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October 1, 2014

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Letter to the editor:

Social Security not part of the problem

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I have long contended that the hullabaloo surrounding Social Security and Medicare has been created by the GOP and its patrons in the Heritage Foundation, the Cato Institute and other right-wing “think” tanks with the help of right-wing media writers such as David Brooks. For example, in his column “D.C. dance moves are exhausting,” Brooks couldn’t help getting in his slap at these programs, saying “sequestration carefully spares programs such as Medicare and Social Security that actually contribute to the debt problem.”

If Mr. Brooks and his cronies in the media and the GOP were honest, they would admit that these programs cause very little, if any, part of the debt problem; especially Social Security, which, up until the Bush recession hit, was running a surplus and has never caused any part of the budget deficit, as it and Medicare are funded from the separate payroll tax entirely.

This is a fact, but the GOP has always wanted to eliminate these programs, although if it did so, it would have to eliminate the payroll tax that pays for them. That would mean that no deficit reduction would result. Get it?

These programs are definitely not any part of the deficit. That is the truth.

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  1. Social Security benefits do not contribute to the debt problem.

    Writer Dniel Olivier is correct. Columnist David Brooks is wrong at least for the next 20 years or so. I'll explain. The Social Security Trust Fund is holding $2.7 Trillion of Treasury IOUs that are already part of the widely publicized $16+ Trillion debt. For example, say payroll taxes for 2013 are $80 Billion short of paying all Social Security benefits. The Trust Fund will redeem $80 Billion of it's IOUs for cash to pay the difference. The Treasury will sell $80 Billion in Treasury bonds to raise the cash and redeem $80 Billion of Trust Funds IOUs. Net increase in the debt is ZERO.

  2. Letter writer and Jim: If the fund were not raided, it would earn interest on the holdings. With the raids on these funds, and with the IOU's owed to pay it back, the gov't borrows to pay the borrowings and interest on the fund. These add to the debt and deficit of the US.

    CarmineD

  3. CarmineD

    The Social Security Trust Fund does earn interest on the Treasury debt it holds. When Treasury issues other debt to retire debt to the SSTF it's a wash as far as the National Debt is concerned.

    You are correct that it increases the Budget Deficit when this happens. In the Bush years, for example, when the Payroll Tax was bringing in surplus funds, it reduced the Budget Deficit by the amount of that surplus.

  4. "When Treasury issues other debt to retire debt to the SSTF it's a wash as far as the National Debt is concerned."

    And American taxpayers are taking a bath in debt. Government can't owe itself, so all is honky dorey.

    CarmineD

  5. "Head in the sand" geniuses like Oliver abound when it comes to financial responsibility. Of course Social Security is bound to go broke. It's inevitable as long as numbnuts in the pig sty known as Washington D.C. keep spending 40% more than they take in. There is no Social Security "trust" fund as politicians, right & left, have looted Social Security's non-existant "lock-box" since its inception. Those IOU's? They will be as worthless as the dollar when the piper comes calling. For leftist morons to blame only the right for this mess is the height of ignorance. What has been going on for decades is bipartisan looting and will not be solved as long as dopes point fingers and look for "free" goodies from a bankrupt federal government. Bringing fiscal responsibilty to the pig sty should be our highest priority. To do otherwise will spell financial chaos for all of us.

  6. If you accept Jerry's reasoning then the rightist "morons" should be held equally in contempt. Thing is, though, while the leftist morons spent the money with the idea that investment in America and Americans would produce a dividend sufficient to replace funds, the rightist morons spent the money with no intention of ever paying it back in an attempt to kill off one of their top-5 hated programs.

  7. CarmineD

    Both parties have been borrowing the dough for nearly 30 years. Maybe you raised the alarm before now, maybe not. At least it can't get worse. There's no more Payroll Tax surplus to play numbers games with.

  8. Tea/Republicans have made it their priority to destroy Social Security. But they have run across a major obstacle. Any of them step forward and take ownership, they will find the rug pulled out from under them.

    Social Security is popular. If the Tea/Republicans make steps to get rid of it, the backlash against them would be felt for years and years.

    And they know that.

    So, what we are seeing alot lately is sniping from behind the scenes and propaganda. It's an effort to make the American public out here believe something that's not true. Only something to fit their agenda.

    The American people are not buying it.

    But I say, go for it, Tea/Republicans. Please proceed and keep attacking Social Security.

    The American voters out here will destroy your entire joke of a political party.

    They don't understand that Social Security was created so that people wouldn't have to dig through the garbage to survive. As a result of the Great Depression in the 1930's.

    And it is wildly popular. The problem Tea/Republicans face is they cannot seem to marginalize that program. Witness them calling it an "entitlement" all the time. No. It's an institution. An American one. Carved in stone. Chip away at it, Tea/Republicans, but it's not going away.

    That is why us, the American voters out here, need to continually remind them that they are basically touching the third rail on an electric train track. ZAPPPPP! Instant obliteration if they try to dismantle it.

    Tea/Republicans are pretty much stubborn, ornery and downright mean spirited. And they don't take no for an answer.

    It's up to us to continually remind them. That we will obliterate the entire Tea/Republican Party for generations to come if they touch Social Security. That's for certain. Go for it, Tea/Republicans. Please proceed......

  9. The fix for Social Security [not SSI, SSDI, Medicare or other stuff] is reasonably simple. Social Security was and is intended to provide a basic level of support for retirement. For approximately one-half of workers is is the only income received in retirement. The system can be made whole by maintaining the current rate of premiums while increasing the amount upon which those premiums are applied. That change should also include an annual adjustment to compensate for changes in wages. In addition, all workers and wage earners should be required to participate....public employees and Congress included.

  10. SS and Medicare need fixes due to changing demographics. And it's a shame we'll cut Medicare benefits because of ineffective health care. In this nation we pay more than anywhere else on the globe for inadequate/poor health care--we have shorter life spans than are now decreasing. We pay administrative health care costs in excess. We pay housing for career-indigents and call it health care--nursing home / assisted living paid by MEDICAID. Anyhow, Daniel, Obama has absolutely refused to discuss his "vision" and what programs he will eliminate and others that can be cut. Obama keeps dreaming of more programs and more illegals for us to support. He can't even get our butts out of Afghanistan--Obama has another $trillion for enemies who will turn on us in a heart beat. Won't even bring hundreds of thousands of troops HOME FROM EUROPE 80 years after the end of that war. "We have a commitment to our Allies." is STUPID. Europe can find the money to defend themselves. Ditto Japan. Really. We should pay for defense of Japan, Europe, Guam, Korea?

  11. http://www.pimco.com/EN/insights/pages/k...
    Sadly the letter writer doesn't know what he's talking about. The unfunded liabilities in those two programs currently sit at about $30 trillion. In addition the average Social Security check is just over $1000. We have millions of seniors living in poverty.

    People pull three times as much out of Medicare as they pay in. That's a major problem. Healthcare costs are way too high and Medicare is not funded to deal with these high costs.

    What sits in the Social Security and Medicare trust funds are specially designated treasury securities. Though securities make up a class of debt known as intergovernmental debt. Intergovernmental debt is currently 40% of our national debt.

    Everyone needs to be given a medical card and costs need to be brought down dramatically. A national pension system needs to be set up in which people can live out their lives in some kind of dignity, and not end up eating cat food.

  12. http://www.ifhp.com/documents/2011iFHPPr...
    To add to what Ms. Anderson posted, the above is why we have deficits and enormous unfunded liabilities going forward. The nonsense has to be brought under control.

    Recent wealth studies have shown that half the country is basically broke in terms of liquid assets needed to fund contingencies. Yet our medical bills are in the trillions. The whole thing is ridiculous. A recent report from the American Dental Association reflects that 100 million Americans can no longer afford dental care much less anything of a major scale.

    The problems with Social Security, Medicare and Medicaid go way beyond right-wing think tanks.

  13. Comment removed by moderator. Name Calling

  14. Comment removed by moderator. Refers to removed post.

  15. "CarmineD

    Both parties have been borrowing the dough for nearly 30 years. Maybe you raised the alarm before now, maybe not."

    Jim:

    To their credit both presidents before this one tried. Clinton appointed a commission to make recommendations to improve Social Security. Bush did too and specifically mentioned SS reform in his State of the Union address. President Obama can go where no president has gone before. He can reform Medicare and Social Security for future generations before they are both insolvent. The Trustees claim the former has 10 years and the latter has 20 years [at current and forecasted rates of payins and payouts]. President Obama has 4 years and he's burning daylight.

    CarmineD

  16. Zippert 10:49: We can't GIVE EVERYONE health care. There are ways to have consumer-driven health care like my health plan where we receive incentives to take care of ourselves. Costs are down big time in the 2-3 years that we've been doing this. I still decide when I need to seek care but I get reductions to my premiums when I get good lab results and when I take online courses in subject matter relevant to my state of health. Of course you know that 25% of Medicare costs (and what, 15-20% of medicaid) goes to end-of-life care that has no positive impact on life or quality of life--you know the 60-minute exposes of terminal 89-year old that wants everything possible done when he comatoses it. I don't suggest killing off grandma but let's limit payment (by government / us) when there is little to no chance of enhancing quality of life. I see that Consumer Reports took up "my" suggestions and explored prostrate-cancer-surgery and says (Dr OZ last week) that men shouldn't even bother with various cancer screenings (but should follow thru on 3 cancer tests) unless they have symptoms. CU speaker said the COSTS of the screening including false positives and surgery leaving senior men incontinent when they were NOT aware of the possible outcome..... See a pattern here? Doctors find it in THEIR ECONOMIC INTEREST to test us endlessly and then to do procedures that we do not need.

    Now SS has other challenges. Sure many will receive more than they paid it--but what the hey--you pay in for say 45 years and want a little ROI for the government using your contributions for decades. A big part of the problem with SS funding is that the government added endless SSI and SSDI without correctly changing the contribution rate or ceiling. I'm not saying those born with limited functioning and those ruled disabled should not be provided a subsistence income. I'm suggesting that the funding should have been calculated--perhaps redirecting the funding that HAD BEEN funneled through other government programs.... Anyhow, this pretty much means that EVERYBODY ON WELFARE is able-bodied sort of and able-brained. So WHY WELFARE for years and years and years. Only TANF is limited to 2 consecutive, 5 years lifetime under each SSN.
    So Zippy, you want to accuse the GOPers of going after the low-hanging fruit of Medicare and SS rather than taking on NEEDED CUTS of programs that are not essential gov initiatives? It's a no-win argument--like cutting the rate of increase in deficit spending--that will NOT FIX the spending problem. The FEDs must be restricted to enumerated programs. Welfare at the local level can address local issues, concerns, funding..... We would also save infinite amounts in admin costs--all the federal employees to monitor, train, review state employees who monitor, train, review city/county employees...and the court costs when the feds want the grant money back--been there, seen it.

  17. Zippert: You might also check out (you know how exact quotations of statistics/details sometimes escape me) how much of our health insurance premiums go to administrative costs in the insurance companies--how we have to pay for pre-approvals and appeal denials in coverage. And how we pay 6-figure starting salaries to drug reps--the sales people who push the drugs onto the doctors to push the drugs on us. Recent media says our longevity (in U.S.) is declining even though we're 17th or so of developed countries and we pay more than everybody else. Something about chronic conditions in West and South, especially women under age 50.

  18. So Zippy and company: when our longevity degenerates down to say 62 on average, Medicare won't have a funding problem....... ditto SS. Is that Obama's PLAN?

  19. "That went over like a turd in the punch bowl." Teamster

    I opine you never heard of or know anything about the Federal Employees Retirement System [FERS]. The turd in the punch bowl came up tasting like a peach dipped in nectar. FERS has been in effect since 1986 and by all accounts is a huge success. It privatized the old Civil Service Retirement System and made it obsolete. FERS is based on private sector retirement and self-directed IRA's. SS is old and out of date. What was good in 1935 is no longer good in 2035. It's called progress. For somebody who is an advocate of alternative energy sources and electric cars, this concept should be second nature to comprehend.

    CarmineD

  20. "Yes, Carmine is correct! That's hard to believe, isn't it?" El Lobo

    Not at all. It's quite easy. Just harder for some [mostly Democrats] than others. But eventually like you, they do.

    CarmineD

  21. "Wow! Carmine thinks its 2035!"

    Well El Lobo, here's a novel concept for you. Try thinking. The SS fund according to the Trustees will be bankrupt in 20 years. This is 2013. Add 20 years and then build in a cushion for rounding errors and unexpected circumstances with the knowledge that SS started in 1935. So 100 years from 1935 until 2035. What would you expect not to change in 100 years, if you and Teamster are believed, besides SS?

    CarmineD

  22. "The difference between the two is that Clinton wanted to keep Social Security & improve it....."clueless George" tried to destroy it!!"

    Really? And all the while I believed as the Trustees said that it was the inherent issue of paying out more than comes in that will make the fund insolvent in 20 years. The Trustees probably never had the new math that you learned in school. Thank goodness.

    CarmineD

  23. Bob 3:13: I appreciate you so much. Whether or not we agree on something, I can count on you to COMPREHEND what I'm saying. And thumbs down to those who find it necessary to comment when a poster misspells or when spell check inserts a similar word.....

  24. Bob 4:54: Don't know if you are familiar with that old book about "The higher your IQ the more kids you should have." Our welfare system and government programs do just the opposite. Tends to explain the degeneration in K-12. The "learning disabled" chain smoker, drug using adults that chuck out numerous kids so they can stay at home and "raise" the kids while taxpayers fund their habits means that those of us who work get to limit our lifestyles while they live off the "land."

    Further, disabilities are not always permanent. When parents qualify for a program based on a learning-disabled child, it should be TEMPORARY.

    INTERNAL CONTROLS is the terminology for designing your programs to preclude outright fraud and abuse. Audits and investigations are the "fail-safe" means to verify efficiency.

  25. Carmine 4:26: And with FERS, federal employees ARE UNDER SOCIAL SECURITY. Those in the transition period seem to get the old federal pension, SS, and the IRA's they pay for--all at the rates / benefit level that they paid for but less from SS. STATE and local government employees still get expensive PERS benefits and do NOT PAY SS contributions.

  26. Roslenda: FERS has 3 pieces to the program: SS is one. FERS is another. And last and largest is the TSP: which stands for Thrift Savings Plan. The TSP is a self-directed IRA/401 K type retirement feature that mimics private industry and has a match provision. In total, SS+FERS+TSP, is a portable retirement system and goes with the employee/Congress member from job to job. Not like the old CSRS which went out of operation in 1986.

    CarmineD

  27. Carmine, I HAVE a TSP account, know all about it. What I'd like changed is the excessive pensions we pay via PERS to city, county, SD employees. State salaries are a bit more reasonable.

  28. CarmineD (Carmine DiFazio):At 5:29 yesterday AM you stated "If the <Social Security Trust> fund were not raided, it would earn interest on the holdings. With the raids on these funds, and with the IOU's owed to pay it back, the gov't borrows to pay the borrowings and interest on the fund. These add to the debt and deficit of the US."

    Very correct, paying the interest earned on the special securities substituted for the cash that was raided DOES add to the deficit. Repaying the initial borrowing, the face value of those securities, does not. Regardless, just how is this a SOCIAL SECURITY problem? Congress enabled raids on the trust fund, Social Security had no say in the matter.

    Later, at 7:17, you commented that " Government can't owe itself, so all is honky dorey."

    Very true, so far as you go. However, you need to review appropriated fund accounting procedures. While the government overall can't borrow from itself, it is VERY possible (and not altogether unknown - see the Social Security incident) for one fund to borrow from another. And if the borrowing agency/fund refuses to repay as agreed, that is, by definition, the Federal government defaulting on its debt. Check the 14th amendment for more on that idea.

  29. SgtRock: at 5:01 p.m. yesterday you commented: "When Social Security was started the starting retirement age was one year less then the average age of death. That means most people would not get it."

    Negative, Sarge. Males born in 1935 had a life expectancy of 59, females born then had a life expectancy of 63. Live expectancy for those turning 65 in 1935 and thereby eligible for Social Security, however, was 77 for males and 78 for females. Social Security was paid only to that latter, and smaller, group.

    Males born in 2012 are estimated to have a life expectancy of 76, females born then to have a live expectancy of 80. Live expectancy for those turning 65 in 2012 but not quite eligible for Social Security was 82 for males and 84 for females.

    Two factors are obvious in this data: 1) The longer you live, the longer you can expect to live. 2) The 1935 basic life expectancy data is biased by the impact of the relatively high infant and childhood death rate at that time; from an increased rate of adult male deaths from traumatic injuries, especially at work; and from an increased rate of adult female deaths in childbirth. The first factor works against Social Security - people will draw for a longer period. The second factor, and the rise in female employment, actually works FOR Social Security - more people are paying into the system for a longer period of time. I lack the expertise to quantify that.

    Regardless, the estimated death rate of people currently entering Social Security is significant short term, and is above that of 1935 but not by that much - certainly not the 20-30 years commonly mentioned. The life expectancy of people BORN currently is significant only long term - by about 2079, if then. What will happen in the meantime? Maybe by then Republican'ts will have had their way and eliminated Social Security altogether. Or maybe the Republican't proposals for health care coverage will cut medical care and life expectancy.

  30. "Later, at 7:17, you commented that " Government can't owe itself, so all is honky dorey."

    I was being facetious [look it up if you don't know what it means]. This is money that US workers paid into the fund and are owed upon retirement. These were and are not appropriated funds. Social Security fund is comprised of FICA taxes paid by workers and employers.

    CarmineD

  31. "Carmine, I HAVE a TSP account, know all about it. What I'd like changed is the excessive pensions we pay via PERS to city, county, SD employees. State salaries are a bit more reasonable."

    Sorry Roslenda, I can't speak to PERS. FERS and CSRS are my specialty. But I will tell you this, Federal employees will be required to contribute more to their FERS retirement in the future. In fact, while I have not read it, I opine that one of the features in Rep Ryan's budget, to balance in 10 years, MAY, I said MAY, include a provision for higher employee paid retirement contributions.

    CarmineD

  32. "Social Security is the least of our problems. You say that SS will become insolvent by 2033. That may or may not be true but don't hold your breath believing that will happen..."

    Wrong, El Lobo, the Trustees said it in their most recent report on SS. I merely repeated it verbatim here as a fact. If you don't know who and what the Trustees mission are, look it up. I know already.

    CarmineD

  33. "Overview

    The trust fund [i.e. Social Security] represents a legal obligation of the federal government to program beneficiaries. The government has borrowed nearly $2.7 trillion as of 2011 from the trust fund and used the money for other purposes. Under current law, when the program goes into an annual cash deficit, the government has to seek alternate funding beyond the payroll taxes dedicated to the program to cover the shortfall. This reduces the trust fund balance to the extent this occurs. The program deficits are expected to exhaust the fund by 2033. Thereafter, since Social Security is only authorized to pay beneficiaries what it collects in payroll taxes dedicated to the program, program payouts will fall by an estimated 25%.

    The trust fund is expected to peak in 2021 at approximately $3.0 trillion.[22] This means that from 2022 through 2033, the government will have to find approximately $3 trillion in other funding to pay beneficiaries beyond program revenues. If the parts of the budget outside of Social Security are in deficit, which the Congressional Budget Office and multiple budget expert panels assume for the foreseeable future, there are several implications:
    Additional debt must be issued to investors to obtain the funding necessary to pay this obligation. This will increase "debt held by the public" while simultaneously reducing the "intragovernmental debt" represented by the trust fund.
    Investors may be unwilling to fund this shortfall unless considerably higher interest rates are offered, if at all.
    Other parts of the budget may be modified, with higher taxes and lower expenditures in other areas to fund Social Security.[23]
    Debate regarding whether the proper debt to GDP ratio for evaluating U.S. credit risk is the "debt held by the public" or "total debt" (i.e., debt held by the public plus intragovernmental debt) will be rendered moot, as the amounts will converge substantially.

    On the other hand, if other parts of the budget are in surplus and program recipients can be paid from the general fund, then no additional debt need be issued. However, this scenario is highly unlikely."

    CarmineD