The media are slowly beginning to admit that Social Security is running a deficit. I first announced this in early 2010 in my video, Retirement Armageddon. It’s posted here. This information was ignored. Not now.
A recent story in the Washington Post began with this:
WASHINGTON — Now that Social Security is paying more in benefits than it collects in taxes, there is a fierce debate among politicians, academics and advocates about whether those shortfalls are adding to the federal budget deficit.
This means red ink. It means that FICA taxes, called “contributions,” no longer provide a nice official sur0plus to the admitted on-budget budget. This accounting deception has gone on for over 40 years. Deficits in the off-budget deficit are ignored, while the money from Social Security’s “surplus” was counted as black ink in making the assessments of the size of the official deficit.
The Social Secutity Administration must now hand over non-marketable IOUs from the Treasury to make up the difference. Congress must borrow this money. This adds to the official on-budget deficit.
Congressman Xavaier Becerra (D-CA) repeats the accounting deception. “Over 77 years and now through 13 recessions, Social Security has not added one penny to our deficit or our debt.” It has added trillion of dollars to our debt, but the debt is hidden off budget. It is part of the $222 trillion in unfunded liabilities reported by Prof. Lawrence Kotlikoff of Boston University. I have written about this here.
Rep. Becerra’s deception was reinforced by Senator Bernie Sanders of Vermont. “I believe that Social Security has not contributed one nickel to the deficit because it is funded by the payroll tax.”
The Post now admits what we critics of the system have been saying for 40 years.
Here’s how it works: For nearly three decades Social Security produced big surpluses, collecting more in taxes than it paid in benefits. The government, however, spent that money on other programs, reducing the amount it had to borrow from the public, including foreign investors. That’s why some advocates complain that Congress has “raided” Social Security.
In return, the Treasury Department issued special bonds to Social Security. The bonds are now valued at $2.7 trillion. They are accounted for in two Social Security trust funds, one for the retirement program and one for the disability program.
The bonds pay interest. This was one of my points in my video. This has added to the official debt. The government must borrow the funds to pay this interest.
What is the projected on-budget deficit for this year? $166 billion.
Becerra denies all this. Social Security is just spending money generated by its “investments.”
What were these “investments”? IOUs from the government.
The voters don’t know what is going to hit them.
Johnson should never have transferred SS to the general fund and Congress should definitely called him on it and not let it happen. He was a "wheeler-dealer", however, and could "twist" arms like no other president until the present.
Maybe if they would put back the 700B they sent to foreign countries there wouldn't be a deficit.
This article is completely bogus, especially the headline. It's sole purpose is to get you to think the deficit is caused by Social Security. In fact, Social Security has brought down the deficit by putting its surplus into the general fund. Like other bloggers here, that is the problem. Social Security should have never been put into the general fund and used to fund wars, etc. Income taxes should have been used for those expenses, but everyone has been too cheap to pay their fair share and are now blaming SS.
Social Security is going broke even faster now. Did you read the Article last week that told about the Obama Administration "Borrowing" another $ 25 Million Dollars. It seems that Grand Parents of past College Graduates have Co-Signed for their Loans and are now facing the inability of having to pay off those Loans with their own retirement funds. Great isn't it, when Obama can just grab a handful of dollars from here and put it there, anytime he so desires. Maybe if the Obama Administration would take Billions of dollars from Obama's slush fund and pay back the Social Security IOU's, our Social Security System would'nt be broke. By the way, I would like to find out how much of these College Loans are actually funds that were spent on Binge/Beach Partys, instead of for Education. Thank you for your time. TSgt., USAF Retired
Even if what you say is true, it does not change the fact that SS is not solvent today and it needs to be fixed. The demographics add to the problem and the only thing that can be done is to change the funding formulas and the payment formula so it will be there for future generations. It is a crime to promise people that there will be some security in retirement when there will be very little. Decisions are made based on those promises that can put people in jeopardy. “Fair shar” seems to be a arbitrarily set standard set bythose who think they know best rather than a widely accepted contribution that we all agree is fair.
I hope that there will be a check list ordered soon, of all the Social Security benefit receivers, in order to see how many actually belong on the list? There is fraud everywhere in the USA, and the present administration wants to care for everyone illegal or illegal. There have been reports of many young people who can't find jobs ,who are advised to go on medical disability and many do. It give credibility to the lies that jobless numbers are shrinking, sure they are because they have been shifted to another entitlement. . We know that there are also vendors using Medicare as a income booster, watch the TV ads for the power chairs that are advertised free of charge. TV ads cost a fortune and the charlatans count on recouping the cost from the Government– sorry that should have read from the US taxpayers.
One of the main reasons is that they (obama) have been giving s.s. to illegal people who have never paid one penny into it.Its way past time that we remove all of these illegals and there offspring from the USA.
Congress 'calling Johnson on it'? Congress is the biggest den of incompetents and thieves we can lay claim to ! Their own pension fund is 100% funded! No way are they going to take their money and 'lend' it to the government in return for worthless IOUs! Oh! Excuse me…they are backed up by the full faith and integrity of our government !
Social security is also LOADED with deadbeats who do not meet eligibility requirements. No one polices it and no one represents the hard workers who contributed (with their employers) over their working careers. Now it's sneeringly called an 'entitlement' !
If a private firm ran a program like Social Security the way LBJ and the Democrats reorganized it to work, they'd get a free all bills paid stay in Leavenworth.