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TimMcM said...
Here is another take on the situation, including the fact that the head of SS asked reporters not to mislead the public by misinterpreting what the report was actually saying. So of course the reporters did just what he asked them not to do.
http://finance.yahoo.com/news/social-security-really-exhausted-not-175539433.html Is Social Security really "exhausted?" Not at all
By Mark Miller CHICAGO (Reuters) - It's rare to see a federal official publicly beg reporters to get a story right, but the commissioner of the Social Security Administration seemed ready to get down on his hands and knees at a Monday press briefing. Michael Astrue was cautioning journalists not to scare the public about the meaning of the word "exhaustion." "Please, please remember that exhaustion is an actuarial term of art and it does not mean there will be no money left to pay any benefits" he warned in issuing the trustees' annual report on the financial health of the Social Security program. "After 2033, even if Congress does nothing, there will still be sufficient assets (from payroll taxes) to pay about 75 percent of benefits. That's not acceptable, but it's still a fact that there will still be substantial assets there," Astrue insisted. This year's report shows some acceleration of the drawdown of Social Security's vast trust fund reserves. Absent Congressional action, the trust funds of the retirement and disability programs are expected to be exhausted in 2033 as baby-boomer retirements accelerate - three years sooner than projected a year ago. But Astrue went out of his way to emphasize that the program is far from broke. Social Security took in $69 billion more than it spent last year, according to the report, when you include tax receipts and interest on bonds held in the Social Security Trust Fund (SSTF). The SSTF had reserves of $2.7 trillion last year. Yet the press plowed right ahead with stories warning that the Social Security retirement program is running out of money. "There won't be much money left for you" after 2033, warned a public radio reporter - a line that pretty well summed up the coverage and nearly forced me to run my car into a ditch. Americans need to get this right, because Social Security is the primary source of retirement security for most Americans -- and it will be even more important in the future as we continue to dig our way out of the rubble of the Great Recession. So, what's really going on with Social Security? 1. Social Security isn't running out of money. The long-range actuarial shortfall is projected to be 2.67 percent of taxable payroll - in other words, 2.67 percent of all the earnings subject to Social Security contributions. That's a modest shortfall - and it fluctuates over time due to economic cycles and changes in assumptions about growth in taxable earnings. For example, the projected year of SSTF exhaustion was as far off as 2042 in 2003 in the wake of the dot-com bubble; it was as close as 2029 in 1994 due to changed expectations about real wage gains. 2. Yes Virginia, there is a Trust Fund. Social Security's critics love to argue that the SSTF is a myth, but it's not. Although Social Security was designed as a pay-as-you-go program, every penny it receives is credited to the SSTF, which has been building enormous reserves following benefit cuts enacted in 1983. The Trustee report confirms - again - that the surplus funds are invested in "special issue Treasury bonds" and that they are "full faith and credit" obligations of the government to Social Security. Since Social Security can't borrow money by law, it uses those reserves to pay benefits whenever cash on hand runs short. 3. This year's news is not about our aging population. The accelerated SSTF exhaustion date stems from two factors: a 1.6 percent drop in taxable earnings due to the ongoing depressed economy, and a 3.6 percent cost-of-living adjustment awarded for this year. Our aging demographics do play a role in the longer range imbalance after 2033, because we have not raised revenue sufficient to match the projected growth in our retired population. "The choice is to either reduce benefits 25 percent, or raise revenues 33 percent to adapt," says Steve Goss, chief actuary of the Social Security Administration. Making reforms sooner rather than later would allow for a more gradual phase-in, giving the public plenty of time to plan and adjust accordingly. I'm in favor of a modest, graduated payroll tax increase. Social Security benefits are modest, averaging $1,230 per month this year. It's the main source of income for most people over age 65 - more than half for nearly one in two married couples and two in three unmarried individuals, according to the National Academy of Social Insurance. A gradual increase in payroll taxes over the next decade would eliminate a sizable portion of the imbalance; another approach is to lift or remove entirely the cap on wages subject to payroll taxes, which currently is set at $110,100. Perhaps that won't be too exhausting an idea for Congress and the media to embrace.
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pazbuc said...
Reelection is more important than fixing the county's problems. Didn't you know that. That Obama didn't even acknowledge the Bowles-Simpson deficit reduction proposals tells us that.
This post has been edited 2 times, most recently by TimMcM on 4/26/2012 at 11:49 PM
Though often asked, God does not take sides in politics or college football.
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TimMcM said...
Amazing the way you guys try repeatedly to rewrite history. The reason that Obama did not try anything from the so called Bowles-Simpson proposals is because no proposal actually passed the committee. Why? Because not a single repub on the committee voted for it - so there was not a majority which was what was called for in the parameters of the committee's own rules for there to be a plan. What was released was the proposals which failed to even pass in the committee itself.
In addition, without GOP support Obama knew he could not get the committee's proposal passed. As always, the GOP wanted to pick and choose what proposals they would back - none that raised revenues or impacted large corporations or rich individual which would mean making all spending cuts on items that only impacted the middle class and poor.
This is just another example of misinformation from the rightwing media, like claiming that Obama promised that unemployment would not go over 8%. It is that old truism that if you repeat a lie often enough people will come to believe it.
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TimMcM said...
Amazing the way you guys try repeatedly to rewrite history. The reason that Obama did not try anything from the so called Bowles-Simpson proposals is because no proposal actually passed the committee. Why? Because not a single repub on the committee voted for it - so there was not a majority which was what was called for in the parameters of the committee's own rules for there to be a plan. What was released was the proposals which failed to even pass in the committee itself.
In addition, without GOP support Obama knew he could not get the committee's proposal passed. As always, the GOP wanted to pick and choose what proposals they would back - none that raised revenues or impacted large corporations or rich individual which would mean making all spending cuts on items that only impacted the middle class and poor.
This is just another example of misinformation from the rightwing media, like claiming that Obama promised that unemployment would not go over 8%. It is that old truism that if you repeat a lie often enough people will come to believe it.
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TimMcM said...
Amazing the way you guys try repeatedly to rewrite history. The reason that Obama did not try anything from the so called Bowles-Simpson proposals is because no proposal actually passed the committee. Why? Because not a single repub on the committee voted for it - so there was not a majority which was what was called for in the parameters of the committee's own rules for there to be a plan. What was released was the proposals which failed to even pass in the committee itself.
In addition, without GOP support Obama knew he could not get the committee's proposal passed. As always, the GOP wanted to pick and choose what proposals they would back - none that raised revenues or impacted large corporations or rich individual which would mean making all spending cuts on items that only impacted the middle class and poor.
This is just another example of misinformation from the rightwing media, like claiming that Obama promised that unemployment would not go over 8%. It is that old truism that if you repeat a lie often enough people will come to believe it.
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gpracer73 said...
Tim
Not sure where you are getting your info but the Bowless-Simpson plan was never even brought to congress to go into a committe for a vote.
There were republicans on the commision that voted for it, Mike Crapo of Idaho, Tom Coburn oklhoma, Judd gregg N. Hampshire. Did you know that there were 3 democrats on the commision that voted against it? It was actually evenly split, 3 repub for 3 against, 3 dems for 3 against
Obama himself chose not to use the suggested plan to come out of the commision, instead submitting his own budget that received 0 votes from either side and thinking he could work a plan with the Republicans afterwards, than it turned political by both sides
http://www.nytimes.com/2012/02/27/us/politics/obamas-unacknowledged-debt-to-bowles-simpson-plan.html?pagewanted=all
Actual the Senate Budget director, Conrad is recently proposing that plan in the senate this month in hopes it starts talks, but I notice different articles that he is being ripped by Dems in the Senate because it cuts spending too much and ripped by some Republicans becuase it raises taxes. so proof again that there are very few people in Washington serious enough to fix this mess
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pazbuc said...
What a brilliant analysis. Our choice is to cut benefits by 25%. That would go over like a lead balloon. Heck AARP and the Dems go crazy when anyone suggests reducing the GROTH in just the COL for SS. The other suggestion is to increase the payroll tax gradually over the next 10 years. First Congress has got to have the courage to add back the 2% reduction that is in effect right now. Congress has gotten us into this quandry but they don't have the courage to get us out.
Though often asked, God does not take sides in politics or college football.
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TimMcM said...
Actually it is to correct the misimpression given by your thread starter. Did you even read what Miller wrote? The point is that "exhausted" does not mean out of money as the article implies. Miller explains that we will still have lots of money in the trust fund, enough to fund all retirees at 75% IF NOTHING IS DONE.. The 75% was to give an idea of how far from being out of money the SS fund will actually be. It is not a proposal as to what we should do - it is what we can do if SS is not addressed in the next twenty years.
I do not believe that SS will be okay(nor does Miller) if it is not addressed by Congress. I do not think that a 25% cut would pass in Congress and would not be in favor of it anyway.
The choices are, as with all money issues on the Federal level: 1. Cut benefits 2. Increase revenues 3. Do a combo of spending cuts and increases in revenue.
Once again the GOP will say #1 period and the dems will respond with the combo in #3 or nothing because if only spending cuts are made it will come out of the the middle and lower classes already greatly diminished share of the economic pie.
Unless one party gets majority in the House, 60 votes in the Senate, and the WH, it will be gridlock as usual.
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gpracer73 said...
Tim
Not sure where you are getting your info but the Bowless-Simpson plan was never even brought to congress to go into a committe for a vote.
There were republicans on the commision that voted for it, Mike Crapo of Idaho, Tom Coburn oklhoma, Judd gregg N. Hampshire. Did you know that there were 3 democrats on the commision that voted against it? It was actually evenly split, 3 repub for 3 against, 3 dems for 3 against
Obama himself chose not to use the suggested plan to come out of the commision, instead submitting his own budget that received 0 votes from either side and thinking he could work a plan with the Republicans afterwards, than it turned political by both sides
http://www.nytimes.com/2012/02/27/us/politics/obamas-unacknowledged-debt-to-bowles-simpson-plan.html?pagewanted=all
Actual the Senate Budget director, Conrad is recently proposing that plan in the senate this month in hopes it starts talks, but I notice different articles that he is being ripped by Dems in the Senate because it cuts spending too much and ripped by some Republicans becuase it raises taxes. so proof again that there are very few people in Washington serious enough to fix this mess
So what's your point? (joking)
gpracer,
Good catch, must of had a senior moment. What I was thinking was that there were no GOP House members who who voted for it in the Commission's final vote but then I implied that none of them voted for it at all and I called it a committee rather than a commission ...
The only disagreement I would have with your post is that it was brought before Congress, at least in a fashion.
http://money.cnn.com/2012/04/17/news/economy/bowles-simpson/
Despite getting bipartisan support on the commission, the plan didn't get the 14 votes needed to present the group's recommendations to Congress for a legislative vote. And since then critics on the left and the right have found much to object to in the plan. Indeed, the House recently voted down a version of the Bowles-Simpson plan offered as an amendment to the House budget.I am going to take away my post since it is so inaccurate.
Hoisted by my own petard.
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minsterbuckeye
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TimMcM said...
Actually it is to correct the misimpression given by your thread starter. Did you even read what Miller wrote? The point is that "exhausted" does not mean out of money as the article implies. Miller explains that we will still have lots of money in the trust fund, enough to fund all retirees at 75% IF NOTHING IS DONE.. The 75% was to give an idea of how far from being out of money the SS fund will actually be. It is not a proposal as to what we should do - it is what we can do if SS is not addressed in the next twenty years.
I do not believe that SS will be okay(nor does Miller) if it is not addressed by Congress. I do not think that a 25% cut would pass in Congress and would not be in favor of it anyway.
The choices are, as with all money issues on the Federal level: 1. Cut benefits 2. Increase revenues 3. Do a combo of spending cuts and increases in revenue.
Once again the GOP will say #1 period and the dems will respond with the combo in #3 or nothing because if only spending cuts are made it will come out of the the middle and lower classes already greatly diminished share of the economic pie.
Unless one party gets majority in the House, 60 votes in the Senate, and the WH, it will be gridlock as usual.
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pazbuc said...
The 2% reduction in SS was one of the dumbest ideas ever passed by the idiots in Washington. SS is now deeper in the hole than it was. Obama has no plan to fix SS because it is more important to him to get reelected than fix this program. After the election is there any politician that will propose doing away with the 2% reduction?
This post has been edited 4 times, most recently by McCague on 5/2/2012 at 12:09 PM
Social Security Insolvency & Payroll tax reduction