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August 1, 2014

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Letter to the editor:

Get Social Security facts straight

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Two things caught my attention in Sundays’ Sun.

First, Dwight Jones’ article, “Federal cuts would hurt the students in our state,” was enlightening. Jones said, “Finally, Nevada had the largest gains of all 50 states in eighth-grade reading and math. ...” He goes on to say “these performance gains were achieved using fewer funds than we had in previous years.” They did better with less but want more. Typical.

Second, Rep. Lynn Woolsey, D-Calif., writes in “GOP must disavow dictatorial tax pledge”: “In fact, Social Security is not paid for out of the general fund and therefore has no impact on the federal deficit.” Maybe she should spend more time researching her facts before making such statements.

Social Security began running a deficit in 2011; it continues to do so. It has paid out over $150 billion more than it has collected over the past two years. That money came from the general fund (or should I say was borrowed), thus adding to the federal deficit.

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  1. I have come to believe that the Republicans are wrong in their fight against tax increases. Tax increases will be required as part of an effort to reach a more balanced budget and reduce the debt.

    That said, on the spending side, the Democrats are at least as misguided. First you have Senators like Charles Schumer and others saying Social Security is solvent. The CBO says in 2011 SS started to pay out more than came in through SS taxes and that will continue for the foreseeable future. Senator Schumer is lying about SS and Medicare is in even worse shape. It should be viewed as a crime that nothing has been done and the government is still delaying action on this issue.

    'Baseline' budgeting (used by both parties) was instituted in the mid 1970's. That means that all Federal Government spending is set to 'automatically' increase by some amount each year. When Americans are told by the party in control of the government (currently the Democrats) that spending was 'cut', it is most often akin to the following:

    You and the spouse spent $ 4000 on vacations in 2010 and 'planned' to increase that to $ 8000 in 2011. When you only spent $ 6000 instead of $ 8000 on vacations in 2011, you call that a 'cut' in spending. NO, that is an 'increase' in spending of $ 2000 instead of an increase of $ 4000. You and your spouse are financial illiterates and idiots and you will likely be broke soon.

    Until we and our government admit that defense spending, and entitlement spending are unsustainable given our current tax rates on all Americans and what else government spends and we throw out 'baseline' budgeting so a 'cut' is only defined as spending less than we spent last year, we cannot stop deficit spending and adding to the debt.

    ANYTHING other than that coming from the Republicans or President Obama and the Democrats is a bunch of nonsense and will do ZERO to fix our deficit and debt issues.

    Michael

  2. Bingo letter writer. Right on the money. The interest paid on the IOU's to the Social Security Fund adds to the yearly national deficit and debt. The Dems who make the argument that Social Security does not increase the national deficit and debt are wrong.

    CarmineD

  3. Mr. Gardner is the one who should get his facts straight.

    During most years of the Bush Administration the payroll tax, used to fund Social Security, brought in $140-180 billion more in revenue than it paid out. What did they do with that surplus? They issued Treasury bonds to the Social Security Trust Fund and cut income taxes. The Bush tax cuts were scheduled to expire in 2010. It was known, even back in 2003, that retiring baby boomers would cause annual outlays for Social Security to exceed payroll tax revenue around 2010 and general fund revenues would be needed to begin redeeming Treasury Bonds in the Trust Fund.

    So, having arrived here, some seem to be singing the chorus that our problem isn't that income taxes are too low, but that Social Security outlays are too high. Quit your bitchin'! You've enjoyed artificially low income taxes for 10 years. It was borrowed money. Time to start paying back the loan!

  4. Ancient history Jim. What do we do now and the future?

    The interest owed on the US Treasuries for the IOU's to Socail Security Fund accumulate every year and add to the deficit and debt. That's the fact that the letter writer makes in contradiction to the poppycock promulgated by Dems. Let's face it, President Obama and the Dems don't want to gut entitlements on their watch. Plain and simple. They want GOP fingerprints on their tax increase plans for cover in 2014. It's politics and economics in concert.

    CarmineD

  5. From the George Will article across the page:

    "When Sen. Richard Durbin said, "Social Security has not added one penny to the deficit," Charles P. Blahous III, a member of the Social Security board of trustees, wrote to the Washington Post to say that in 2012 this program will add $165 billion because benefit expenditures exceed Social Security tax revenues by that amount and "this gap is filled entirely by revenue that the federal government borrows." The fact that the second-ranking Senate Democrat is off by 16,500,000,000,000 pennies reveals the sort of precise thinking that got the country into its current condition and that supposedly will produce a cure. It is enough to make you want to hop in your Fisker and drive off a fiscal cliff."

    I couldn't say it better.

    CarmineD

  6. CarmineD

    Ancient history Jim. What do we do now and the future?

    Like any other debt, we pay it back. We don't get to pass this one on to other generations. It's coming due now. If someone convinced you that you were getting free money over the past 10 years, they lied.

  7. @Jim - re: your 4:48 AM comment:

    I get after Carmine over his one instrument band (spending cuts) once in a while and I agree with you that artificially low income tax rates have contributed, indirectly, to the problems with SS.

    Here is my question to you: The policy of artificially low taxes rates and continued high spending was a dumb policy, but what is it that you favor (specifically) as an alternative to reducing benefits to keep the program solvent?

    Michael

  8. Michael

    I agree with the Simpson-Bowles recommendations to begin raising the retirement age toward 70 and maybe also the early retirement age from 62 to 65. S-B proposed means testing COLA increases which also seems reasonable. About every other possible idea that raises revenue has been scored, so pick and choose. But right now, Social Security is holding $2.7 Trillion in IOUs and while we can gradually slow the growth of benefits, repaying that over X number of years is ahead of us and the only reasonable relief is to increase the value of X. The sin has already been committed and all we can do is negotiate the penance.

    Jim

  9. "I get after Carmine over his one instrument band (spending cuts) once in a while and I agree with you that artificially low income tax rates have contributed, indirectly, to the problems with SS."

    Michael

    I responded to you on another thread above on tightening the purse strings. If you want to read, and others too, you can go to the letter above.

    CarmineD

  10. The letter writer is dead on the money. The Social Security and Medicare trust funds belong to a class of debt known as intergovernmental debt. Intergovernmental debt makes up 40% of our national debt.
    The problem with raising the retirement age is that once people get into their 60s they have significant health issues and are almost completely unemployable. The vast majority of retirees never made it to full retirement age. Most retire at about age 63.

    If you look around the world statistically almost no one is able to work until age 70.

  11. The retirement age has been raised in the past. What has happened? Disability claims have exploded. One way or another 63 is the magic number for retirement. Because people are living longer they need to pay more into the system during their peak earning years.

  12. The social security trust fund is owed 2.6 trillion dollars by the U.S. Govt. that was taken out of the fund, and used for other programs.So I would have to agree that we are currently paying out more in payments then we currently take in.

    But don't blame the social security trust fund. Blame the politicians who took the money out and never paid it back.If the 2.6 trillion dollar fund was never touched we would not be having these conversations.Put the blame where it belongs on the politicians,end of story.

  13. While Robert Gardner might have been a little more accurate with his facts than Rep. Woolsey, he still doesn't get it completely right. Part of the $16 trillion debt that the government owes consists of $2.7 trillion the SS Trust Fund invested in the US government, the same as if you or I invested our savings in US bonds. When SS pays out more in a year than it takes in, SS cashes in some of their "bonds" to make up the difference, just like you or I would do if we need to use money out of our savings. Because the government has already spent every nickel in the general fund, it must borrow money from another source to pay back SS. The total US debt does not increase one nickle, it is just owed to a different creditor. If anyone thinks that the US government is never going to pay back the $2.7 trillion owed to SS, then we should pat Congress on the back for instantly reducing the $16 trillion debt by $2.7 trillion. Problem solved. But just remember, the biggest single holder of the $16 trillion debt is US citizens and companies, not China, which is the largest FOREIGN holder of debt. If the US defaults on the debt, it's the US that will suffer the most.

  14. The Social Security trust fund isn't a major issue. It's the Medicare trust fund. Because of medical inflation the Medicare trust fund is going to be paying out many times more than what it is taking in.

  15. Dustman; you said it entirely correct. social security is currently solvent. It just so happens all of their assets have been borrowed for other expenditures. That's the problem, the gov. doesn't know where they're going to get the money to pay SS back. The righties here need to reset their thinking.

  16. http://www.pimco.com/EN/insights/pages/k...
    look at figure 1. Social Security is a drop in the bucket. Its medical care that is going to kill us going forward.

  17. We can keep arguing over esoteric points of the budget, where the revenue comes from and where the expenditures go. Carmine is trying his deflection trick of demanding that BO identify areas to cut. Got news for you DeFazio, BO has already identified revenue and reductions. Your bunch, campaigning on cuts, cuts and more cuts and reducing taxes, has refused to identify those cuts except for mealy-mouth words like "entitlements". The New York Times and several other sites have Federal budget calculators where you can go to fiddle with numbers for departments and program revenue and expenditure to see the effects of your personal choices. As we all know military is the elephant in the general fund, while Medicare and Social Security are significant they are, at present, funded by reserves held as US treasury certificates, i.e debt. We are paying the price now for poor budgetary decisions made 30 and 40 years ago. You can close all the National Parks, the Department of Education and the Capitol lunchroom, raises taxes on the "wealthy", closes all the "loopholes" in the tax code and it won't do squat towards the deficit or the debt.

    If we are serious about reducing the deficit then we need to decide what we want the Federal government to do and determine what revenue will need to be collected to do that and how. You can't spend a billion bucks a week on an undeclared war over and above budgeted military spending without collect a billion extra dollars a week to pay for it. So who pays?

    I'm less concerned with bUS debt. The United States is still, an will remain for the near/mid term future, the safest investment available. If that were not so interest rates on US debt would be climbing and inflation would be a problem. We have minimal inflation and interest on some forms of US debt is negative by a quarter or half percent. Try getting that on your absolutely preferred A1 Platinum Onyx Black magic card.

  18. Medical is the elephant in the room. You could eliminate the entire Defense Department including veterans benefits and off the books appropriations, then eliminate the entire federal payroll and you still would barely cover the federal government share of the nation's medical bills.

  19. with $900 billion in defense appropriations and a $270 billion federal payroll you would barely close the gap by eliminating both.

  20. Pat says and I agree: 'You can't spend a billion bucks a week on an undeclared war over and above budgeted military spending without collect a billion extra dollars a week to pay for it."

    Then Pat says: 'I'm less concerned with US debt. The United States is still, an will remain for the near/mid term future, the safest investment available.'

    And you KNOW this HOW? These words frighten me every time I hear them. We've always been the safest investment in the past, so no matter how we screw up our economy and our finances, we will continue to remain the safest investment and everything will be just fine.

    I am much less sure of that than you and all the other people that claim the same thing. I 'hope' you are right, but I 'fear' that you are wrong.

    Michael

  21. Some major (But very popular with some extremists) misconceptions here.

    In his original letter, Henderson alleges that Social Security "...has paid out over $150 billion more than it has collected over the past two years. That money came from the general fund (or should I say was borrowed), thus adding to the federal deficit." First sentence, true. Second one, false. That deficit has come from the SS trust fund - which cut the amount of the US bonds it holds.

    In a response Carmine states that "The interest owed on the US Treasuries for the IOU's to Social Security Fund accumulate every year and add to the deficit and debt." Very true, Carmine. But is it really reasonable to blame Social Security because CONGRESS required SS to turn in its cash to Congress and "accept" non-negotiable interest-paying US paper in its place? Of course when, early next year, the Republican'ts try to default on our interest-bearing paper by not raising the debt limit, they will blame SS for losing even MORE money - specifically interest that Congress would be refusing to pay.

    Carmine quotes George Will as saying that "Charles P. Blahous III, a member of the Social Security board of trustees, wrote to the Washington Post to say that in 2012 this program will add $165 billion because benefit expenditures exceed Social Security tax revenues by that amount and 'this gap is filled entirely by revenue that the federal government borrows'." Actually, Carmine, this is LITERALLY true. SS had a negative cash flow. To cover that, SS had to cash in a portion of its US paper. To cover THAT, the Treasury undoubtedly had to borrow from other sources.When the Treasury had to replace the off-budget paper held by SS with new on-budget paper, the Treasury (NOT SS) increased the national debt and the year's deficit. Again, as noted above, this is a Congressional problem, not a SS problem. Carmine confuses "cash flow" with "revenue" - quite an odd mistake for one with the expertise in macro-economics Carmine seems to display.

  22. All the points made here are wonderful. However, nothing we do will fix anything. At one time, only about 10% - 15% of the people were on some sort of government program. Now about half of citizens are. It makes no difference what we do, unless we raise taxes and seriously cut our programs, we will be bankrupt within a decade. When you have 150 million people wating for their "checks" every month, you have a system that is financially and mathematically impossible to continue.

    Unless the politicians make some very hard choices - and they won't - we are doomed. We can cut out defense and end the wars forever. It still won't pay for all the things the welfare crowd believes we owe them. We don't owe anyone anything. We currently have almost a hundred different government programs, most of which are means-tested, that spend almost a trillion dollars a year.

    In every society throughout history, there have been the haves and the have-nots. Nothing we do will ever change that. People will still have $10,000.00 toilets while others starve to death. Sad and unfortunate, but a reality of living in a world of billions of individuals in hundreds of countries.

    It is also unfortunate that we have so many people who believe that takin g money from us affluent folks and giving it to the poorer ones is justified. When a central government takes your money and decides who gets what, that is the end of that nation. For all you librals and socialists out there, a question: how many communist or socialist countries are doing just fine? Yea, not many.

  23. "Carmine confuses "cash flow" with "revenue" - quite an odd mistake for one with the expertise in macro-economics Carmine seems to display." @ Renorobert

    Not at all. One [Cash] in an asset on the Balance Sheet [which is a picture of the financial condition of an entity at one point in time]. And the other [Revenue] is an asset on the Income Statement [which is the financial condition of the operations for an entity for a period of time]. You need both [Balance Sheet and Income Statement] not just one or the other to see the total picture.

    CarmineD

  24. "Your bunch, campaigning on cuts, cuts and more cuts and reducing taxes, has refused to identify those cuts except for mealy-mouth words like "entitlements"." @ Pat Hayes

    This is what the 2012 election was all about. Americans weren't ready to hear it. They preferred the ostrich's head in the sand approach of your bunch.

    CarmineD

  25. Carmine: "Revenue" is not an asset. Revenue is the total flow of income (not necessarily cash - you can have a really huge revenue last year, all of it now in receivables, yielding zero cash on hand) over a period of time. What SS has done, and which does NOT affect the deficit, is to convert assets - those special interest-bearing notes that Congress forced SS to accept - into cash to pay beneficiaries. What the Republican'ts tried to do last year (and appear eager to do again this year) was to prevent Treasury from issuing new notes to generate the cash to pay off old notes that have expired and to pay for current (Congressionally approved...) expenses. That's where the debt ceiling enters. . .

    The whole mess has little to do with the President. He is barred from spending money not appropriated (although he can move DoD general appropriations from one project to another). He is ALSO barred from refusing to spend funds that have actually been appropriated. He sends Congress a "budget" (i.e. a dream sheet of what he would LIKE to spend), but he has no real control over the actual spending approval. He can only accept or reject Congress's plan in toto.

  26. We must hold the line in funding for K-12 until the results come up to the level of funding. We get 51st or is it 52nd in results despite overall funding at 24-27, depending on which fiscal year we're talking about. Posters / Readers: K-12 funding is not limited to the State's DSA funding but includes much money that the teacher lobbists will lie about: add in the LSST portion of Sales Tax, property taxes, endless Bond Issues, estate funding...

  27. "Carmine: "Revenue" is not an asset." @ Renorobert

    I said, and go back and reread, that Revenue is an asset ON THE INCOME STATEMENT. It's how you arrive at your PROFIT/LOSS from operations after accounting for operating expenses and inventory.

    The accounting equation is, and you should know it:

    Assets - [less/minus] Liabilities = Capital

    If liabilities exceed assets, as in the case of the Social Security fund, you have negative capital. Negative capital is a deficit [liability]. If you borrow to make up the deficit, you have a debt [liability]. If the debt gets larger and larger, with accrued interest added too, and can't be repaid, there is bankruptcy. Hence, Spain, Greece, Portugal, Italy in Europe are bankrupt. And a host of cities, counties and soon States in the USA too.

    CarmineD

  28. "That's where the debt ceiling enters. . ." @ Renorobert

    The Debt Ceiling process and procedure is Admentment 17 to the Constitution. It came after the Income Tax Law, Amendment 16, was passed in 1913. Income taxes give Congress a yearly and systematic flow of REVENUE, an ASSET. Rather than having to vote and appropriate on each and every Federal government expenditure, the Congress has a stream of revenue, called a budget, to spend. Amendment 17 in concert with Appropriation Laws, limit and control the spending BY CONGRESS as required by the Constitution: Article 1, Section 9.

    CarmineD

  29. Carmine: ??? How does the 17th amendment apply to the debt? It addresses only the direct election of Senators. Section 4 of the 14th does, however, directly address the debt and the ceiling on it: "The validity of the public debt of the United States, authorized by law, . . . shall NOT be questioned." (Emphasis added.) Republican proposals to use a threat to default on the public debt, by failing to extend the debt ceiling, is an obvious attempt to hold the country hostage until their demands are met. I quote a popular late 18th century comment:* "Millions for defense. Not one penny for tribute." Will the Republican Party allow the government to honor the legal public debt authorized by Congress or will it choose to dishonor that debt?

    *Popularly attributed to Jefferson from the early 1800s. Possibly first used in 1798 by Robert Goodloe Harper, a South Carolina Federalist and Chairman of the House Ways and Means Committee

  30. "Carmine: ??? How does the 17th amendment apply to the debt? " @ Renorobert

    Mea Culpa: Should have posted 1917. Not Amendment 17.

    http://seattletimes.com/html/nationworld...

    CarmineD

  31. The debt ceiling was established by act of Congress in 1917, and was intended as a means to keep CONGRESS in line. The best comparison to it would be the limits on your credit cards. There is NO Constitutional reference to a "debt ceiling." There IS Constitutional authority that may well invalidate the ceiling - see my 9:47 comment.

    That's what the President was referring to when he said earlier this month that he wanted the debt ceiling issue resolved in Congress, without having to refer to the Constitution.

    Staying within the ceiling, raising it, lowering it, ignoring it. NONE of these options are within the power of the President, other than thru his authority to veto legislation or his use of the "bully pulpit." Congress has yet to present him any form of legislation on the matter. Until when (or IF...) it does so so, Obama is limited to use only of his bully pulpit. The President extends Congress a courtesy when he says in advance that he may veto an item Congress is discussing, he is not required to do so.

  32. I know it sounds simple but why did the president lower the worker tax rate 1% with such a big problem ahead? How codoes not advocate increase worker contribution an extra 1% like he does taxing the rich 2%. Seems like a double standard to me.

  33. "The debt ceiling was established by act of Congress in 1917," @ Renorobert

    That makes it the law.

    CarmineD

  34. "There is NO Constitutional reference to a "debt ceiling." @ Renorobert

    US Constitution Article 1, Section 9 is the governing site for the debt ceiling. All government monies are to be appropriated, approved and spent by Congress.

    CarmineD

  35. The debt ceiling is not a means to keep Congress in line with spending. It's means for CONGRESS to keep the government in line with spending.

    CarmineD

  36. Thought I share this email with you renorobert. I wholeheartedly agree with Rep Fleming for all the reasons I posted here.

    Fleming Bill Says NO to Power Grab on Spending

    "Only Congress should decide our debt ceiling. The president's blank check request needs a resounding NO from Congress."

    "Congress must not surrender its power over setting the debt ceiling. That's why I introduced H.Res. 826, a resolution giving the House of Representatives an opportunity to reject President Obama's attempt to control the debt ceiling.

    Washington has forgotten how to live within a budget. From bailouts and the failed stimulus bill, to the government takeover of health care, Americans are sick and tired of Washington's overzealous spending and its disregard of constitutional boundaries.

    We are in our fifth straight year of trillion dollar annual deficits, and the president believes that -- despite the Constitution -- the power of deciding how much more debt the government can accumulate belongs to him instead of Congress. The president is asking for a blank check, and he wants Congress to abdicate power to him so he can raise the debt ceiling as he pleases. H.Res. 826 affirms the value of our three-part government, and the checks and balances that keep the pendulum from sticking in the liberal position. Giving the president the ability to raise the debt ceiling-- without congressional authority-- would be giving him power far beyond anything the Constitution intended. H. Res. 826 must be passed to remind the president that Congress will not surrender its power.

    Together, we can continue to make sure our government remains as our forefathers intended."

    Sincerely,

    JOHN FLEMING, M.D.
    Member of Congress