Friday, July 30, 2010

Why We Do Not Need to Fear Social Security Going Bust

It is not true, as I have heard every now and then, that Social Security is going to go bankrupt. Just found this, Top 5 Social Security Myths.
Myth: Social Security is going broke.

Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.3 trillion surplus (yes, trillion with a 'T'). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever. After 2037, it'll still be able to pay out 75% of scheduled benefits--and again, that's without any changes. The program started preparing for the Baby Boomers retirement decades ago. Anyone who insists Social Security is broke probably wants to break it themselves.

Myth: We have to raise the retirement age because people are living longer.

Reality: This is red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than did 70 years ago. What's more, what gains there have been are distributed very unevenly--since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half. But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut.

Myth: Benefit cuts are the only way to fix Social Security.

Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share. [More on that here.] If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come. Right now, high earners only pay Social Security taxes on the first $106,000 of their income. But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth: The Social Security Trust Fund has been raided and is full of IOUs

Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States. The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market--which would have been disastrous--but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth: Social Security adds to the deficit

Reality: It's not just wrong -- it's impossible! By law, Social Security funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.
Although there are other problems out there I am glad we can relax about that particular issue.


  1. You bought into that liberal dribble? was founded by a progressive liberal named Wes Boyd. There is no trust fund. The money is blown by the government and in return it issues non-negotiable United States Treasury bonds which are stored in a file cabinet somewhere in DC. If the government goes belly-up (and it will) you lose.

    I would advise folks to Wiki "Social Security Trust Fund" and learn for yourself.

    Also if you care to think for yourself, study trends. Gerald Celente has many educational videos on Youtube or you can visit his website.

    "The best way to destroy the capitalist system is to debauch the currency."
    Vladimir Lenin

    Living, you are proving yourself as an "useful idiot" for the current ruling class socialists here in America.

    "The goal of socialism is communism."
    Vladimir Lenin

  2. Hey Ken,
    Please don't address this blogger as Living. He is actually "Redfox". He set up this blog initially to attack the Living Church of God about which he actually spawns outright lies.

    The Living Church of God, I am sure, would not agree with most of Redfox's vomit. or for what the church actually does believe.

  3. I deleted the above comment for a misstatement I made.

    Your so called LCG is vomit. Return to it.

    You make no points with me Paris. My contention is with Redfox's liberal buy in to the political theology of the Marxist regime in Washington. Americas currency is a supply and demand currency like any other country. Make it plentiful and the value slips.

    As to Redfox, his idea of a lockbox for SS is an illusion. It will not be there for future generations. Your government is full of liars and thieves that serve the greater purpose of self propagation. The American government is just like Rod Meredith. Both extorts money using the fear of some crisis. It is all a lie for the purpose of self enrichment.

  4. Paris,

    LCG is a deceptive organization, I am sorry to say. There is no mention of Second and Third Tithes in their recruitment writings. They claim that HWA made many astounding predictions yet deceptively hide his many false prophecies from unsuspecting readers.

    This is not your fault, Paris. I do not blame you for that. It is the fault of the LCG leadership. Let the reader be aware that LCG are deceptive in their recruitment.


    "If the government goes belly-up (and it will) you lose."

    The US Government cannot go belly up because it is the source of money.

    "Your family needs income in order to pay its debts. Your government does not....Since it [the US government] is the source of money, government can't run government can ever be forced to default on debts in a currency it controls. Public defaults happen only when governments don't control the currency in which they owe debts--as Argentina owed dollars or as Greece now (it hasn't defaulted yet) owes euros. But for true sovereigns, bankruptcy is an irrelevant concept."

    I do not believe this idea that some in the Right promote that the Democrats are manufacturing a crisis in order to push in 'Socialism' whatever is meant by that. I do not believe that.

    It was the private sector that unleashed this current financial crisis. The Government let them do it by not getting in Big Business' way by deregulating business because they inaccurately thought nothing was going to go wrong. That is why the US Government is now seeking to regulate Big Business. To prevent this catastrophe from occurring again. I do not understand why people

    As far as I can tell the Right works on the assumption that if the Government regulates anything it will fall apart. It is seems to be a dogma. I do not believe this. If anything many of our current woes were caused because the US Government didn't intervene where they needed to.

    Another thing, the Obama Administration has given tax cuts to 95% of the US population. Any attempt to raise taxes is from the top 5%. Already the very rich avoid paying taxes, which normal people pay, by exploiting various legal loopholes. Because of this $60 billion in taxes are (legally!) avoided a year. It seems perfectly fair to me for the US Government to try to change that.

  5. I've heard for 25 years that Social Security "isn't going to be there" for me when I retire.

    As I recall, I first heard it from a financial planner -- when I was considering how to invest inheritance money. (Coincidence?!)

    Yet I keep getting closer to retirement age, and S.S. is still there. At least for now.

  6. There's one problem. While as you mention, government is indeed the source of money, government is not the source of wealth. Imagine the government printed off and distributed one trillion dollars to each person in the country. Would we all suddenly be wealthier?

  7. Redfox,
    Wait until you get government healthcare. You will learn just how "great" government is.

  8. Mike,

    That is a good point. When I mention that government is the source of money I am combating the idea that somehow the US Government can become bankrupt. I used to be worried about that, but now I feel more relieved.

    When I make this argument I am assuming that the financial authorities will do this with wisdom and prevent the emergence of hyperinflation. As far as I can tell austerity seems much more likely possibility which I hope will not occur.

    Argentina and Greece do NOT apply to the US. Argentina's debts were in another currency, the US dollar and Greece does not control its own currency, unlike the US.


    Before Obama, the American public were being plundered by unnecessary healthcare costs. This figure comes from the OECD

    "Total spending on health care, per person, 2007:
    United States: $7290
    United Kingdom: $2992"

    This is why people are trying to change it. This is why reform is necessary. The current system is not working.

    Why should people be denied health care insurance because private health insurance providers can't make a buck out of them?

    I do not understand why it is that way. There are alternatives that would provide health care insurance to more people.

  9. "I do not understand why it is that way."

    It is called American capitalism. You are responsible for your costs. Not your neighbor.

    You have a problem with belief. You believe your government which has a piss poor record having to do with trust. Start any program and it will over run hundreds of times over.

    How shocked you will be when you see the citizens of this once great country, overthrow the shackles of oppression by men who build monuments to themselves. How shocked you will be when blood shall once again flow. Why? Because you my friend are not dealing with reality. Recount your cards. There's some missing!

  10. Getting back to the original topic of this post here is a post arguing that the Social Security "problem" can be relatively easily be managed and therefore other topiucs are of far more pressing concern.

  11. I do not dogmatically view the Government as inherently unble to properly intervene in matters.

    Frankly I do not understand the conservative dogma that "Government can't do anything right." I do not believe it.

    It is the Government that has ordered the end of racial segregation and so very few are able to do thoe sort of things anymore.

    Some Conservatives, from what I see, seem to view any intervention by the Government as always bad and ineffective. They seem to view the Government as something alien to the market. It is not.

    The market is a part of society. Government is a part of society.

    I remember one time hearing about Malawi and the Government supplied farmers with fertilizer subsidies. Then it had to get a loan from the IMF and they said that had to stop because it was a distortion of the market.

    So the Government stopped supplying it. Result due to Government getting out of the way of the free market: famine.

    Recently the Malawi Government decided to ignore this free market dogma and restore subsidies now they are exporting food. You can read it here.

    This is one example of government intervention in the economy that provides good results. This is Government intervention that works.

    Now the free market is good in doing many things. In many ways we are fortunate to live in a free market society. But the private free market can't do everything. Government has to intervene where the private market fails.

    It was the private free market that plunged us into the financial crisis. Loosening of the rules, a "let private business do whatever they want" attitude, Government getting out of the way, allowed banks, mortgage providers to engage in unethical practices such as predatory lending, tricking people to take out loans for houses which they are unable to pay, selling these toxic mortgages to big banks poisoning the entire world economy and so the sub-prime mortgage market collapsed and then the world economy had that dramatic scare after Lehman Brothers went bankrupt.

    It was Government failing to regulate unethical and risky practices that caused this financial crisis. Therefore the Government must regulate again.

    Furthermore the broken private heath care system forces Americans (well those lucky enough to pay for it) to pay over twice as much as other developed countries, as mentioned above. This is another reason why many Americans were unable to pay their mortgages causing the sub-prime mortgage market, and then the world market, to collapse as it did in 2007-8.

    The private free market did that.

    No wonder people are trying to get the Government to intervene in these matters in order that this crisis may not occur again.

    Therefore I cannot understand this "Government can't do anything right" dogma of the American Right.

    As far as I am concerned these events have discredited that dogma.

    The old way has failed. A new way must be done.

    I do not support Soviet style Socialism, and I do not believe the Obama Administration does either, as some on the right seem to think. Despite everything the free market has its place in society. I do not dispute that. (Didn't Obama once state his admiration of bankers in one of his books?)

  12. "You are responsible for your costs. Not your neighbour."

    But we all are suffering because some people behaved badly and caused this financial crisis.