila.1 Dominick Vila

      Social Security is solvent inasmuch as its revenues cover current outlays. The problem is that demographic changes, which already started with the retirement of baby boomers, and the fact that the contributor/beneficiary ratio is now at a breaking point, will strain the system to the point that it will have to rely on general funds to cover outlays unless something is done soon to ensure its solvency for many years to come.
      I suspect President Obama’s prediction concerning issuance of SS checks if the USA defaults on its debt was influenced by the fact that if we don’t meet our debt obligations, borrowing would come to a halt, and the government would have no choice but to prioritize services. In other words, we would have to choose between paying the military and intelligence agencies to guarantee our national security, pay air traffic controllers, medical researchers at the CDC, the border patrol and other such services and honoring the obligations associated with paying seniors the benefits they were promised in exchange for the contributions they made during their productive years.
      Bear in mind that our contributions were not set aside for future use, the SS checks issued today are backed up by the contributions our young make today, the same way we paid for the SS checks our parents and grandparents collected long ago.

      • http://www.facebook.com/BaronSieggy Siegfried Heydrich

        From a rather cynical demographic point of view, the poor health and habits of the baby boomers now retiring makes this a largely self-solving problem. I live in SW Florida (a retirement Mecca), and when I see the number of obese, wheezing retirees who essentially stop living when they retire, on one hand I am sad, and on the other, aware that their early departure from this vale of woe reduces the long term burden on the SS system. However, this is offset by the increased demand on Medicare / Medicaid. Oh, well . . .

        • CPAinNewYork

          So, what is your point?

      • jnap

        I am sorry Dominick but you are wrong. Social Security, when it was enacted, required all money, in excess of what is paid out to beneficiaries to be invested in Special Issue Treasury bonds. The fund has about 2.3 trillion of these bonds and can case them in to pay benefits when it is needed. These bonds are no different than bonds sold to China, banks, pension funds and other countries. The problem is that when these bonds are cashed in the money will have to be borrowed to pay them off.
        But that also applies to all bonds that reach maturity.
        Congress needs to worry about all of the other problems it has and worry about SS in about 5 years. As many people have pointed out just raising the rate by 1.3% solves the problem.

    • johninPCFL

      Current paycheck contributions don’t pay for all of the current outlays, so money is now borrowed to pay current retirees. Do you want to pay the army or granny? Do you want Saturday mail delivery, or pay granny? Do you want safe air travel or pay granny? Do you want to repair that bridge, or pay granny? Do you want your fire department trained or pay granny?

      It costs about $500B to run the federal gov’t, about $700B to run the military. The rest of the $3800B in federal expenditures is SS, Medicare and Medicaid. This year’s deficit will be around $900B, so to keep the SS checks solvent without exceeding the debt ceiling, most of the federal gov’t and military would have to be shut down. Or, alternatively, keep the coutry secure and slow the SS payments.

      Which would you do?

      • jnap

        Pay granny! She paid into the fund and deserves to be paid back. I paid into the fund for 50 years and, in fact I’m still paying into it. If you don’t pay granny or me; what do you expect us to do live in the streets?
        We are not getting anything more out then we were promised.

        • johninPCFL

          You realize, of course, that this month’s check is the last one you’ll ever get once you disband the military because you can’t pay them? You sure the country’s security isn’t more important than you, maybe just this once?

  • Sand_Cat

    The problem isn’t that the Republicans won’t raise taxes: it’s that they hate Social Security as the last surviving New Deal “Liberal” program and want to destroy it, along with Medicare and Medicaid. But first they want to milk Social Security for all their Wall Street owners can get by “privatizing” it.

    • http://www.facebook.com/bob.brindell.7 Bob Brindell

      Generally I have difficulty agreeing with you. But Sand_Cat you are on target here!

    • 1Johnny

      No, the problem is that Republicans beleive that the working people of this country should be allowed to make decisions related to the money they EARN. The average working person is already turning over 50 to 60% of their income in taxes (state taxes, SS taxes, Medicare taxes, Federal taxes, County and City taxes, property taxes, sales taxes, etc. The Government does a terrible job managing tax income. More taxes is not the answer! New leadership is the answer!

      • Allen Bates

        Why don’t you look at the fact that most people are not saving for retirement and if they didn’t have Social Security they would have nothing. The Republican party just wants to see privatization for their rich crook bankers to fleece the American public more than they can now. http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2012/12/21/the-middle-class-retirement-delusion-by-the-numbers

        • 1Johnny

          Allen,
          You are essentially wrong! The SS tax (which goes into the social security fund) is13% or your pay (you pay 6.5% and your company or business pats 6.5%). The money comes out of everyones check who is working. So, if there was a choice, send it to the Federal Government or invest yourself (and no it does not have to be in stocks or risky investments). Either way, anyone working is paying for their retirement. It is just a matter of who you trust with your money. But if you are wokring, your are savings for your retirement.

          • Saaby000

            It’s not ony a matter of trust, but also economics. The vast majority of people do not have the time or the skill set to invest their money “wisely”.. those that do want to invest usually either hire professional or just buy a series of Mutualy Funds.. in either case there are “fees”, commisions and costs involved. Many studies have shown that over a “long term” 20 to 50 years, those “costs” eat away a VERY LARGE chunk of our ‘savings’ and we are left with very little if anything at all (this doesn’t even consider the swings in the markets which might work very much against us.. consider the 2008 crash).

            SS is risk free (it was before we elected sedicious hostage takers to office), with steady growth which is “inflation protected”. The peace of mind and security in itself has TREMENDOUS value.

          • 1Johnny

            While I understand the security people find in the Government, I would never use the words “risk free”? The Federal Government is now $17 trillion in debt and pays over $400 billion just on the interest related to the debt each year. The number is expected to grow to $800 billion by 2020. The Federal Government is horrible at the management of money. As with everything with the Government, you get what they say you will get (and it is always subject to change).
            Come to the State of Illinois (my home state) and tell the teachers that their Government Pension (paid by the state) is risk free. The pension funds is currently $100 billion in the red and they are looking serious reductions or concessions because the politician found a way to spend all their money. People have way to much confidence in the government.
            Finally, I totally agree with you about the huge fees paid to the mutual fund companies. People need to take the responsibility to read and study the most effective way to invest, and maybe that is primarily CDs (which are extremely low right now but will head higher at some point), or some other form of low risk investment.

      • Chris

        Taxes are indeed the problem. Let us take a look back to the 1950′ and 60′s when the rich were taxed 70 to 90% or they could write it off by investing that money. Often time increasing their wealth as a result. During that time corporations paid 30% in taxes, they now pay on an average of 10% and due to corporate welfare some pay nothing. In the 50′s and 60′s we had the highest standard of living, we had infrastructure that was the envy of the world. We also went to the moon and back not once but several times. Now with the tax reductions on the rich and corporations, look at the sad state America is in now. Even our education system is far below par. We are the richest country in the world, richer than we were in the 60′s but due to giving money back to corporations and the rich, our country is now in a sad state. No longer are we number one and reflect the best a peoples government can achieve. I would also point out to look at what the Koch brothers are doing with their extra wealth, trying to take the working peoples voice away and replace it with the voice of the rich. If money is all congress hears today, then we need to spread the wealth even more, so that all American can afford a voice in congress.

        • 1Johnny

          Chris,
          Not being a democrat, I really am not concerned or interested in what everyone else pays in taxes. I really don’t care what the Koch brothers, or Warren B or Bill Gates do with their money. You can take all the wealth or the two wealthiest people in American (Bill G and Warren B) and it would run the Government for 28 days (over $100 billion dollars). The top 10% of earners are the reason there is a government (they fund 70 to 80% of the Federal Government and the bottom 50% pay nothing).
          Fair is a very relative term (and probably varies by person). I guess I would feel better if the Federal Government carefully managed the tax payers money instead of investing in failing businesses and industries and spending $415 billion in 2013 paying interest on the bloated debt. The tax revenue would go so much further if the money was not wasted and was carefully managed. Maybe set some appropriate priorities and spend the money based on those priorities.
          Just my thoughts!

      • slideguy

        “The Government does a terrible job managing tax income.”

        Wrong. The program is fully funded for the next 25 years, could fully funded for the next 75 years with minor tweaks and has been an unqualified success in accomplishing its goal, which is to end the grinding poverty of old age that was the fate of MOST Americans prior to its establishment. Its a government program that works as advertised and is a resounding success. Which, of course, is why the GOP hates it.

        • 1Johnny

          Slideguy,
          Republicans do not hate Social Security. There is so much focus of a few people within the Republican party that the media loves to talk about. In my view, social security is a pension program that should be there when an individual retires (because they paid in all these years). When I said that the Federal Government does a lousy job of managing money I was in refer to our wonderful politicians who spend all the funds for 60 + years and the Federal Government now owes the social security funds all the money people paid in for their life time (the money is not actual there and it is not invested-other than government treasuries). The politicians spent the money! What is mismanagement is the $17 trillion of debt, and the fact that the US Goverment paid out over $415 billion in just interest on the debt in fiscal 2013. I know, we have paid that amount for years! Interest on the debt is projected to increase to $800 billion per year by 2020.
          I am an individual that would like to not pay into social security and worry about my own retirement. Approximately 13% (6.5% from your check and the company matches that amount) and invest it myself. Why, the Federal Government is the big revenue sink where money goes in never to be seen again. 13% of your lifes pay goes into social security (that’s a lot of money)! People should have a choice. Pay into the Social Security (pension fund) for invest for yourself. By the way, Social Security disability is expected to go dry by 2017.
          One final comments for those that firmly believe in the Federal Government, in the 1950′s and 1960′s, there were 50 or 60 people working for each one getting benefits (SS benefits). Today (2013), there are 3 to 4. Social Security, based on the latest Gevernmental Reports, is expected to go dry (run out of money) by 2032 if nothing is done (which we call no we have a do nothing government).
          But I am not a person who would support elimination of SS for the people who work a lifetime (and paid into the fund their whole life) and I am a pretty conservative person. Infact my parents are currently living of SS. SS should not be considered a Governmental Entitlement (it is something people worked for).
          Just my thoughts!

          • Saaby000

            Johnny,
            Nice thoughts, but like swiss cheese, lots of holes in it.

            Regarding the “running out of money” statement. That doesn’t mean the well is dry and SS has no money to dish out. That just means the money in the “pot” might be empty starting in 2032, but the people that need their retirement funds will still get money in 2033, except they will only get about 75% since that’s all that was collected the previous year… and on and on.

            This situation is not new.. It happened at least once before.. and guess how they solved it? They passed a law to increas the SS tax to what it is today, to keep it going for another 40 or so years.

            We can do the same again.. just read my previous post.

            Regarding the term “entitlement”. I guess you don’t know that it’s actually an “accounting” term and does not mean the same as the world we use in our every day usage. Your right, SS is a Retirement Savings Account that both the worker and the employer contribute to. Unlike normal 401K or IRA accounts where you take out what you put in… SS is a Government Social program designed to give every American citizen a “safety net” so that they do not suffer unnecessary hardship in their “golden years”… So, if you think back to the beginnings of the program.. the first ‘retires’ did not contribute 40 or more years into to fund.. they turned 65 after only working 5 or 10 or 15 or 20 years.. but yet, they where “guarentted” a “minimum” retirment amount.. so, it took a few decades for the money that was comming in to exceed the money that was going out.. so that it could build up..

            Another worry, that nobody is talking about is the current “birth rate”. Not only did the “baby boomers” reach retirement age, but, the current generation is not ‘replacing’ itself, so that the money coming in will continue to go down in the future (unless things change).. Just a thought.

  • jimjf

    The “crisis” part is that the Social Security Trust Fund has all been lent to the general fund and spend. It will have to be repaid from general revenue. Removing the cap on the income that is taxed would greatly help long term solvency also.

  • http://www.facebook.com/dominick.vila.1 Dominick Vila

    Increasing FICA contributions by 1.4% would keep the program solvent for many decades. The only question I have is: why don’t we raise the contribution cap from the current $106K to $200K to achieve the same goal without impating the middle class? Oh, I forgot, those making $250K a year are middle class…wink, wink.

    • http://www.facebook.com/bob.brindell.7 Bob Brindell

      Raising the cap is not a bad idea. Only problem is that it would only fund the additional payout to cover increased benifits paid to those earning $106K and $200K. Benifits paid are based on average of your highest 5 years of income. Increase still needed.

      • http://profile.yahoo.com/UHE4MJP5FHMFIEAOGEQHETUGDQ Rvn_sgt6768

        In the future there will be many more low average workers retiring than any of those whose average earning were between $106K and $200K. Remember the money taken in each year funds the ongoing SS payments which has so far generated a surplus of over $2.3 Trillion which Congress has borrowed from. I do not see a scenario where those high earner’s payments will ever drain that surplus if we increase the cap.

      • Poiks

        Benefits are not capped?

        • http://profile.yahoo.com/HGC4BGWVYXV76PHZBPSPOOU5GA Independent1

          Actually, there should be a “net worth limit”, above which no benefits should be payable. CEOs whose net worth is in the multi-millions should not receive SS benefits at retirement.

          • Poiks

            I totally get your point, there’s just something that makes me uneasy about telling people they get nothing out of what they paid into for all those years.

          • AntieQ

            They get what I like to call “Living in a civilized society”. If they don’t like the dues they pay to live and do business in ours, they can afford to move somewhere else.

          • Andrew Ashburn

            Someone needs to Ayn Rand. Because yes, they will. And you won’t like the result.

          • Saaby000

            Switzerland, the richest country in the world (avg net worth per capita is 3 times ours). Just a few weeks ago passed a law to add $2,400 to every working citizen’s salary.

          • Saaby000

            If they raise the Cap to a higher level.. or even remove it completely.. then the system would be more flexible to manage the changes in the democgraphics of our society over time.. Right now, the “upper income” class doesn’t care one IOTA about SS, Disb. Benefits or Medicare/Medicaid.. since they put hardly anything… if anything.. into it (Investment income is not taxed in Payroll Taxes)… so they don’t give a HOOT and would like to see it all just GO AWAY… Whereas at least 90 if not 99% of the population do rely on it to some extent.

            Remember, right now.. those at the top ARE NOT paying their FAIR SHARE into our system… No CAP on SS would at least they pay their fair share into our Social Insurance programs… I hate the term “entitlements”.

          • 1Johnny

            I really do not think multi-million dollar CEO or concerned about SS! But I would remember, and I know democrats LOVE to talk about CEOs, there are a relatively small number of CEOs compared to the overall population. So not getting benefits by the group is not going to make a huge difference in the fund!

      • http://profile.yahoo.com/HGC4BGWVYXV76PHZBPSPOOU5GA Independent1

        I don’t think that’s necessarily so. A lot of those whose earnings are over $106k would not live long enough to fully recover the extra monies they paid in by they and their companies paying the SS taxes on their income past the 106k current limit. Those “unpaid out funds” would then go to providing benefits for others (including retirees who earn a lot less than 106K).

    • http://www.facebook.com/BaronSieggy Siegfried Heydrich

      WHAT?!? And impoverish the ‘job creators!?! Oh, the pain, the pain . . .

    • http://profile.yahoo.com/KV2YCNDU755CHTULDVEIFTW7GE steven c

      Im sure that if you were making 250,000 a year your would be here saying raise the cap. Your one of Obamas people that wants to “redistribute the wealth” but doesnt think you have to work for. No original ideas or hard work to get what you want just gimme gimme gimme. People that make 250,000 a year are not rich they are well off in most circles. These people get trapped in the middle because they make more than the average person, but less than the millionaires. Obama wants to raise taxes on these people to take care of the people on welfare andf the unemployed and uneducated. Sure its easy to take from peter to pay Paul, that is until Paul doesnt have anymore to give. Here is a better idea, bring American manufactures back to America. How hard would it be? Most of these companies moved overseas because the government placed high taxes on them for manufacturing goods in America. Corporations are in business to make money so why not ship jobs overseas to countries where no employee protection laws impede profit, and the taxes are low. Most companies can afford to make and ship products in foriegn countries for a lot less than the U.S. and make twice the profit. Offer companies a lower tax rate if they can prove they have created a certain amount of jobs in America. In contrast make tariffs on imports higher if the company shipping the product is an American company. Make it viable for manufacturers to create products in the U.S. Tear up NAFTA and put import limits on products from China until they import the same amount of products from us. Finally penalize companies like Walmart and Target for not buying American products. These companies steal from the American people by buying Chinese products and selling them to the American people for huge profit.

    • Chris

      Right on Dominick! Same thing Sen. Bernie Sanders has said could save SS. Lifting the cap will save the SS system for more than 75 years. Of course depending on the amount the cap is lifted.

  • http://www.facebook.com/kate.kolaske.9 Kate Kolaske

    I have heard and don’t know if it is true, but has the government borrowed against the social
    security funds and have not been able to pay it back? Perhaps we should be looking at this !

    • http://www.facebook.com/BaronSieggy Siegfried Heydrich

      Much of the SS Trust Fund has been invested in T-bills. Personally, I don’t see the problem, but hey . . .

    • jnap

      The SS fund, by law, must buy Special Issue Treasuries with money remaining after benefits are paid. This has been the law since SS was enacted. SS has about 2.3 trillion in its fund and that money belongs to SS recipients.

  • http://profile.yahoo.com/RCV6PTTSY3NRJKVOBMMRXMJ6NA Barbara

    Years ago I remember people were happy when they made more than 50,000 a year
    so they wouldn’t have to pay into SS anymore. Later, if you made more than 70,00, you
    stopped paying the SS tax. Now it is 110,000. Why not just raise the amount to 125,000
    or whatever amount is appropriate to keep SS funded?

  • stcroixcarp

    There is a huge pot of money out there. Can you imagine the additional profits if employers didn’t have to pay anything into social security?

    • jnap

      Employers actually consider money paid into Social Security a contribution to the employees pension fund and they get to deduct the payment from their corporate taxes.

  • http://www.facebook.com/jgodiska John E. Godiska

    Why don’t we lend our SS money to ourselves, similar to a 401 K ? You could borrow a thousand bucks for a freezer or whatever, and pay a hundred bucks a month for 12 months, in order to pay it back quickly. 25 bucks a week coming directly out of your paycheck or SS check. All the interest would be going to insure the SS system is solvent, and it would not be going to Bankers and Capital one, for their pleasure.

    • http://www.facebook.com/bob.brindell.7 Bob Brindell

      That would work. Oh! the Repubs would not like it, it makes sense.

    • http://profile.yahoo.com/7ZCSXZFKCPCCNTXWY7PKX4VPOA jg

      Lending to yourself from your retirement funds is like what happened when people started delving into the value of their homes with second mortgages. It’s so easy to keep taking those loans instead of saving or repaying. Many people simply don’t have the discipline to ever pay themselves back. Next thing you know a job loss or a real financial emergency arises and you are a goner.

      I believe we have already lent out our FICA money to the government. It’s all held in U.S. Treasury bonds. The Fed’s stimulus programs are basically paying zero interest on those bonds.

  • http://profile.yahoo.com/AO5XGV65KYB5J75FJVYGKPHZOU L. Roy

    All of the media misinformation on this doesn’t explain that the Republicans want to rob people of what they’ve earned in order to pay off the indebtedness incurred in two unpopular MidEast Wars

    • FredAppell

      True, but it goes way beyond that. Republicans have been trying to dismantle Social Security since it was first enacted. The information is really easy to find since Republicans are really proud of the fact that they oppose it. Every couple of election cycles the Repubs like to trot it out and use it as part of their platform to rile their base. They change the wording but the message is always the same. Now, if they can somehow create a situation that makes Social Security look inadequate then that is what they’ll do and that is what they have been doing for some time now.

  • Tallboy52

    Sand Cat has a point, and is right on the mark. The fact is that Republicans have been looking for ways to gleen more money out of Social Security. Could you imagine what would have happened for example if they had succeeded in privatizing Social Security into the Stock Market. Then it would have been a real crisis. When the market crashes so too does Social Security. One resolution to solving potential problems is to close the lid on Social Security and not allow Congress or Government to tap the funds. Congress borrows from the fund and does not re-pay it. And no matter what we have to continue to pay into the program as we have. No Holidays. Second, Congress needs to repay Social Security the money borrowed. If Congress had left the program alone in 1965 we would not be in trouble today.

  • m8lsem

    An alternative to higher payroll taxes for everyone would be graduated payroll taxes, that is, 3% of wages up to poverty level, 7% from poverty to middle class, and something like 10% to 15% on incomes above that … one would adjust that highest number to the one that would achieve liquidity ‘forever’ for the Social Security Fund.

  • quasm

    Mr. Sattler;

    When people were informed of the SS funding were they also told that all the reserve funds are in government obligations which must be met by either taxes outside of SS or just printing money which would drive hyperinflation? The problem with SS is that it is a government program which elected officials have and will continue to use to buy votes.

    It has been removed far from its intended purpose and is now just another program to transfer wealth from those who create it to those who have not earned it. And this reaches deep into middle income earner’s pockets.

    Dik Thurston
    Colorado Springs

  • artolga

    Republicans have always been a “I’ve got mine, so don’t raise my taxes for those who have not” party. What I don’t like about FICA tax is that if you earn up to 110k you pay 6.25% on every dime you earn, and your employer matches it—but someone like Payton Maning earns 18m but only pays on 110k, which is matched by his employer. THEY SHOULD REMOVE THE CAP BEFORE CUTTING BENEFITS!

  • http://pulse.yahoo.com/_KOPKDFAUQPIIRAFI3HEXNMSHLQ Ed

    And raising the limits on contributions would make it solvent forever; but then you would be requiring our elected officials(who don’t really need it anyway) to pay more. Any way, the facts are that there is no crisis, just another product of the right wing gloom and doom machine. Much as the debt crisis is. How many know the difference between the “debt” and the “deficit”?

  • http://www.facebook.com/mrfun9153 Tom S Brown

    To make social security secure, remove the revenue collection cap then 100% of the people paying into FICA will be paying on 1oo% of their wages or taxable income.

  • Poiks

    I’d be interested in knowing what the new “cap” would need to be in order to make Social Security sustainable. Removing the cap entirely would be politically difficult, but raising it probably wouldn’t.

  • montanabill

    This is a story for dummies. Mostly true, but not complete. The government does not save our Social Security taxes for future retirees. Congress borrows this extra money and uses it to make up for deficits elsewhere in the budget. Thus the Social Security trust fund contains nothing but IOUs the government has written to itself. And when Uncle Sam goes to repay those IOUs, you know who pays the bill: we do. That means that in order to repay those IOUs, the government will have to either raise taxes or cut programs.
    Social Security is already the biggest tax that most workers pay, but to keep the system afloat payroll taxes will have to rise even higher—to 20 percent of each worker’s wages.

    Around 2018, Social Security will start to spend more than it receives in payroll taxes. At that point, it will begin to cash in the bonds in the trust fund. Where will the money come from?

    According to the OMB, there are only four sources that money can be drawn from. Congress could repay the money by raising other taxes. It could also authorize the Treasury to just borrow the needed funds. Another alternative would be for Congress to reduce other federal programs and to use the money that was to have been spent for them to redeem Social Security bonds. Finally, Congress could reduce Social Security benefits.

    • jnap

      Montana, it is not just Social Security Special Issue Treasuries that mature; billion of dollars of other Treasuries mature every year. Those maturities are far greater than SS Treasuries.
      The Federal Government will just borrow the money just as it has been doing for many years. I don’t care if it is SS bonds or China’s bonds that mature both have to be financed by new borrowing. SS bonds should not be considered to be worth less than China’s bonds.

      • montanabill

        So who do you suggest we borrow more money from?

  • http://pulse.yahoo.com/_XQV2E2E7VGHH5S2E2HEEGKMEAE Chas

    Higher income earners are taxed on their social security income as high as 85 %. These taxes go into the general fund but it would make more sense if it would go back into the social security trust fund.

    • jnap

      No Chas, benefits are not taxed at 85%. 85% the benefits received may be subject to income tax but the rate is never above 39.5%

  • http://profile.yahoo.com/GGHNYPK4GNCRYZLXWVZ447WHJM Plznnn

    Trouble with raising taxes again, that will just burden taxpayers more, and do nothing to really solve the growing problem. Eventually the Federal Government will have to again and again raise taxes to fund this, and with Baby Boomers reaching the age of 65 in 2011 at the rate of 10,000 per day, and Amnesty for Illegals, this is just kicking the can down the road. By giving Americans false hope that this problem is minor, for political reasons is just going to hurt us all and those in the fiture.

  • ObozoMustGo

    While Jason Sattler, useful idiot du jour, may not think there’s a problem, the actual Trustees of SS and Medicare BOTH are ringing the warning bells. Newsflash: There is NO money left in either program. Current benefits are paid out of current taxes. Once they reach the tipping point, then they have nothing but government IOU’s to redeem from an already bankrupt country. I’m not sure why you leftists can’t do simple math. Either that or your taking the ostrich methodology of problem solving with your heads firmly planted in the sand with the ol’ “we’ve got plenty of time, nothing to worry about” state of mind like Sattler displays in this article for morons.

    Too many people are too dependent upon the government now. The problems will not be solved by policy but by force of economics which will be much more painful. This is unfortunate, but true.

    [click image to enlarge]

    Have a nice day!

    “The task of weaning various people and groups from the national nipple will not be easy. The sound of whines, bawls, screams and invective will fill the air as the agony of withdrawal pangs finds voice.” — Linda Bowles

    • jnap

      Fuc you obozo, People earned the right to collect SS. We paid into the system and deserve to collect the benefits that were promised. Let’s quit starting wars we can’t pay for.

      • ObozoMustGo

        jnap… I’m with you on the wars thing. Bring them all home… NOW! Put them along the boarder to secure that.

        Re: SS… People put money into Bernie Madoff, too. While they deserve to get it back, that doesn’t mean the reality of no money there can be overcome. So, if we want to save the program for those seniors who most need it without forcing current workers into slavery to pay for it, then changes must be made. You have bought the lie that there is money there when there is not. SS is a Ponzi Scheme. Sorry dude, but it’s just a matter of simple math.

        Have a nice day!

        “Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.” — Frederic Bastiat, French economist (1801-1850)

  • judgeglenda

    the gov has been stealing from social security for years. social security is not now in trouble.

  • http://profile.yahoo.com/KV2YCNDU755CHTULDVEIFTW7GE steven c

    The problem is that the Social Security system had a huge surplus in the 1970s. The government in their infinite wisdom decided they could “borrow” from the program and then pay it back later. Unfortunately the government is not very good at paying back its debt (big surprise) and now the “IOUs” that the federal government wrote the pension plan are not worth the paper they are printed on. Privatization of Social Security would be a nightmare because it would be tied to the stock market. I guarantee that if the stock market goes up that the social security recipients would not see an increase because of some loophole in how the contracts are written, but when the stock market goes down so would recipients payments. The biggest problem that we the people have is assuming its Democrats against Republicans. Its not its us the people against them the government and the big money people. As long as they keep us pointing fingers and placing the blame on “the other party” they win.

    • Jim_n_Panama

      The “IOUs” you refer to are called US Treasury Bills. You know, the safest “IOU” in the world? And as with a T-Bills, the Treasury pays the Social Security fund interest effectively when the Bills mature. Would you feel better if the SSA kept the money under a mattress somewhere? As far as “the government is not very good at paying back its debt” ….excuse me, but could you name one instance just ONE wherein the Treasury has defaulted on a note? Never mind, you don’t like facts

  • Eastoceanview1

    What about the 4.4 trillion that the government has borrowed from social security? We are the largest creditor of the US government.

    • Jim_n_Panama

      The Social Security tax has been raising more money than is needed to pay for current benefits, in order to build up a surplus to help finance the retirement of the Baby Boom generation. All of this surplus is lent to the U.S. Treasury when the Social Security Trust Fund buys bonds from it. The money is then used to finance the federal deficit, just like any other money the government borrows. The bonds held by the fund pay the same interest as bonds held by the public. These bonds are every bit as real as the bonds held by banks, corporations, and individuals. Throughout U.S. history the federal government has always paid its debts. As a result, government bonds enjoy the highest credit ratings and are considered one of the safest assets in the world. Thus the fund has very real and secure assets.

  • jstsyn

    So why do we let these fool politicians constantly LIE to us and refuse to do what the biggest majority of people want? Americans need to grow some balls and demand our politicians do what we want. They don’t understand nice. What is wrong with everyone?

  • http://www.facebook.com/tom.young.547 Tom Young

    How about the thieving basturds paying back what was borrowed(STOLE) from SS and it would be solvent without doing a dam thing !!!!!!

  • http://KIDK.com Racyman

    Unfortuanately, the GOP doesn’t deal in facts.

  • onedonewong

    When this same group of people are informed that illegals and those who have never paid into the system are eating at the trough with impunity. Allowing people to opt out of SS is preferred by the majority of taxpayers and opposed by those who don’t pay taxes

  • http://www.facebook.com/richard.patterson.9659 Richard Patterson

    If the founding fathers of the Social Security Administration, could hear how everybody is talking about Social Security, they would turn over in their graves in disgust!!!! The Social Security Administration is as famous as our American flag!!!! It was created to stay here as long as this country is here. That’s why it was created, for hard times, retirement, senior citizens and people disabilities. Talking about cutting their benefits, even one dollar, shows we have no class as a nation. Don’t pick on the weakest!!!!

    • 1Johnny

      When Social Security was implement, there were 40 to 50 people working for each person getting benefits. Now there are about 2.9 people working for each person getting benefits, which is expected to shrink to about 1.9 within 5 years. Yet, the SS program has not evolved and changed. The progam must be adjusted to the changing times. This is the reality!

  • vippy

    Pay more in, are you kidding? When congress sees a pile of money they will find a way to take it all. They did already rob from the Social Security Program and put worthless IOUs in place which now are part of the budget and now they don’t want to pay up! We need a law that congress cannot use SS Funds EVER! Raise the cap of SS and the problem is solved! Why don’t they ever do the right thing?

  • 1Johnny

    Everyone is always for someone else to pay more taxes! Never ending taxes? Stop the tax increases! Tell the people in the survey it is 22.6% increase in there SS taxes (1.4 / 6.2%) and there company will have to the same. Then tell them how much more of their money will sent to the black hole of the Federal Gov and then see if they agree! It is an additional 1.4% above the 6.2% of taxable income. The average working American is already turning over 50 to 60% of their income in taxes! Why don’t we just turn over our whole check?

    • Saaby000

      WTF are you talking about? In 2013 the SS was increased from 4.2 back to 6.2%, the same rate it was a couple of years earlier before Obama cut it by 2%, temporarily, as part of his stimulus package.

      http://www.irs.gov/pub/irs-pdf/n1036.pdf

      • 1Johnny

        Such foul language-does your mother know you talk like that? I agree the rate increased to it’s prior point of 6.2%, but I think many people when they looked at their pay check noticed the additional amount being taken out (maybe short memories). As a percent increase, it is simple math (which I actually calculated incorrectly). If the rate was 4.2% and increased to 6.2%, the difference would be 2%. So, 2 divided by 4.2 (the current rate) is acutally an increase in the tax of 48% in the tax. But I do realize this was the same as it was before the rate was lowered. But none the less, the rate was increased 48% from the current rate. I hope this makes sense!

        • Saaby000

          OK. Now your more accurate.
          Yes. People who pay SS taxes did see an increase in their tax.
          And no, there was no change in the employer component. That did not change from the 6.2 rate.
          I have to admit that it was too soon to increase it back to the 6.2 rate when we are still in a recovery… That just slows down the recovery.

  • Saaby000

    Obviously we need more revenue to start coming in to keep the SS Fund abover water in the future. When this article was the projection was fully funded till 2033 (I’m assuming that includes the 10 year extension from Obamacare savings?). Now, there are four ways of adding more revenue to the SS Trust Fund:

    1. Increaseing the Payroll tax from 6.2 to 7.6 (remember the employer kicks in too)

    2. Either Increaseing or Removing the “cap”.. which is now set at around $110,000.

    3. Massive job programs to bring the “unemployment” rate down to 4%

    4. Passing “Immigration Reform”.. this will give us approximately 10,000,000 new
    participants (mostly younger 21 to 50) that will start to contribute “instantly” to the
    fund instead of waiting 21 years (time for a citizen to mature from birth).. before
    they beome eligible to start withdrawing from the Trust Fund.

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